PARTIAL SETTLEMENT REACHED ON FEES FOREIGN AIR CARRIERS
AT TOM BRADLEY INTERNATIONAL TERMINAL WILL PAY LOS ANGELES AIRPORT

            (Los Angeles, California – July 29, 2008)  Los Angeles Board of Airport Commissioners announces approval of a partial settlement agreement with 22 foreign air carriers operating at the Tom Bradley International Terminal at Los AngelesInternationalAirport (LAX). 

            Los Angeles World Airports officials released the following statement after the Board publicly reconvened yesterday from a closed session that followed its regularly scheduled public meeting:

            In the matters of Alaska Airlines, et al. v. Los Angeles World Airports, et al. (Docket No. OST 2007-27331) and Aer Lingus Group, PLC, et al. v. Los Angeles World Airports, et al. (Docket No. OST-2007-28118), Los Angeles World Airports (“LAWA”) has reached a partial settlement agreement with 22 foreign air carriers operating out of the Tom Bradley International Terminal (“TBIT”) (“TBIT Airlines”), which settles for Calendar Years 2006 through 2009, the challenges raised by the TBIT Airlines in their February 16, 2007, and April 30, 2007, complaints concerning the imposition of certain terminal charges for TBIT and also addresses certain issues related to recovery of the costs of the renovations currently underway at the terminal.

            The key settlement terms include:

1. LAWA and the TBIT Airlines have agreed that the extensive construction projects currently underway to refurbish and renovate TBIT are estimated to cost at least $723.5 million and that at least of total of approximately $455.2 million will be debt financed and the annual debt service and issuance costs will be recovered from the airlines then operating at TBIT as part of their terminal rates and charges.  LAWA and the TBIT Airlines also reached agreement that the remaining project costs would be funded by non-airline sources.
2. In recognition of the impacts of these renovations on the airline operation and the use of space in TBIT, LAWA has agreed to discount the Basic Rate (the dollar per square foot charge equivalent to base rent in a lease) by 5.7 percent annually, which amounts to a $3.4 million reduction over the three-year project life of the renovations.
3. In recognition of the fact that these renovations will significantly increase terminal fees and to make such increase less onerous and more gradual, LAWA has agreed to give the airlines operating in TBIT a credit in the amount of approximately $61.2 million to reduce their annual terminal rates and charges for Fiscal Years 2011 through 2013.  This $61.2 million credit will be recovered from the airlines operating at TBIT in the future over the remaining useful life of the project.
4. For the Calendar Years 2006 through 2009, each of the maintenance and operations (M&O) charges, the basic rate and airport infrastructure charges under the Tariff at LAX will be calculated based on the prior fiscal year actual expenses, instead of being based on the current calendar year budget, and they will be based on useable not rentable space.  Rentable space is space that the airlines occupy exclusively and the space that it jointly uses with other airlines.  Useable space is rentable space occupied by the airlines plus an allocation of common space, such as hallways and public restrooms.   
5. The TBIT Airlines agreed to a number of different technical facts related to terminal charges that are expected to reduce disagreements in the future.
6. There are a number of provisions that require future negotiations between the parties in an effort to reach longer-term agreement.
7. Both sides agree to adhere to the decision in the current appeals pending before the U.S. Court of Appeals for the District of Columbia Circuit regarding the decision issued by the U.S. Department of Transportation on June 15, 2007, on administrative complaints filed by certain air carriers operating at LAX challenging both M&O charges and terminal fees imposed by LAWA.