AGP ‘keeps word’ on Puerto Rico airport privatization deal
Saying his administration “will always keep its word and honor its legal responsibilities,” Puerto Rico Gov. Alejandro García-Padilla gave the final go-ahead to the public private partnership through which the government will pass the responsibility of operating and managing the Luis Muñoz Marín airport to a private consortium.
His “blessing” cleared the way for Aerostar Airport Holdings — a consortium comprised by Mexico’s Grupo Aeroportuario del Sureste and Highstar Capital — to take over the airport in exchange for a $615 million upfront payment to the Ports Authority and annual payments during the life of the 40-year contract.
García-Padilla announced his decision during a news conference late in the day, after spending several hours huddled with members of his economic team to discuss the Federal Aviation Administration’s 42-page report recommending the transaction’s approval released early Tuesday.
The initial payment should be transferred electronically to the Government Development Bank’s coffers early today. The GDB will proceed to pay off part of Ports’ burgeoning $1 billion debt, starting with some $60 million it owes Wells Fargo and is due today, as well as secure a $500 million payment for debt related to the airport’s operations due in June, García-Padilla said.
Meanwhile, he conceded that the contract and the FAA’s stipulations met the three criteria he had required to back the deal: job security of airport employees; a ban on airport rate increases; and development of the island’s 10 regional airports, for which $25 million will be set aside from the agreement to cover expenses and capital needs.
“The three conditions I put on the deal were met, but I am keeping a watchful eye,” he said. “It’s a transaction I’m convinced is necessary at this time. It’s necessary.”
Defending his decision
In response to detractors who lambasted him for not rescinding on the lengthy lease agreement with Aerostar, the governor said his position has “been unwavering before and after the elections.”
“I said it then and I’ll say it again now, if it had been my administration back then, we would have handled this much differently,” he said. “We would have used American Recovery and Reinvestment Act funds that we received in 2009 to maintain the airport’s operations and not let it fall apart like it did to the point that now the government has now way to fix it.”
“The situation at Ports aggravates the government’s fiscal situation and doesn’t allow Puerto Rico to establish real, responsible measures to effectively address the issue of the airport without further affecting government coffers,” García-Padilla said.
‘Your jobs are guaranteed’
García-Padilla also stressed that without the financial injection coming from the agreement, Ports would not have the money to pay airport employee salaries or contribute to their retirement accounts. Among other things, the transaction earmarks $50 million to launch an early retirement program that could benefit 224 agency employees.
“If this transaction weren’t to happen we would have no way to pay your salaries or your retirement. Your jobs are guaranteed and now, so are your salaries,” he said, speaking directly to LMM employees, most of which were against the transaction and protested outside La Fortaleza as García-Padilla spoke to reporters inside.
Employees and labor unions will stage another protest at the airport Thursday and have vowed to carry out civil disobedience to defend their stance. For the most part, protestors are unhappy with the government’s decision to “give away the airport to foreigners” and fearful over losing their jobs.
In its report, the FAA took note of Aerostar’s intensions to hire existing Port Authority employees, but the document did not specify how many would be offered jobs.
Committee to scrutinize contract
Meanwhile, García-Padilla said he will create an evaluating committee through an executive order — a requirement included in the lease agreement Aerostar and Ports signed last summer — to review the contract “line by line.”
Ports Executive Director Víctor Suárez; Chief of Staff Ingrid Vila; Carolina Mayor José Aponte Dalmau; House Speaker Jaime Perelló; and Senate President Eduardo Bhatia will compose the committee in charge of the task.
“Through the creation of the evaluating committee, the contract could be rescinded if the leaser defaults,” he said.
Representatives from Aerostar were not available for comment Tuesday, despite multiple attempts by this media outlet to gain their perspective on the FAA’s decision as well as the governor’s.
It will take about six months for the transition process to be completed, so Aerostar should be officially running the airport by August.