LAX Approves Settlement Worth $118 Million

As the city grapples with a $222 million deficit, the Los Angeles Board of Airport Commissioners Monday approved a settlement of a lawsuit brought by a few airlines that would be worth about $118 million if the deal is approved by the City Council and the plaintiffs.

The settlement would end a long-standing case against the city, Northwest Airlines, Inc. v. City of Los Angeles, involving control of LAX's Terminal 2, according to a statement from the city's Los Angeles World Airports department. LAWA spokeswoman Nancy Castles spun the deal as a win for the city:

The terminal, controlled by Northwest successor Delta Air Lines, Hawaiian Airlines, and Air Canada, charged 40-year-old lease rates according to an old contract; the city, she said, would assume control of leases and increase them to reflect today's market rates.

"We believe that we will be able to recover the settlement cost through charges to the airlines that use that terminal in the future because we'll be able to charge them today's market rates ... ," Castles said.

The settlement calls for $29 million to go to the airlines that controlled the terminal and a refund to plaintiffs of $88.7 in bond obligations related to the construction in Terminal 2. As part of the deal, Air Canada and Hawaiian airlines would turn around and enter into leases with the city for use of the terminal.

Castles said the city had the settlement cash ready in escrow since 2007.

-With reporting from City News Service.