A Texas court ordered the city of Austin to pay the private operator of Austin-Bergstrom International Airport’s South Terminal $90 million as the city moves forward with a partly bond-financed expansion project that includes the facility’s demolition.
The Travis County Probate Court’s award to Lonestar Airport Holdings resulted from a petition Austin filed in June seeking condemnation of the company’s terminal-related leasehold, which the city had valued at only $1.95 million.
“This step in the case, along with the recent federal court ruling that allows expansion efforts to proceed, furthers the airport’s mission to deliver critical improvements and modernization projects needed to support increased passenger and airline activity at AUS,” the airport said in a statement on Tuesday.
Last week, U.S. District Court Judge Robert Pittman denied Lonestar’s motion for a preliminary injunction in a lawsuit the company filed in August seeking hundreds of millions of dollars in damages from the city.
“Given that Lonestar’s injury could be remedied by monetary damages, which Lonestar’s own allegations demonstrate are ascertainable, Lonestar has not shown that the absence of an injunction would impair a damages remedy in this case,” the judge’s ruling stated.
To accommodate rising traffic volume, the airport’s development program includes an expansion of the Barbara Jordan Terminal and a mid-field concourse at a cost of $3 billion to $4 billion. The concourse, which the airport considers a vital project, requires the South Terminal’s closure.
Passenger traffic from January through November 2022 was up 61.77% compared to the same period in 2021.
The city and Lonestar entered into a 40-year lease and concession agreement in March 2016 for the terminal currently used by Frontier and Allegiant airlines.
In its federal court lawsuit, Lonestar accused Austin of abusing its condemnation power and claimed the city breached the contract by excluding the company from participating in plans to build a new terminal. In a Jan. 11 ruling, Judge Pittman dismissed all but the breach of contract claims in Lonestar’s case.
Jeff Pearse, Lonestar’s CEO, said the $90 million probate court award “recognizes the significant value we have built at the South Terminal.”
“We continue to desire to work with the city to find an amicable resolution to avoid ongoing, costly and unnecessary litigation,” he said in a statement.