Agency suing American Airlines over tax incentives

Published on NewsOK Modified: March 12, 2014 at 9:13 am •  Published: March 12, 2014
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CHICAGO (AP) — The agency that oversees public transportation in Chicago is suing American Airlines for falsely claiming to buy "vast amounts of jet fuel" from a small office in a rural community to avoid paying tens of millions of dollars in taxes in the nation's third-largest city, where the actual work is done.

The lawsuit comes a year after the same agency — the Regional Transportation Authority — accused United Airlines in a lawsuit of doing the same thing in the same small town. The RTA filed its lawsuit in Cook County Circuit Court late Tuesday afternoon.

The RTA oversees the Chicago Transit Authority, the region's Metra commuter line and the Pace suburban bus service. The agency has been making the allegations against American for more than a year but said it was waiting for the airline to emerge from bankruptcy protection, something that happened in December.

As it said when it sued United, the RTA said American or its subsidiary, American Aviation Supply, could not possibly conduct the business of buying fuel for jets at one of the largest airports in the world, Chicago's O'Hare International Airport, out of an office that's less than a 1,000 square feet where one or two employees work. The office is in City Hall in the town of Sycamore.

"We're saying whatever work is being done there is a sham," Jordan Matyas, the RTA's chief of staff, said ahead of the lawsuit being filed.

Matyas said that while the lawsuit also names American Aviation Supply, American Airlines is responsible for what is being done — or not being done — in Sycamore.

"This is clearly American Airlines doing the deal," he said. "They set up a subsidiary in order to funnel the money and not pay the appropriate taxes."

RTA alleges that under the arrangement between Sycamore and American, the city reimburses the airline for a portion of the sales tax it pays on the fuel. According to the RTA, the Sycamore office cost the Chicago, Cook County and RTA a total of more than $23 million last year.



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