CHICAGO – St. Louis is launching a search for an advisory team as it explores privatizing St. Louis Lambert International Airport.

A request for proposals will be issued through the city counselor’s office and a selection committee will be charged with selecting the advisory team by the end of October. The committee will include representatives from the mayor’s office, Board of Aldermen, the city counselor’s office, and the comptroller’s office.

“This is the next step in the process,” Mayor Lyda Krewson said in a statement announcing the RFP. “We will continue to explore this option as long as it makes sense for the taxpayers of St. Louis.”

Airfield employees are trained in using new runway rubber removal equipment at St. Louis Lambert International Airport in July 2017.
Airfield employees are trained in using new runway rubber removal equipment at St. Louis Lambert International Airport in July 2017. St. Louis Lambert International Airport

Former Mayor Francis Slay, who did not seek re-election this year, early this year announced the city’s intention to pursue a possible privatization of the city-owned airport as a means to generate private investment in the airfield and money for the city government. The Federal Aviation Administration’s Airport Privatization Pilot Program allows for private operation of airports that have received federal funding.

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 for exemption under the pilot program.” Krewson submitted to the FAA her intention to continue with the effort in a May letter.

The city wants to explore whether a privatization could generate upfront payments and payments over time that can be used for non-airport city purposes. The airport is also looking to improve operating revenues through a private partner.

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 city’s Board of Aldermen and the Board of Estimate and Apportionment.

The city’s statement on the RFP process said any lease would need to result in improved airport services, adhere to city policies on minority-and-women-owned business participation, and keep collective bargaining agreements intact. "Any consultant or advisor working for the city on this project will not be allowed to participate with any group bidding on this project,” Krewson said.

Lambert has nearly $700 million of revenue debt that carries ratings of BBB-plus from Fitch Ratings, A-minus from S&P Global Ratings, and an A3 from Moody's Investors Service.

Ahead of a spring sale, Moody’s revised the airport’s outlook to positive from stable “based on our expectation of growth in enplanements, a significant decline in debt from the historic levels, and a continued decrease in debt service with no major capital investment needs, resulting in an improved operating and financial profile.”

Southwest Airlines accounts for about 51% of the 6.7 million of passengers who traveled through the airport in 2016.

The program was launched in 1996 allowing airports to enter into long-term operating leases or pursue the sale of a facility to a private firm. The 2012 Reauthorization Act increased the number of airports than can participate from five to 10 but there have been few takers.

St. Louis is the only U.S. hub airport currently seeking a slot program after Chicago Midway International Airport withdrew its application in 2013. Only two airports have been privatized since the law was enacted, and one of them, Stewart International Airport in Newburgh, N.Y., reverted to public ownership after seven years.

The FAA approved the privatization of Puerto Rico's Luís Muñoz Marín International in 2013 and it remains in the program. Aside from St. Louis, there are only two county airports in in Florida and New York currently seeking slots, according to the program’s website.

The program has found few takers because of restrictions on how the FAA allows private operators to fund related infrastructure projects, the Congressional Research Service said in a report last month.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.