YVR-led consortium wins Chicago Midway deal

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A $2.5bn deal has been struck for the development and operation of the first privatised major airport in Chicago.

An investment group that includes the Vancouver Airport Authority (YVR), Manulife Financial and Citigroup has won the US$2.5bn contract to operate and develop the first privatised major airport in Chicago. The 99-year lease deal for Chicago Midway airport, the city's largest airport after Chicago O'Hare International, is now awaiting approval from Chicago city council and the Federal Aviation Authority (FAA).

The consortium, known as Midway Investment and Development Corp, includes Citigroup's Citi Infrastructure Investors, which is reportedly putting up most of the funding, Vancouver Airport Services, which operates 18 airports in seven countries, and John Hancock Life Insurance Co, a division of Manulife. The group was one of six that submitted responses for a requst for qualifications (RFQ) in March for what at the time was projected as a 50-year lease. The deal was announced following a review by the city of Chicago, along with the six airlines at Midway plus the FAA and Transportation Security Administration.

Citi Infrastructure bought a 50 per cent stake in Vancouver Airport Services earlier this year. Larry Berg, president and CEO of the Vancouver Airport Authority, which owns the other half of Vancouver Airport Services, called the deal a “milestone” in the company’s growth. He said Chicago Midway will be the biggest airport Vancouver Airport Services has in its portfolio, but not its first private one.

Chicago, which has the third-largest metropolitan area in the US, applied two years ago to be part of an FAA pilot programme to privatise up to five airports in the country. The city expects to get more than US$1bn in net proceeds from the deal, with much of that money to be used for infrastructure improvements.

George Casey, president and CEO of Vancouver Airport Services, said the transaction will help the company grow its already large airport network. “In addition, we can continue to partner with British Columbian and Canadian firms exporting know-how, knowledge and best practices. The experience we have in transitioning airports from government control to private sector management will benefit the operation at Chicago Midway Airport,” he said.

Chicago Midway handled more than 19.3m passengers and 304,000 aircraft operations in 2007. Together with O'Hare it serves a population of 10m. Vancouver Airport Services’ airports recorded revenues of $440m and combined passenger traffic totalled 27m last year.