Ontario International Airport
A new audit by Ernst & Young concludes that the city of L.A.’s asking price for LA/Ontario International Airport may be $181 million too high. (Francine Orr / Los Angeles Times)

By Dan Weikel
January 18, 2015

In the battle for LA/Ontario airport, the city of L.A. may have overstated its worth, according to a new audit

In Ontario’s legal battle to gain control over LA/Ontario International Airport, a new audit contends that the sale price offered by Los Angeles is inflated by at least $181 million.

If Ontario wants the airport back, Los Angeles officials have said, the Inland Empire city can buy it for about $400 million.

LA/Ontario is a valuable asset, they say, and Los Angeles World Airports, which has operated the airport since 1967 along with Los Angeles International and Van Nuys, must “be made whole” and recover its investments.

But an audit of airport financial records suggests that LAWA has invested dramatically less than what it has claimed.
The analysis greatly undermines L.A.’s claims that it is somehow entitled to hundreds of millions of dollars. – Andre Cronthall, attorney for Ontario

The accounting firm Ernst & Young conducted the review for Ontario, which has sued Los Angeles to regain control of the struggling airport, where passenger volumes have plunged about 40% since 2007.

Talks about a possible sale broke off in mid-2014, setting the stage for further proceedings in Riverside County Superior Court. Decisions on several key motions are pending.

The audit contends that Los Angeles airport officials double-counted about $4 million in debt and failed to subtract investments that were repaid. It also claims Ontario is not obligated to pay back $128 million raised from airline passengers to build new terminals and other facilities.

“The analysis greatly undermines L.A.’s claims that it is somehow entitled to hundreds of millions of dollars,” said Andre Cronthall, an attorney representing Ontario. “In fact, the net outlay of funds by Los Angeles World Airports is a small fraction of that amount.”

Cronthall said the audit was prepared in case sales talks resume or Superior Court Judge Gloria Connor Trask rules in Ontario’s favor and clears the way for the city to regain control of the airport.

Los Angeles airport officials declined to comment on the audit. But Maria Tesoro, a spokeswoman for LA/Ontario, said, “We look forward to all the facts being presented in an appropriate context and as part of the current adjudication process.”

Los Angeles airport officials have insisted for several years that LA/Ontario is worth hundreds of millions of dollars. In 2013, the consulting firm LeighFisher said the fair market value of LA/Ontario was between $243 million and $605 million.

Ontario, in turn, hired the Oliver Wyman consulting firm, which countered that the airport was worth a negative $78 million to $104 million due to its severe passenger decline in recent years and forecasts for a slow recovery. From 2007 to 2013, passengers dropped from 7.2 million to fewer than 4 million. Last year, the number of travelers increased about 4%.

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