ORLANDO, Fla. - Millions of taxpayer dollars to bring in hundreds of jobs: that was the state's deal with AirTran at Orlando International Airport, years before the company was sold to Texas-based Southwest Airlines.
Southwest Airlines has less than three weeks to hire more than 40 people at Orlando International Airport or it will face a sharp increase in its rent, all because of a deal signed almost a decade ago by another company, WFTV 9 Investigates reporter Christopher Heath found out.
In September 2010, Southwest Airlines announced plans to purchase Orlando-based AirTran Airlines.
The $1.4 billion deal quickly gave Southwest access in to 37 additional cities, and increased its footprint in Orlando.
However, with the benefits of the acquisition, Southwest also assumed liability for all of the deals made by AirTran, including an agreement to build a company headquarters in Orlando and hire 121 workers. That deal comes due on Jan. 1, 2014.
For the month of December, Southwest, which currently uses the two buildings once occupied by AirTran at OIA, paid $22,440 for one building and $8,981 for the other. The rent is paid to the Greater Orlando Aviation Authority, which in 2008 joined with the State of Florida in crafting an incentive package for AirTran.
As part of the incentive package, The Florida Office of Tourism, Trade and Economic Development (later renamed the Florida Department of Economic Opportunity) issued AirTran a check for $3 million and GOAA pledged an additional $1.7 million. The money was given in exchange for AirTran’s agreement to build a company headquarters and staff it with additional workers. The headquarters was built, but after Southwest bought AirTran, hiring did not happen.
In a statement from its Fort Worth offices, Southwest told Eyewitness News, "The OCC (building) was constructed and both that facility and the HDQ are under long-term lease. We continue to work with the State of Florida on any ongoing compliance issues with the agreement."
But, Eyewitness News has discovered that the agreement signed by AirTran with the state, was quietly amended after Southwest purchased the airline. According to the Florida Department of Economic Opportunity, Southwest now has until the end of 2014 to meet its state mandated hiring requirements before sanctions take effect.
"Performance (proof of job creation) will be due in 2015, at which time DEO will determine their compliance with the QACF agreement. Should the company not meet the required performance agreed upon in 2009, claw-backs and sanctions will apply," said Florida Department of Economic Opportunity Press Secretary Jessica Sims.
The change by the state has not altered the agreement between GOAA and the airline. GOAA's attorney, Marcos Marchena, said Southwest is still required to employ 334 people at OIA by the end of 2013, with an additional 51 new hires expected in 2014, and 26 more hires in 2015. GOAA, which owns the building that Southwest uses, said it will raise the rent on the airline to recoup its money if the hiring benchmarks are not met.
"It's obviously not the way we saw it unfolding when the agreement was entered into," said UCF Economic professor Dr. Sean Snaith. "Nobody forced Southwest to buy AirTran."
Snaith reviewed the AirTran deal for Eyewitness News. He said Southwest should have known of all pending deals made by AirTran prior to the buyout, and those deals remain intact regardless of what the airline is now called.
"All of those things don't get rendered invalid because another company made the purchase," said Snaith.
The lease, signed by AirTran for its headquarters and operations buildings at OIA, expires in 2025, with the lease on its airport hangar expiring in 2016.
Southwest's corporate headquarters is in Dallas, Texas. When Southwest purchased AirTran it said it planned to keep its headquarters in North Texas, raising concerns that the airline would not meet the hiring requirements outlined in the $4.7 million deal signed by AirTran with GOAA and the State of Florida.