Puerto Rico's Main Airport Draws Two Final Bids

Two consortia looking to expand holdings in the global aviation infrastructure submitted final competing offers to privatize Puerto Rico's main airport as soon as the year's end, according to the Caribbean island's government.

Grupo Aerpuertos Avance and Aerostar Airport Holdings LLC delivered final offers to run the Caribbean's busiest airport for the next 40 years.

A winner to run Luis Munoz Marin International Airport should be in place by Aug. 1. A decision would clear the way for final Federal Aviation Administration approval this fall and allow private managers to take control by year's end.

The Caribbean nation is an unincorporated territory of the United States.

If completed, it has been reported that the deal would deliver $500 million or more to Puerto Rico's Ports Authority.

Grupo Aerpuertos is headed by Ferrovial Aeropuertos , which operates six airports in the United Kingdom, including Heathrow, as well as an airport in Chile. Its partner, investment fund Macquarie Infrastructure & Real Assets, has stakes in eight airports in Europe, India and Australia.

Its rival, Aerostar, is made up of Aeroportuario del Sureste, which operates nine airports in Mexico, and Highstar Capital, which has made investments in Baltimore and London.

Both operators have records of increasing flights and passengers and have close relationships with many of the world's largest airlines, Puerto Rico Public-Private Partnership Authority Executive Director David Álvarez said.

While the deal will provide fresh cash to the Ports Authority, which is weighed down by nearly $1 billion in long-term debt, officials say they also expect the deal to yield increases in air routes, passengers and tourism for an island that has been in recession for six years.

Alvarez declined to detail the offers, other than to say the U.S. commonwealth expects a large upfront payment, an agreement to share in future earnings, and commitments on capital spending.

Puerto Rico's international airport already has under 9 million passengers a year, but is not living up to its potential, according to officials. Outbound boardings fluctuate from 4 million to 5 million annually, or half its capacity, and only half its facilities are in use.

Last year, Puerto Rico sold a 40-year concession for major roadways PR22 and PR5 that gave the government a $1.136 billion upfront fee, a commitment to invest $56.1 million in immediate improvements, and another $600 million over the contract's life.