Regional Transportation Authority (RTA) Sues American Airlines

        Regional Transportation Authority (RTA) Sues American Airlines

World's's largest carrier accused of using sham sales office to avoid paying
millions in taxes owed to Chicago-area municipalities and public transit
agencies

PR Newswire

CHICAGO, March 12, 2014

CHICAGO, March 12, 2014 /PRNewswire/ --The Regional Transportation Authority
("RTA") on Tuesday filed suit against American Airlines ("American") to force
the company and its affiliated fuel subsidiary to comply with Illinois law and
stop diverting millions in sales-tax revenues owed to local governments and
transit agencies from the six-county Chicago area. The lawsuit alleges that
American is engaged in an "unlawful scheme" by its fuel subsidiary's false
reporting of the site of bulk jet fuel sales to avoid paying taxes due to the
RTA.

In 2013 American's fuel purchasing practices are estimated to have cost the
City of Chicago $11.5 million, Cook County $3.8 million, and the RTA system,
which includes Chicago Transit Authority ("CTA"), Metra and Pace, $8.3
million. Although publicly available records suggest that these practices
have been ongoing since 2004, likely costing local government and transit
agencies many millions more, American's bankruptcy, from which it recently
emerged, might shield it and its subsidiaries from paying on certain past
liabilities.

American claims that it purchases jet fuel in the rural community of Sycamore
in DeKalb County, which is more than 50 miles west of Chicago's O'Hare
International Airport ("O'Hare"), but which is just five miles from the RTA's
service region and does not have an airport. Sycamore and American's fuel
subsidiary have entered into an agreement that calls forSycamore to rebate
almost all of the sales tax it collects back to the company in the form of
incentive payments and, in exchange, is allowed to keep as much as
half-a-million dollars each year. Documents obtained from Sycamore describe
American's fuel subsidiary's offices as "…a modest operation housing one or
two employees….An office suite of less than 1,000 square feet would be
sufficient for the operation. There will be no demand on public services for
such a business." In fact, this tiny office is located in Sycamore's City Hall
and no fuel for aircraft at O'Hare is ever physically delivered to Sycamore.

"The world's largest airline has a responsibility, like every other business
or individual, to pay the taxes it owes and that are used to support the
public infrastructure that allows the airline to operate," said RTA Chief of
Staff Jordan Matyas. "Millions of passengers, as well as airline employees,
use mass transit to get to O'Hare." Additionally, emergency personnel from
local governments serve the airport and respond to serious situations there.
They also rely on those tax dollars to support their operations and to protect
the safety of American's employees and customers."

American partners with several other airlines in the oneworld® alliance, whose
members include airberlin, British Airways, Cathay Pacific, Finnair, Iberia,
Japan Airlines, LAN, Qatar Airways, Qantas Airways and Royal Jordanian
Airlines. American purchases millions of gallons of jet fuel every year for
its operations at Chicago's O'Hare Airport, and provides operational support
to its partner airlines.

The RTA is responsible for funding the mass transit agencies, which rely on
sales taxes from the six-county region, and account for half of its operating
funds. The lawsuit against American is not the first one that the RTA filed.
It filed a similar lawsuit against United Airlines in 2013, which also claims
Sycamore as the location of its fuel purchases. American was not sued at that
time because it was in bankruptcy. The RTA has also filed suit against the
towns of Kankakee and Channahon for entering into tax-avoidance deals with
retailers and other airlines. A number of businesses have subsequently
announced they are terminating their agreements with those municipalities.

To view a copy of the lawsuit and additional documents relating to the lawsuit
visit www.rtachicago.com/media-center/sales-tax

About the RTA
The RTA provides financial oversight, funding and regional planning for the
three public transit operations in Northeastern Illinois: The Chicago Transit
Authority (CTA) bus and train, Metra commuter rail and Pace suburban bus and
paratransit. For more information, visit www.RTAchicago.com

SOURCE Regional Transportation Authority

Website: http://www.rtachicago.com
Contact: Susan Massel, Director, Communications and Public Affairs, RTA,
312-913-3256  massels@RTAchicago.org
 
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