CHICAGO — A three-member team will advise St. Louis whether to proceed with a proposed privatization of St. Louis Lambert International Airport.
Moelis & Company, LLC; Grow Missouri, Inc.; and McKenna & Associates, LLC were chosen by a special selection committee made up of city officials from submissions received last fall in a request for proposals process.
Grow Missouri would underwrite the evaluation process. It’s a non-profit tied to Rex Sinquefield, who helped last year launch the city’s exploration of a lease deal under former Mayor Francis Slay.
“A multidisciplinary advisor team is needed to consult with and assist in defining those terms and conditions, and ultimately in soliciting and evaluating the qualifications and proposals from potential operators,” Mayor Lyda Krewson said in a statement issued late Friday announcing the team. “The advisor team will work solely on behalf of the city of St. Louis.”
The advisor team is charged with evaluating the airport’s existing services and its developable land, air, and cargo capacity, and with beginning the work of “identifying credible firms in the global aviation operation market who may bid on the operation,” said the statement released in letter form to aldermen and airport commissioners.
“Achieving better airport service is the highest and primary objective of exploring the FAA’s Airport Pilot Privatization Program,” the letter said. The city has also said a goal is to free up funding through the lease for non-airport projects.
Representatives of the mayor’s office, the comptroller, Board of Aldermen president and city counselor’s office sit on the committee. The board must approve the selection.
The RFP bans any member of the team from participating as a consultant, team member, investor, or in any other role with any team that bids to operate the airport. All costs for services and expenses incurred by team will only be reimbursed if and when revenues are available from a final agreement to lease and operate the airport.
Some have warned the latter provision gives the team too much incentive to endorse a privatization. The city has been reviewing the proposals since they were submitted in late October. The committee has faced some criticism for its closed-door meetings to consider a team, leading some to question whether the process would be transparent and open to public input.
Slay launched the process early last year by submitting an application to participate in the FAA pilot, saying the city was looking at how to leverage the program either through an upfront payment or payments over time to pay for non-airport related costs. Krewson continued the process.
The Department of Transportation accepted the preliminary application and in April said the city may proceed with the necessary steps to select a private operator, negotiate an agreement and submit a final application to the FAA.
Under the program, the city could lease the airport and its operations but would retain ownership rights. If the city moves forward, the FAA and a majority of airlines serving Lambert would need to approve as well as the local city boards.
Southwest Airlines accounts for about half of passengers traveling through the airport and it supported Chicago’s efforts to privatize Midway International Airport. The city later dropped the effort due to a limited number of qualified bidders.
Lambert has nearly $700 million of revenue debt that carries ratings of A-minus from Fitch Ratings, A-minus from S&P Global Ratings, and A3 from Moody's Investors Service.
The FAA program was launched in 1996 and the 2012 Reauthorization Act increased the number of airports from five to 10, but there have been few takers. Only two airports have been privatized since the law was enacted, and one of them reverted to public ownership after seven years. San Juan, Puerto Rico's Luís Muñoz Marín International remains in the program. As of April, three applications including the one from St. Louis were pending, according to the program’s website.
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Corrected January 31, 2018 at 7:21AM: An earlier version included a wrong FItch rating for Lambert.