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Mexican Company To Run Puerto Rico's Airport
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July 22, 2012

The awarding of the 40-year contract for the Luis Muņoz Marin International Airport to ASUR brought an end to a process that had attracted the interest of more than 10 consortiums worldwide.

San Juan, Puerto Rico - A consortium led by Mexico's Grupo Aeroportuario del Sureste outbid another group headed by Spain's Ferrovial for a contract to lease and operate the San Juan airport, the largest in Puerto Rico and the Caribbean region.

The awarding of the 40-year contract for the Luis Muņoz Marin International Airport to ASUR and 50-50 joint venture partner Highstar Capital brought an end to a process that had attracted the interest of more than 10 consortiums worldwide.

Puerto Rico Governor Luis Fortuņo said in a press conference Thursday that the Aerostar Airport Holdings consortium beat out the other finalist - a consortium made up of Ferrovial and Sydney, Australia-based Macquarie Group - by submitting a nearly $2.6 billion bid.

ASUR operates the Cancun Airport and several other airports in southeast Mexico, while Ferrovial controls BAA Limited, the company that operates London's Heathrow and four other airports in Britain.

As the two finalists, the consortiums led by ASUR and Ferrovial in recent weeks finalized their proposals for modernizing the airport.

The government of the US commonwealth, which has been struggling with high budget deficits for years, looked outside for the investment after publicly acknowledging it could not afford the project.

In recent months, Fortuņo's administration has insisted that the Luiz Muņoz Marin Airport was not up for sale in the auction and Aerostar noted Thursday in a press release that it would operate and lease the facility as a public-private partnership.

The opposition Popular Democratic Party, meanwhile, has accused the government of a lack of transparency and possible hidden motives in the bid process and said that if it wins the November 6th gubernatorial election it will closely examine the contract conditions.

Amid those doubts, the head of the Puerto Rico Public-Private Partnerships Authority that organized the auction, David Alvarez, appeared before the media this past Wednesday - the day before the winner was announced - to defend the process. He also noted that the United States Federal Aviation Administration still must give the green light for the concession contract.

ASUR Chairman Fernando Chico Pardo said that the bidding process was rigorous and transparent and sends a message that Puerto Rico is a good place to invest.

ASUR and its New York-based partner now will embark on a complete remodeling of the airport, including its sign system, boarding bridges, electricity infrastructure, roof sealing, air conditioning, escalators, parking lot security, and drainage.

Aerostar plans to invest nearly $1.4 billion in the capital improvements, including an upfront $615 million leasehold fee to the Puerto Rican government. The initial investments also cover construction of nearly 118,250 square feet of new retail space.

The consortium noted that "the Puerto Rican government has indicated that it estimates that it will receive over $2.6 billion in revenues and other benefits from the PPP over the life of the lease."

Aerostar added in a press release that "in partnership with the Puerto Rico Ports Authority, ASUR will ensure all existing workers' jobs and benefits will be maintained."

The Puerto Rican government envisions Luis Muņoz Marin as an international hub and therefore required that the winning bidder expand the capacity of the airport, which currently handles over 8.5 million passengers per year and is served by over 14 airlines.

Chico Pardo said recently that his group planned to transform the airport into the best in all of Latin America and restore a direct link between Puerto Rico and Mexico.

Luiz Muņoz Marin currently has two runways measuring 1.9 miles and 1.6 miles in length, respectively, and three passenger terminals.

For Ferrovial, which has had a presence in highway and tunnel projects for years in Puerto Rico through its Ferrovial Agroman unit, the failure to land the concession means the loss of a growth opportunity on the Caribbean island.