Puerto Rico Governor Alejandro García Padilla will go ahead with plans to privatize Puerto Rico’s main airport.
Late on Monday U.S. Department of Transportation Secretary Ray LaHood and the Federal Aviation Administration approved a plan to privatize San Juan’s Luis Muñoz Marín International Airport.
The Puerto Rico Port Authority had announced a deal to lease San Juan’s Luis Muñoz Marín International Airport to Aerostar Airport Holdings LLC for 40 years.
While prior Governor Luis Fortuño explicitly approved the privatization of the airport, in late January García Padilla, who unseated Fortuño in November, said he might oppose the privatization unless some conditions were met.
On Tuesday afternoon García Padilla said that the airport’s employees jobs and salaries are safe in the deal. Our duty “will always be to carry out our word and legal responsibilities,” he said.
The privatization is part of a pilot project by the Federal Aviation Administration to allow public private partnerships for a select few airports. This will be the first major passenger airport to go forward.
Aerostar will make a $615 million upfront payment to the port authority. The port authority currently owes nearly a billion dollars in long-term debt and would thus benefit from the $2.57 billion deal.
Aerostar plans to finance the upfront payment through $350 million in investment grade bonds and $265 million in equity.
Aerostar is to make revenue-sharing payments to the port authority in the following years.