Chicago Midway airport moved closer to privatization yesterday when the Chicago City Council voted in favour of the $2.52 billion-lease and redevelopment deal granted to Midway Investment and Development Company.
Next, Chicago will submit to the FAA a final application to privatize its secondary airport with a 99-year lease.
The city says in a statement that it would like to obtain FAA approval this year.
Last week the city selected Midway Investment, a consortium of John Hancock Life Insurance Co., Citi Infrastructure and Vancouver Airport Services, to modernize the 43-gate airport.
Midway Investment will pay $2.52 billion upfront in rent to the city when the deal closes.
The city will use roughly $1.3 billion of the net proceeds of the handover to pay off airport debt and another $1 billion will fund city infrastructure projects and shore up Chicago public employee pension funds. Use of the remaining 10% of the net proceeds has not been determined.
Privatization of Midway has been in the works for years.
Chicago filed a preliminary application with FAA in September 2006 for Midway to be considered for lease under a pilot program at the agency.
In November 2007, Southwest Airlines became the first carrier to endorse the city's plan, which under federal guidelines requires the approval from at least 65% of the airlines serving the airport.
Four of the five airlines now operating at the airport, including AirTran Airways, Delta Air Lines and Northwest Airlines, are formally committed to support the transaction, the city says. With Southwest, these carriers represent 80% of the airlines and more than 95% of the traffic at Midway.
If the deal goes through, Midway will become the second airport to be privatized in the United States.
Previously Stewart International airport was the first privately-run airport in the country.
UK firm National Express Group inked a 99-year, $35 million-lease effective April 2000 for Stewart, about 60m (97km) north of New York City.
The transaction occurred under the FAA's pilot program, that allowed for the sale of five airports.
But the privatization of the Newburgh, New York-based airport did not last. The Port Authority of New York and New Jersey assumed ownership of Stewart in November 2007, paying National Express $78.5 million for the remainder of the lease.