Implications of the Grupo Aeroportuario Del Pacifo (PAC-NYSE, $65.46) Acquisition of Sangster International Airport Contract.

The cost of $190.5 million, assuming that 100% is funded via debt, will represent about $12 million per year in interest charges.

Donald Sangster Airport is the largest of Jamaica’s airports and the concession will run for a further 18 years. The government of Jamaica, in a report dated November 2014, concluded that the airport fee structure was insufficiently attractive for the prior owner to earn a reasonable return on capital. The conclusion was that international passenger landing charges rise by 121%

http://www.jcaa.gov.jm/NEWS_UPDATES/AirportReview/MBJ-FinalReport.pdf

A fee increase would assure PAC a profitable return on its investment, over the remaining life of the contract.