Economy

Lufthansa Technik to build facility in Puerto Rico

SAN JUAN, Puerto Rico (AP) — German company Lufthansa Technik announced Thursday that it had signed a deal with Puerto Rico's government to build a facility for aviation maintenance, repair and overhaul in the U.S. territory.

The facility will be based at the Rafael Hernandez International Airport in the northwest town of Aguadilla and is expected to serve short- and medium-haul aircraft, according to Gov. Alejandro Garcia Padilla.

JetBlue and another unidentified major U.S. client have committed to using the facility, which will be run by Lufthansa Technik Puerto Rico, officials said. The announcement comes as the U.S. territory of 3.6 million people enters its eighth year of recession and struggles with a 15.2 percent unemployment rate, the highest compared with any U.S. state.

"It's a critical contribution as Puerto Rico continues to move its economy forward," U.S. Commerce Secretary Penny Pritzker said in a conference call. Lufthansa pledged to invest $20 million in equipment and other materials as part of a 20-year contract in which it will pay Puerto Rico's government an unidentified amount in yearly rent that will increase every five years, Garcia said. The island's Government Development Bank will issue a loan of up to $40 million for construction costs that it expects to recuperate through rent, Garcia said.

He said he could not specify what type of tax incentives Lufthansa Technik received as part of the deal, which was reached with help from officials with SelectUSA, a federal program to promote economic investment in the United States. The program's executive director, Vinai Thummalapally, said Puerto Rican officials approached his office in March 2013.

"One of our locations was competing against a foreign location," he said, adding that it's the first time his office has worked on a deal with the U.S. territory. Thomas Stueger, a member of Lufthana Technik's executive board, said it's also the first time the company has established that type of operation in the U.S.

"It's been a competitive process that began in early 2013," he said. "It was quite an extensive search." Construction will begin in the next three months, with Lufthansa Technik expected to hire up to 400 employees. The facility will run a total of five overhaul lines, initially operating only two lines for checks on the Airbus A320. The first layover is scheduled for 2015, company officials said.

Lufthansa Technik said it will provide training through one of its subsidiaries in partnership with the University of Puerto Rico and the island's Department of Education.

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