Flights at Chicago Midway International Airport will continue to take off as usual, but a multibillion-dollar deal to privatize the airport will remain grounded, at least until the U.S. economy refuels. The sale, valued at $2.52 billion and set up for a 99-year lease, was scheduled for signatures on April 6, but Midway Investment and Development Co., a joint venture of Citi Infrastructure Investors, John Hancock Life Insurance Co. and Vancouver Airport Services, failed to come up with the capital needed to close the deal. MIDCo finally broke talks with the city in late April after it was granted a two-week deadline extension amid negotiations to delay the deal for even longer, up to six months.

Chicago city officials say the global recession is to blame. The credit crunch “has created serious challenges for many businesses and financial institutions, including those involved in this transaction,” says Gene Saffold, the city’s chief financial officer. He adds that Chicago may put the airport lease out to bid again “when financial market conditions improve.”

The city is still a winner, as MIDCo loses $126 million in earnest money to get out of the deal. Chicago obtained bids from five other firms, but officials say it is not now interested in reaching out to the others to complete the sale. “Offering the airport competitively again would ensure the highest possible return for Chicago taxpayers,” says Peter Scales, a spokesman for the city’s Dept. of Budget and Management. “Simply taking the second bid would not necessarily ensure the best result.”

Rather, Midway plans to weather the economic storm. “The liquidity crunch could have the same adverse effect on any other team at this time, and they could run into the same financial hurdles,” Scales says. Chicago has refused to disclose the values of the other bids, but industry insiders peg the next-highest offer, from Macquarie, at about $700 million less than MIDCo’s.