NEW YORK (AP) — A Florida real estate developer said late Monday that it ended a deal that covered Southwest Airlines Co. for up to $26 million in losses at a new airport in the state.
St. Joe developed The Northwest Florida Beaches International Airport in Panama City, which opened in May 2010. To lure Southwest, the developer promised to reimburse the airline's fuel costs if it failed to break even on ticket purchases during the first three years.
That agreement was set to expire in May 2013. It was intended to serve as insurance for Southwest while the airport got off the ground and built up passengers. Despite ending the agreement early, Southwest said it will still serve the airport until at least 2015.
St. Joe said it hasn't made any payments to Southwest since the deal went into effect. St. Joe has faced strong shareholder opposition surrounding the deal. Based in Watersound, Fla., St. Joe owns about 573,000 acres, primarily in northwest Florida, and various commercial, resort and club properties.
The airport faced huge hurdles just to open its doors. The region was hit hard by the real estate slump, and then hit again with the massive oil spill in the Gulf of Mexico in the spring and summer of 2010 that decimated tourism in the Southeast. During the first months of operation, visits by The Associated Press revealed more ticket agents than travelers. Southwest passengers accounted more than half of the traffic at the airport since it opened.
The airline said its operation at the fledgling airport was successful. It also runs flights out of nearby Pensacola, Fla., an airport it began serving when it acquired AirTran in 2010.
