LOS ANGELES WORLD AIRPORTS, UNITED AIRLINES REACH SETTLEMENT ON LEASE FOR TERMINALS 7 AND 8 AT LOS ANGELES INTERNATIONAL AIRPORT

     (Los Angeles, California – October 5, 2009)  The Los Angeles Board of Airport Commissioners today approved a Global Settlement Agreement and Release among Los Angeles World Airports; United Airlines, Inc.; and UMB Bank, N.A., as successor indenture trustee; with regard to $59.3 million in outstanding principal for bonds that were issued to finance construction at Terminals 7 and 8 at Los Angeles International Airport (LAX) in connection with the 1984 Olympics.

            Under the terms of the settlement agreement, bondholders will receive $75 million as settlement for all of their claims, which exceed $94 million.  The $75 million will be funded first from $22 million that is in a disputed rent credit escrow, secondly from the sale of 579,348 shares of United stock, and thirdly from a LAWA payment of up to $52.7 million.  Depending upon the value of the United stock at the time it is sold, LAWA expects to pay approximately $49 million in this settlement.

            In exchange for its payment under the settlement, United and LAWA will amend and restate United’s Terminal 7 and 8 Lease.  Under the amended lease, United’s rents will increase significantly.  Through a phased approach, the rental rates in the lease will ultimately result in United paying full tariff maintenance and operations charges by 2014 and will also permit LAWA to implement a unified capital charge methodology. 

            The settlement is contingent upon approval of the amended lease by both the Board and the Los Angeles City Council, as well as by the U.S. Bankruptcy Court.   

According to LAWA officials, the benefits of the settlement agreement include the transfer of control of Terminals 7 and 8 back to LAWA and a significant financial future return to LAWA.  The  settlement also supports LAWA's strategic goal of implementing a unified capital charge for terminal facilities that will create a more sustainable approach to financing future capital improvements.  Finally, the negotiated amendment of United's lease will allow LAWA to recover a higher level of its future maintenance and operating costs without the risks and expense of litigation.