$88M settlement approved for Austin Bergstrom-International Airport to acquire South Terminal

Austin City Council approved an $88 million settlement with LoneStar Airport Holdings LLC, the operator of the Austin Bergstrom-International Airport’s South Terminal, to acquire the terminal and move forward with an airport expansion later this year.

The two lawsuits between the city and LoneStar will be settled by the $88 million paid for by the airport’s general fund.

“The acquisition of this leasehold estate is necessary for moving forward with improving and modernizing [ABIA] through the Airport Expansion & Development Program,” ABIA spokesperson Sam Haynes said in an email.

LoneStar did not respond to request for comment as of publication.

How we got here

In 2021, ABIA announced the expansion of the airport as more passengers are using the airport each year with 2022 marking the busiest year for the airport.

As part of the expansion, ABIA seeks to construct a new space where travelers will pass through the airport, which would include a new tunnel connecting to the main terminal and new taxiways. This requires the removal of the South Terminal.

In April, Austin offered LoneStar $1.95 million to end the remainder of the 40-year agreement that began in 2016, but LoneStar rejected the offer.

To acquire the South Terminal, Austin moved forward with an eminent domain lawsuit in June. In response, LoneStar filed a federal lawsuit, citing a breach of contract and unjust compensation.

On Feb. 6, a Texas probate court ordered the city to pay $90 million to the South Terminal operator, in which a panel of three special commissioners assessed the total damages payable to LoneStar is more than the city initially offered.

Now, Austin and LoneStar will settle the two lawsuits at $88 million. Since 2021, Austin has also spent a total of $3.5 million in legal representation in the two lawsuits.

What’s next?

LoneStar will transfer management to ABIA this fall, and the terminal will continue to operate until its removal in 2025, according to a news release by ABIA.

“This milestone settlement benefits the traveling public by progressing [ABIA]’s work to deliver new capacity and infrastructure for more passengers, flights and airline activity,” ABIA said in the release. “[ABIA] appreciates LoneStar Holding’s years of service to the traveling public and looks forward to continuing to provide all [ABIA] travelers with a positive customer experience as the airport transforms from medium-hub to a large-hub airport of national and international prominence.”