radarlove
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Airlines near Midway deal
By Paul Merrion
Feb. 09, 2008
Mayor Richard M. Daley's plan to privatize Midway Airport is gaining altitude.
Airlines operating at Midway say an agreement is near that would allow the city to seek a private operator for the South Side airport, a deal expected to raise up to $3 billion for Chicago's underfunded public pension plans and long-term infrastructure needs.
Under the federal law that allows Midway to be privatized, five of the seven airlines operating there must approve the deal's terms before it can be put out for bid. Southwest Airlines Co. and Delta Air Lines Inc. have tentatively approved it, while officials with AirTran Holdings Inc., ATA Airlines Inc., Frontier Airlines Holdings Inc. and Northwest Airlines Corp. all say a deal is near. A Continental Airlines Inc. spokeswoman says the "process is still ongoing."
The airlines have been seeking assurances from the city that their costs at Midway won't go up dramatically and that the airport's operations and maintenance would not suffer so that a private operator could make a profit.
"We're leaning toward supporting it, just trying to clarify one or two more issues," says a spokesman for Denver-based Frontier. He expects a deal in the next couple of weeks.
While commercially operated airports are common internationally, Midway would be the first major U.S. airport to go private. Until details are final, most of Midway's carriers won't say they have accepted the city's terms. But Delta, whose regional affiliates operate 16 flights a day out of Midway, acknowledged it is already on board, along with Southwest.
Dallas-based Southwest, which has enough flights at Midway to veto the deal, announced its support in November after initial objections led the airline to hire Citibank last March to scrutinize the city's proposal. That spadework also answered many of the questions other airlines had, but it pushed back the city's original goal of closing the deal by late last year.
Six years ago, Delta blocked the proposed privatization of its hometown hub in Atlanta, but "this one's different," a spokeswoman for the airline says. "The proposal they have in place would give us lower, more predictable costs."
A spokeswoman for the city's Office of Budget and Management, which is handling the transaction, says, "We hope to have approval from the airlines soon."
Once the carriers sign off, the city will "almost immediately" issue a request for potential bidders to submit their qualifications, she adds. The process of determining qualified bidders, allowing them to examine Midway's finances and operations and then evaluating their bids is expected to take nine to 12 months.
Despite a global credit crunch, the deal should attract strong interest from multiple bidders.
"Opportunities like Midway come up once in a blue moon, so there's a lot of interest," says Derek Sadubin, chief operating officer of the Centre for Asia Pacific Aviation, a consulting firm in Sydney, Australia, that tracks airport deals around the world. "It's the jewel in the crown."
By Paul Merrion
Feb. 09, 2008
Mayor Richard M. Daley's plan to privatize Midway Airport is gaining altitude.
Airlines operating at Midway say an agreement is near that would allow the city to seek a private operator for the South Side airport, a deal expected to raise up to $3 billion for Chicago's underfunded public pension plans and long-term infrastructure needs.
Under the federal law that allows Midway to be privatized, five of the seven airlines operating there must approve the deal's terms before it can be put out for bid. Southwest Airlines Co. and Delta Air Lines Inc. have tentatively approved it, while officials with AirTran Holdings Inc., ATA Airlines Inc., Frontier Airlines Holdings Inc. and Northwest Airlines Corp. all say a deal is near. A Continental Airlines Inc. spokeswoman says the "process is still ongoing."
The airlines have been seeking assurances from the city that their costs at Midway won't go up dramatically and that the airport's operations and maintenance would not suffer so that a private operator could make a profit.
"We're leaning toward supporting it, just trying to clarify one or two more issues," says a spokesman for Denver-based Frontier. He expects a deal in the next couple of weeks.
While commercially operated airports are common internationally, Midway would be the first major U.S. airport to go private. Until details are final, most of Midway's carriers won't say they have accepted the city's terms. But Delta, whose regional affiliates operate 16 flights a day out of Midway, acknowledged it is already on board, along with Southwest.
Dallas-based Southwest, which has enough flights at Midway to veto the deal, announced its support in November after initial objections led the airline to hire Citibank last March to scrutinize the city's proposal. That spadework also answered many of the questions other airlines had, but it pushed back the city's original goal of closing the deal by late last year.
Six years ago, Delta blocked the proposed privatization of its hometown hub in Atlanta, but "this one's different," a spokeswoman for the airline says. "The proposal they have in place would give us lower, more predictable costs."
A spokeswoman for the city's Office of Budget and Management, which is handling the transaction, says, "We hope to have approval from the airlines soon."
Once the carriers sign off, the city will "almost immediately" issue a request for potential bidders to submit their qualifications, she adds. The process of determining qualified bidders, allowing them to examine Midway's finances and operations and then evaluating their bids is expected to take nine to 12 months.
Despite a global credit crunch, the deal should attract strong interest from multiple bidders.
"Opportunities like Midway come up once in a blue moon, so there's a lot of interest," says Derek Sadubin, chief operating officer of the Centre for Asia Pacific Aviation, a consulting firm in Sydney, Australia, that tracks airport deals around the world. "It's the jewel in the crown."
