Bloomberg News

Chicago Midway Plan Draws Interest From Ferrovial, GIP

February 07, 2013

The leasing of Chicago’s Midway International Airport is drawing investor interest from Global Infrastructure Partners LP to Ferrovial SA, London Heathrow’s biggest shareholder, as privatization efforts advance.

Responses to a request for qualification of interest in the airport are due this month, Amit Rikhy, vice president for business development at Vantage Airport Group, said at an event in London today. Vantage, which was the preferred bidder in an auction in 2008 before financing failed, is evaluating the project, Rikhy said.

The leasing plan for Midway is part of a wider U.S. Federal Aviation Administration pilot program to privatize airports and spur infrastructure investment. Midway follows a leasing agreement for Puerto Rico’s Luis Munoz Marin International Airport last year and could precede a plan to privatize New York LaGuardia airport.

Global Infrastructure will also look at the plan, Michael McGhee, a partner at the New York-based private equity firm, also said at the TFI-News European Transport Finance Forum in London today. The firm also owns London City and Gatwick airports in the U.K.

“I suspect the degree of competition for the asset will be intense,” said McGhee. “We will certainly look at it.”

Investment Opportunities

Midway “is attractive to us,” Gonzalo Velasco, corporate development officer at Ferrovial’s airport unit, said at the forum. Ferrovial, which was forced to sell Edinburgh, Stansted and Gatwick airports in the U.K. by antitrust regulators, is now looking at investment opportunities, he said, with North America an area of interest.

Raising funding to purchase the lease shouldn’t be an obstacle, said Deepu Chintamaneni, vice president at Industry Funds Management.

“There is enough liquidity in the market for high quality infrastructure assets,” said Chintamaneni, at the event today.

The Melbourne-based fund became an investor in Manchester Airports Group, which agreed to buy Stansted airport last month.

Chicago Mayor Rahm Emanuel said in December that a leasing of Midway airport would be explored providing the transaction would benefit taxpayers and travelers. Emanuel last month set up a panel to ensure transparency of the process. The lease would be for about 40 years.

‘Southwest Model’

Southwest Airlines Co (LUV:US)., the biggest low-fare carrier, dominates the volume of flights at Midway.

“One really has to buy the Southwest model” to bid, Rikhy said. The large union representation of Chicago’s workforce also could complicate the transition to private ownership, he added.

Midway was dedicated in 1927 and handled about 19.5 million passengers in 2012, 3.4 percent over the year prior, according to the Chicago Department of Aviation’s website. In comparison, 66.8 million passengers traveled through O’Hare during the same period.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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