The Los Angeles World Airports (LAWA) board of airport commissioners approved a new lease with Southwest Airlines at Los Angeles International airport (LAX) on 14 January.
The 11-year contract allows Dallas-based Southwest to undertake $400.2 million in renovations to terminal 1 and move US Airways to terminal 3 from 1. The airline will in turn drop its pending lawsuit against LAWA regarding a rental rate change in 2007.
The lease still must be approved by the Los Angeles city council, says the airport operator.
Southwest says that it is "pleased" that the contract was approved by LAWA but declines to comment further on the agreement until it receives approval from the city.
Under the agreement, LAWA would purchase "non-proprietary" improvements to terminal 1 from Southwest for up to $222.4 million and has the option to purchase improvements to public areas for up to $146.9 million in rental credits, according to board documents. Improvements include a new checked baggage inspection system, upgraded security checkpoint, new jet bridges and refurbishments to the arrivals and baggage claim areas.
"While that may sound like a lot of work, the $400 million will not buy you a new terminal," says the airport operator. "Many of the improvements are functional, and not ones passengers will notice."
Southwest will also make $16.1 million in branded improvements to terminal 1.
In addition to the upgrades, LAWA will reimburse Southwest for the cost of relocating US Airways with up to $14.7 million in rental credits.
Tempe, Arizona-based US Airways says that it is in discussions with LAWA regarding its operations at LAX and notes that it has not signed an agreement.
"Relocation remains a possibility but is not definitive," it says.
Terminal 1 has 15 gates and is used by Southwest and its subsidiary AirTran Airways, and US Airways. The latter uses four gates.
Southwest would be the sole user of terminal 1 if the move occurs.
Terminal 3 has 11 gates and is used by JetBlue Airways, Spirit Airlines and Virgin America. LAWA has upgraded some of the ticket counter and lobby space, as well as the building systems, in the facility since Alaska Airlines moved to terminal 6 in March 2012.