AA looking to get out of LMM lease
American Airlines claims it is no longer using all of the facilities it is paying for at LMM through its lease with the Port Authority. (Credit: © Mauricio Pascual).
American Airlines, once the anchor and darling of the Luis Muñoz Marín International Airport, filed a motion in a U.S. Bankruptcy Court in New York stating its interest in getting out of its lease agreements with the government for the use of the facilities, the Dallas Morning News reported Thursday.
The motion was filed as the government is negotiating to hand over the management of the island’s main airport to a private operator.
In the motion, the carrier cited the significant reduction of its business out of LMM in recent years as the main reason for wanting to get rescind contract signed in 1996 with the Puerto Rico Port Authority.
Since then, “the debtors have reduced operations at [LMM] significantly, and have no future plans to expand at [LMM]. However, the debtors’ costs of operation at [LMM] in the form of rental payments and costs to maintain and operate facilities have not been reduced by a comparable amount,” according to the motion analyzed by the stateside publication.
Furthermore, the carrier and its parent company AMR Inc. said while its local operation has contracted, it has been obligated to maintain significant portions of the terminal facility, which it shares with other airlines. The carrier claimed it is also required to keep the Federal Inspection Service Facility that is located there.
“This results in expenses that are disproportionate to American’s actual operations at [LMM],” the carrier told the court.
“In light of the foregoing, the debtors’ plan, among other things, is to enter into an operating agreement and a lease with the [Puerto Rico Port] Authority similar to that of other airlines operating at [LMM]. This will allow the debtors to use only the exclusive space necessary for their operations, with the Authority responsible for maintaining common areas and public use space including the Federal Inspection Service Facility,” said the motion cited by The Dallas Morning News.
In 1993, Ports issued $30 million in revenue bonds and another in 1996 for $116 million, which American Airlines guaranteed. The money was used to build the Terminal D facility for the carrier.
American Airlines filed for Chapter 11 bankruptcy protection in November 2011.
