SAN ANTONIO — San Antonio’s largest airline has sued the city in an effort to block a new airline leasing deal that would lock it out of a new $1.4 billion terminal.

Southwest Airlines filed a lawsuit Thursday in U.S. District Court against the city and San Antonio Airports Director Jesus Saenz.

The Dallas-based airline claims the city has pulled off a “bait and switch.” Despite what the airline said, there were multiple verbal commitments from Saenz that Southwest would have space in the new Terminal C under development, a new Airline Use and Lease Agreement (AULA) would provide Southwest’s ten gates in the older and smaller Terminal Place A.

The airline also claims the city used “unlawful” subjective selection criteria when choosing which airlines were given a spot in the coveted new terminal, such as international routes and airline lounges.

Eight other airlines have already committed to the new AULA, according to the city, and the City Council approved it two weeks ago. The agreement should enter into force on October 1 and last ten years, with an option to extend the agreement for another five years.

If Southwest doesn’t sign, it would pay higher rates than the signatory airlines. However, the airline has asked the federal judge to block the entry into force of the lease.

The airline has not threatened to leave San Antonio because of the fight, but city manager Erik Walsh indicated the lawsuit could mean no airline gets a spot in Terminal C.

“The aviation agreement is the foundation of our Terminal Development Program, and Southwest’s actions could result in our progress being halted and the airport remaining as is,” Walsh said in a statement Friday.

Southwest Airlines has taken a more optimistic tone. In a statement Friday morning, Southwest spokesman Chris Perry said the airline filed a lawsuit “to preserve our legal rights” before the lease took effect on Oct. 1.

“We are encouraged by recent conversations with city leaders and look forward to reaching a quick and realistic resolution,” Perry said.

‘Back to square one’

The lawsuit came after a Tuesday meeting in Dallas between a city delegation of City Manager Erik Walsh and Mayor Ron Nirenberg and Southwest CEO Bob Jordan, COO Andrew Watterson and the airline’s legal counsel.

In a memo Wednesday, Walsh told council members that the airline threatened to take legal action against the city if it did not delay the deadline for executing the new airport lease agreement.

“Subject to the city’s assurances that the improvements (to Terminal A) would be funded regardless of cost, they urged the city to delay implementation of the new agreement,” he wrote.

However, the city flatly refused, saying it would delay construction of the new terminal and send negotiations between them and other airlines to “standoff,” which could essentially give more power to Southwest, according to Walsh’s memo.

According to the AULA, $200 million is being allocated to the renovation of Terminal A, although Southwest is concerned that this will not be enough.

Although Walsh said Southwest chaired the committee that signed off on that amount, the airline wrote in its lawsuit that it had not focused on what would happen to the terminal because it had expected to move its operations to Terminal C.

“Had Southwest been given timely notice that Defendants did not actually intend to offer Terminal C to Southwest, the airline would have taken a different bargaining position and not assumed it would not have remained in Terminal A,” the lawsuit said.

At Tuesday’s meeting with Southwest, the city offered to add another $100 million for renovation work — half of which would be funded entirely by the airport, but Southwest declined.

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