CHICAGO — A hearing set for next week on Chicago’s request that a Cook County Circuit Court judge dismiss an airline lawsuit that seeks to block $3.36 billion of expansion projects at O’Hare International Airport was pushed back a week as settlement negotiations continue.
Lawyers for American Airlines and United Airlines and the city met privately with Judge Richard Billik to update him on the status of negotiations. “We agreed to defer the hearing on the city’s motion to dismiss to March 14 in order to facilitate our continuing discussions,” said United spokesman Michael Trevino. The city and airlines did not provide a comment on where negotiations stand.
Billik rescheduled a hearing on the city’s motion to dismiss to March 14 from March 8. A hearing on the airlines’ request for a temporary injunction that would block the city from starting any completion-phase projects or from issuing general airport revenue bonds to finance them is set for March 15 and March 16.
The two sides have been meeting in negotiations led by federal authorities in an attempt to resolve their differences over the timing of completion-phase projects that are part of an $8 billion expansion.
The dispute over whether the city can proceed with its financing plans without airline approval forced Chicago officials to put off a $1.1 billion debt sale secured by passenger facility charges and federal grants.
The delay followed the filing of a lawsuit on Jan. 18 by American and United — which together handle about 80% of O’Hare’s passenger traffic — seeking to block it from starting construction this spring on projects or issuing $2.5 billion of future general airport revenue bonds.
Chicago wants to complete its $8 billion O’Hare Modernization Program by 2014, but the airlines want the city to adhere to a schedule tied to operational triggers based on passenger and flight growth. The price tag on the final phase is $3.36 billion.
The city has completed financing for the first $3.3 billion phase that airlines previously approved. Plans for a new $2 billion terminal as part of the overall program remain on hold.
As the airlines resisted signing off on the final projects over the last year, the city put together a plan it contends bypasses the need for airline approval. To raise funds for the spring construction season, it intended to sell PFC- and grant-backed bonds that don’t require airline authorization earlier this year.
Under the existing pact between Chicago and carriers at O’Hare, airlines do have a say in projects funded with GARB borrowing, since it is their rates and charges that repay the debt. However, the city believed under its financing plan that it could begin issuing GARBs later this year because it planned to delay debt-service payments until after the existing airline-use agreement expires in May 2018.
As the city moved closer to selling the PFC-grant bonds, the airlines filed the lawsuit. They contend that the city’s attempt to finance the completion-phase projects breaches its contractual rights under the use agreement. While the use agreement does not give the carriers a say on projects to be paid for with PFCs or federal grants, the airlines believe those projects should be blocked because GARB proceeds ultimately will be needed to complete them.
In other city news, budget director Eugene Munin announced on Friday that the Feb. 1 blizzard cost the city and its sister agencies $37.3 million. The estimated cost covered snow removal and other weather-related services by the city and its airports, the Chicago Transit Authority, Chicago Public Schools, City Colleges and the Chicago Park District. The third highest amount of snow in Chicago history fell during the storm.
That figure includes $14.5 million spent at the city’s airports and can be recovered from airport revenues. Officials hope to recover some of the remaining money through federal disaster assistance funds.
“At the same time, we will continue our efforts to reduce costs wherever possible,” Munin said.