Carlyle to lead $12bn modernisation of New York’s JFK

The Carlyle Group will lead a consortium of private investors financing a $12 billion redevelopment of New York’s John F Kennedy International Airport, according to a plan unveiled by state governor Andrew Cuomo.

Carlyle, a US-based private equity firm, is part of the Terminal One Team chosen by the Port Authority of New York and New Jersey to modernise JFK, one of North America’s busiest airports – hosting 60 million passengers annually. Along with Carlyle, the private investors chosen to finance the project, one of the largest public-private partnerships in the US, include JLC Infrastructure and Ullico, according to a statement.

The consortium also includes airlines operating at JFK’s current terminal one: Air France, Lufthansa, Korean Air and Japan Airlines.

Investors will provide almost all the financing needed to complete the project, while Cuomo said the state government will contribute around $1 billion. It is not yet clear how the investors will structure the PPP with equity and debt.

The plan selected by the Port Authority, after more than a year of weighing proposals, is to consolidate JFK’s six terminals into four, which will feature spacious new facilities and roadways to increase the airport’s passenger capacity, retail shopping areas and streamlined security lines. Terminal One Team’s proposal featured environmental commitments to reduce JFK’s energy use by 30 percent and to use renewable energy for 50 percent of the airport’s needs, with a target of 100 percent renewables use by 2025. The plan also calls for 100 percent composting of organic waste and recycling of inorganic waste.

“Government can master plan, but then give it to the private sector,” Cuomo said. “Let them design it, let them build it, get the best price, incentives for early delivery, sanctions for late delivery, but you get government out of the building and design process.”

Cuomo first unveiled plans to modernise JFK in 2017, which was first billed as a $10 billion proposal. That announcement came on the heels of New York’s first airport PPP, the $4 billion LaGuardia Airport modernisation, which was awarded to a consortium led by French fund manager Meridiam Infrastructure to rebuild the airport’s Central Terminal Building.

In that project, the consortium assumed $2.8 billion of combined debt and equity.

JLC, a fund formed by former basketball player Earvin “Magic” Johnson along with Loop Capital chief executive Jim Reynolds, joined the LaGuardia consortium last year with a $10 million investment.

Carlyle, which is raising the $2.5 billion Global Infrastructure Opportunity Fund, has been circling the airport sector with interest for some time. In a podcast  posted in July 2017, Glenn Youngkin, Carlyle’s president, said airports could be the most promising US infrastructure sector on the horizon.

“There’s an extraordinary amount of investment needed in airports,” Youngkin said. “That’s probably going to be the top prospect for investing in infrastructure over the near term.”

Construction work on JFK’s modernisation is expected to begin in early 2020, with the first new gates expected to be ready by 2023. The entire project is planned to finish by 2025.