Pittsburgh International Airport concessions company loses management fight, for now

An Allegheny County judge on Wednesday ruled against the company running concessions at Pittsburgh International Airport, saying that it failed to show it would suffer irreparable harm if it was removed from its role.

In her ruling, Common Pleas Judge Christine A. Ward denied Fraport Pittsburgh’s request for a preliminary injunction. She also wrote that she had “serious concerns regarding the pretextual nature of the (airport authority’s) alleged defaults.”

Fraport was seeking the injunction to allow it to continue to perform the work — as the lawsuit proceeds — under the lease agreement it had through 2029.

“Whether the alleged events of default were material, whether they were sufficiently cured, or whether they were conjured by the (Allegheny County Airport Authority) to find a way out of its contractual obligations, are all issues that are better left to be resolved at trial,” Ward wrote in her four-page opinion.

Authority solicitor Jeff Letwin said in a statement that the authority is pleased with the court’s decision, and it will assume management of concessions operations.

“The safety and security of everyone at Pittsburgh International Airport is our top priority and cannot be compromised,” he said. “We took steps to terminate our relationship with Fraport, which we are contractually allowed to do, because we documented a steady decline in their performance.”

Fraport Pittsburgh, which has run concessions at the airport since 1992, filed a lawsuit against the airport authority in June alleging that the organization had used bullying tactics to force them out of their lease at the airport and that their contract was illegally terminated. The lease, signed in December 2012, allows Fraport to oversee all retail and food and beverage concessions at Pittsburgh International, including in the airside terminal’s award-winning Airmall, the lawsuit said.

On June 15, the employees for Fraport were met by two Allegheny County Police officers, told to gather their belongings and leave the airport immediately. At the same time, the authority emailed the airport’s tenants, including food and drink stands and stores, to tell them that the authority was now managing their leases.

The authority told Fraport in the letter terminating its lease that there had been “serious and continuing defaults” by Fraport in its airport operations. It alleged that Fraport failed to properly conduct inspections and walk-throughs of their tenants and keep track of safety measures.

During three days of hearings, authority Chief Executive Officer Christina Cassotis testified that Fraport’s work at the airport was unacceptable and led to potential security concerns.

She also said that when the authority raised those and other issues with Fraport, it refused to turn over data on sales and revenue.

Fraport CEO Michael Mullaney testified that the authority wanted out of the contract with the company and offered to buy them out in June 2021 for $5 million.

Mullaney said the offer was too low and that he later acknowledged that $20 million would be fair.

As part of their filing, Fraport filed a request for a preliminary injunction, seeking to continue running the concessions at the airport after it was forcibly locked out.

Although Ward granted an emergency preliminary injunction shortly after the initial lawsuit was filed, her ruling on Wednesday removes Fraport from its work at the airport based on legal standards required for a preliminary injunction.

To obtain such an order, Ward wrote, Fraport was required to show that the company would suffer immediate and irreparable harm that cannot adequately be remedied by financial damages.

In this case, Ward said that Fraport failed to show that.

“Though the agreement at issue in this case is characterized as a leasehold, it is more in the nature of a commercial contract for services, the breach of which is adequately compensable with damages,” she wrote.

In a statement, Fraport Pittsburgh said it was disappointed in the decision that it could not continue to run airport concessions while the case remains pending and that the company is continuing to review its legal options.

“As the evidence at a three-day hearing demonstrated, Fraport Pittsburgh, which has never been cited by the Airport Authority or any other governmental body for security-related deficiencies, believes that the alleged ‘security incidents’ advanced by the Airport Authority were solely part of an effort to gain a commercial advantage over a long-time business partner,” the company said. “Fraport Pittsburgh is, and at all times has been, dedicated to the safety and security of the retail options provided to the traveling public.”

The statement went on to say that the decision will permit the authority to dismantle Fraport Pittsburgh’s program and potentially terminate their long-time business partnership.

“This is not the result that Fraport Pittsburgh sought as we simply wanted to complete the remaining term of our commercial lease, which has been in place since 1991, and continue to serve the traveling public,” the statement said.