Initial Deal Fell Through When Economy Faltered

The FAA will give the city of Chicago more time to find a private company to take responsibility for Midway Airport after the initial deal for privatization ground to a halt along with the stagnant economy.

A consortium of investors led by Citigroup, John Hancock Life Insurance, and a division of Vancouver International Airport was the highest bidder in 2008 to privatize the airport, which was expected to be the first major airport privatization deal in the U.S. The deal called for more than $2.6 billion up front, according to the Crain publication Chicago Business and other media sources. But the deal fell through when the economy tumbled later that year.

The city last week asked the FAA for more time to negotiate with other qualified bidders from that initial bid process, a request the FAA has granted. “The city is in continuing deliberations regarding the completion of the Midway Airport privatization,” the city said in a letter to the FAA. “The pace and direction continues to be dictated by conditions in the global credit and capital markets.”

Chicago officials said they would report back to the agency by April 30th. The city reports that traffic is again growing at Midway, which it hopes will again make it an attractive investment for a private operator.

FMI: www.chicago-mdw.com