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Aerostar Expenditures at Helm of LMM Airport Reach $937 Million

By on March 2, 2016

SAN JUAN – Three years after being handed the reins of the Luis Muñoz Marín International Airport (call sign: SJU) in Carolina, part of a public-private partnership (P3) deal, airport operator Aerostar Airport Holdings has spent $937.4 million in remodeling and modernizing SJU, Aerostar President Agustín Arellano said on Wednesday.

Out of the total expenditures incurred by the company, $205 million went directly into the first stage of remodeling work at the airport, Arellano noted. Meanwhile, about $615 were spent to pay off existing debt, $450 million of which was allocated to settle the debt of the Puerto Rico Ports Authority, the government agency that was formerly in charge of the airport.

The bulk of remodeling work at SJU, which was completed late last year, consisted of a full-blown renovation of Terminals B and C, as well as the airport’s central lobby, with minor work also being carried out at Terminal A, which houses the JetBlue gates. The remodeling has created some 400 direct jobs and 2,500 indirect jobs, Arellano added.

In 2014, as part of the process, Aerostar moved the operations of United, Delta, US Airways, Southwest and Copa, to Terminal D, where American Airlines and Seaborne were also located. The company also moved smaller airliners such as Cape Air, Liat, Tradewind Aviation and Vieques Air Link to Terminal A. It has since moved most of the airlines back to their original locales.

When it comes to Terminal A, Aerostar execs found design flaws in the structure from early on, despite the terminal being one of the most modern facilities at the airport. To fix its shortcomings, Aerostar removed elevator bays and escalators to open up the lobby and optimize the flow of passengers from the check-in counter to the security inspection areas, while in the waiting area, commercial locals where moved to the sides to free up space.

At the Terminal B gates, 22 new boarding hallways were bought at a bulk cost of $11 million. The baggage-management section was also significantly overhauled, and is currently one of the most modern in the U.S. with the capacity to manage up to 7,200 pieces of luggage an hour, Arellano said.

Arellano took issue with various recent reports in local media outlets highlighting some of the alleged difficulties the company has faced regarding its debt with the Puerto Rico Electric Power Authority (Prepa). In late February, both parties culminated a claims process of their differences in the airport’s electric-energy consumption by during the period of February 2013 to December 2015. As a result, Aerostar paid $22.7 million for the exclusive electricity consumption in areas leased by the company at the international airport.

He also fired back at reports that the company has increased operational costs for airport tenants. “Some have singled out that we have increased the rent, and that is wrong,” Arellano added. “Aerostar does not collect rent; it is instead a participant in the business. Government entities such as Ports usually rent out their facilities; Aerostar operates under a different business model in that we become partners with every service providers. We help them succeed so that in turn we can also succeed.”

Aerostar, a Puerto Rico-based joint venture of Highstar Capital and Grupo Aeroportuario del Sureste, the latter of which operates the Cancún airport and eight other airports in southeastern México, was tapped by the Puerto Rico government to run SJU under a 40-year public-private partnership (P3) deal that took effect in early 2013. The P3 deal calls for Aerostar to invest nearly $1.4 billion over the life of the lease to transform the airport into a world-class gateway.

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