In an attempt to recover back payments from American Airlines for space at Los Angeles International Airport, the city has asked a federal bankruptcy judge in New York to allow it to proceed with legal action against the carrier in a California federal court.
American, now the world’s largest carrier, exited Chapter 11 bankruptcy in December when it completed its merger with US Airways. According to a court filing, Los Angeles World Airports officials contend they are owed $21.5 million, plus interest, which the airline should now pay since it is no longer in bankruptcy. But the old company — AMR Corp. — no longer exists. It was replaced last month by American Airlines Group.
“Since December 31, 2010, American has underpaid its rental invoices from LAWA by a total of $21,556,915.70,” lawyers for Los Angeles wrote in court documents. “Of this amount, $5,710,738.65 accrued prior to American’s chapter 11 petition on November 29, 2011 and $15,846,177.05 has accrued since the filing of American’s chapter 11 petition.”
According to the bankruptcy court filing, Los Angeles wants to take legal action against American in federal district court in Los Angeles regarding a contractual issue. It needs permission from a bankruptcy judge to do so.
At issue is American’s long-term lease for Terminal 4. The city contends, according to court documents, that it can recover not only rent, but also funds for “maintenance and operations” of Terminal 4. The sides disagree on whether American can continue to avoid paying these costs, called “M&O,” and the city seeks to have a federal judge in Los Angeles decide the question. M&O fees pay for matters such as security and roadway upkeep.