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American Air Terminates Maintenance Base Lease After Shift to Third-Party Vendors

Aug 23, 2013 2:15 am

Skift Take

American hasn’t used the Fort Worth base in nearly a year after bankruptcy reorganization mandated the airline shift its maintenance work to third-party vendors. American won’t be able to fully exit bankruptcy until a decision regarding a merger with US Airways is reached.

— Samantha Shankman

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The city of Fort Worth has reached a deal with American Airlines to terminate its lease on its maintenance base at Alliance Airport so another company can use the facility.

Under the agreement, filed in U.S. Bankruptcy Court last week, American will receive $9.75 million from AFW Solutions, which will assume the lease for the 1.8 million-square-foot facility.

American will also pay $1.5 million to assume leased equipment that it will continue to use at the engine overhaul facility it still operates at Alliance with Rolls-Royce.

According to the filing, American hired Jones Lang LaSalle to market the property in May 2012, and the firm showed the facility to about 20 companies. American then received two offers for the facility, one from Jet Midwest Group, the other from AFW Solutions. American chose to enter into an agreement with AFW Solutions, which is backed by the Minneapolis-based equity firm TPG Credit.

No information was available about AFW Solutions. But TPG Credit has invested in aviation maintenance companies that perform airframe and engine disassembly work, according to its website.

American and the city of Fort Worth both declined to comment on the lease termination. A court hearing on the agreement is set for Sept. 24 in New York.

The maintenance hangar first opened in 1991 with an iconic suspended roof that has no fixed columns holding it up. With its cantilever design, seven wide-body planes standing wingtip to wingtip can fit inside the facility’s docks. It closed late last year as American shifted maintenance work to third-party vendors as part of its bankruptcy reorganization.

American’s initial lease was to run until August 2028 with lease extension options until 2089. American pays a base rent of $100 per year but is also obligated to pay additional charges and expenses for the facility estimated at $7 million annually, the filing said.

Separately, the union representing American pilots took out a newspaper ad in The Dallas Morning News on Monday, criticizing Texas Attorney General Greg Abbott’s decision to join the federal antitrust lawsuit opposing the merger between American and US Airways.

“Are you opposed to having a leading global carrier headquartered in Fort Worth?” the Allied Pilots Association ad asks. “Considering everything at stake — including the large number of jobs and the tax revenues they generate — that doesn’t make any sense.”

Abbott, who is running for governor, said the merger would harm competition on about 200 Texas routes and hurt consumers as the airlines could increase bag fees, fares and ticket change fees. He also expressed concern that the merger would reduce service to smaller airports in the state.

The Fort Worth and the Dallas chambers of commerce sent a joint letter to Abbott’s office Monday, asking him to reconsider his decision.

“If this merger is not finalized, there is no plan B for American Airlines,” said the letter, signed by James Oberwetter of the Dallas chamber and Bill Thornton of Fort Worth chamber. “Failing to allow American Airlines to merge with US Airways will result in further bankruptcy proceedings that will stretch for an extended period of time.”

(c)2013 the Fort Worth Star-Telegram. Distributed by MCT Information Services.

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