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Puerto Rico seeks to privatize Luis Munoz Marin airport

San Juan – Puerto Rico is seeking permission to privatize operations at its main airport under a federal program meant to finance aviation improvements, officials said.

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San Juan – Puerto Rico is seeking permission to privatize operations at its main airport under a federal program meant to finance aviation improvements, officials said. But the island wants the money to cope with a budget crisis, not renovate in its airport.

The government could receive at least $1 billion for letting a private company run Luis Munoz Marin airport in the capital, according to Alvaro Pilar, executive director of the port authority that runs the airport.

Officials have requested an exemption to Federal Aviation Administration rules so they can use the money to help rescue the island’s flailing economy, he said.

“We need to cover the deficit,” Pilar said.

Puerto Rico is trying to whittle down a $3.2 billion deficit as it battles a 15.9 percent unemployment rate, higher than any U.S. state. The government has dismissed more than 8,000 state workers this year, and 12,000 more layoffs are planned for next year.

The FAA has 30 days to review Puerto Rico’s preliminary application, which was submitted Wednesday, spokeswoman Marcia Alexander-Adams said.

Louisiana and Illinois are already participating in the privatization program, though officials have not yet found an investor for New Orleans’ Louis Armstrong Airport, and Chicago is trying to find a new investor for Midway Airport after a first attempt that failed when the U.S. financial markets crashed.

The FAA allows applicants to request that funds be used for purposes other than airport improvements, but that would require the backing of 65 percent of the airlines serving Puerto Rico, which include American, US Airways, JetBlue and Northwest.

If approved, part of the money would be used to reduce the Port Authority’s $800 million debt, Pilar said. It also would be used for projects such as renovating cruise ship piers in San Juan’s colonial district to accommodate larger ships.

“Right now, we have no way to pay for new projects,” he said. “We’re trapped.”

The Port Authority would still own the airport, but a private company would run the facility and collect its revenue. Once Puerto Rico has identified an investor, it has to submit a final application to the FAA for review.

Privatization remains a touchy subject in this U.S. Caribbean territory, where residents organized large, violent protests when the government privatized the health system and the telephone company in the 1990s.

Puerto Rico’s international airport had 4.6 million passenger boardings in 2008 and employs some 300 workers.

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