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American Airlines says United got a better deal in major O'Hare makeover

American Airlines is balking at what it called a "secret provision" in an $8.5 billion deal to renovate and expand Ch...

Posted: Mar. 1, 2018 9:55 AM
Updated: Mar. 1, 2018 9:55 AM

American Airlines is balking at what it called a "secret provision" in an $8.5 billion deal to renovate and expand Chicago's O'Hare airport.

American, the country's largest air carrier, said on Wednesday it believes the provision gives United Airlines an unfair advantage.

The project would mark the largest expansion of O'Hare in the airport's history, according to Chicago Mayor Rahm Emanuel's office. Before Wednesday, it looked like United and American -- which both use O'Hare as a flight hub -- would give the plan a thumbs up, according to local news reports.

But American now says it "cannot sign the lease in its current form" because a "last-minute" provision would allow United to "expand its size advantage" at O'Hare.

American is angered that United would get five dedicated gates in O'Hare's Terminal 2, and only three would be for common use, according to the company.

American says a copy of the lease terms it received on February 8 dedicated all eight gates in Terminal 2 for common use, but those terms were altered in a February 15 version and it "blindsided" the company.

"United's last-minute secret deal with the city raises a number of questions and undermines competition and consumer choice," the company said in a statement.

Chicago officials denied the deal was kept secret, and United staunchly denies any backdoor deals were made.

"It is disingenuous for American to make these claims," United said in a statement. "Our agreement with the city for five additional gates was made more than 18 months ago in response to American's deal with [the] city for five additional gates. American has been aware of our agreement for over a year and has worked to block the implementation at every opportunity."

Chicago Aviation Commissioner Ginger Evans, who has overseen these contract negotiations, sided with United, the Chicago Tribune reported.

The deal can still move forward without American's approval, and the airline would still be able to fly in and out of O'Hare, two sources familiar with negotiations said.

Currently, American has about 66 dedicated gates at O'Hare, while United has about 80, a source at American Airlines said.

Related: Warren Buffett hungry for deals and says he could buy an entire airline

American also has five new gates under construction elsewhere at O'Hare, which will bring its total gate count to 71. The company says it asked the city to award three more gates to American, but that request was dismissed "without explanation."

The senior city official denied that the request was dismissed and said it awards gates to airlines based on customer demand.

To be awarded more gates, American would "have to fly their gates to full capacity," the official said.

In a statement Thursday, Mayor Emanuel touted the O'Hare renovation plan as a job creator and a "turning point for Chicago."

"The project will create 60,000 construction jobs through 2026 and ensures one of the City's economic engines is positioned to drive significant growth for the region in the years and decades to come," Emanuel's office said in a press release.

The renovations, which will be paid for in part with fees that airlines pay to the airport, will eventually remake Terminal 2 into the O'Hare Global Terminal and put in "state-of-the-art" screening systems that could speed up the security check process. O'Hare will also get new self-service check-in technology.

Construction is slated to begin in 2019.

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