LOS ANGELES, CA – Fitch Ratings has lowered its rating on the debt financing the Automated People Mover at Los Angeles International Airport to B- from BB, citing the near certainty that the contractor will not have the train carrying passengers by a Dec. 8 deadline, according to a Fitch report issued this week.
The downgrade comes about four months after the previous rating action and pushes the project’s debt further into junk territory. Fitch said the rating reflects the expectation that the contractor, LINXS (LAX Integrated Express Solutions), will miss the Dec. 8 date, which the rating agency described as a long-stop date for the 2.25-mile train.
Fitch said missing the date would amount to a technical event of default. It said that event could give either LINXS or Los Angeles World Airports, known as LAWA, the right to issue project termination notices.
A Fitch analyst described the downgrade as an uncommon action of severity. He said the agency had believed there was a fair amount of cushion for LAWA and LINXS to settle their disputes, or for LINXS to show the trains can run safely in a reliability test.
LAWA officials had no immediate comment on the downgrade Thursday, Nov. 12.
Dec. 8 date and the 120-day buffer
Fitch said the Dec. 8 date does not by itself end the contract. A 120-day buffer period follows the date, giving both sides time to settle issues before either can move to terminate.
The analyst said that after the date passes, the question becomes whether both sides still want to work together or decide to find a way to separate.
According to initial reports, bondholders earlier agreed to move the key deadline from Oct. 8 to Dec. 8. Fitch also estimates that LINXS’s remaining cash resources will be fully depleted by mid-2027, according to initial reports.
The rated debt is $1.2 billion in senior revenue bonds that finance the project.
Contractor says train will not be ready until February 2027
The contractor has said the train will not be ready until February 2027, or even later. A LINXS spokesperson said in a statement Thursday that the consortium “remains committed to working with LAWA to successfully deliver the Automated People Mover and provide a world-class transportation system for the Los Angeles region.” LINXS declined to comment beyond the statement.
Mayor Karen Bass said in late October that she felt very confident the train would be running by the end of the year or in January. She said one of the contracted firms would otherwise face very severe financial consequences.
LAWA has said that no opening date can be confirmed until LINXS completes its final testing.
Testing requirement and unresolved issues
Officials describe the project as 99% complete, but several issues remain open. Agreements to implement solar energy on the project have not been signed with the city’s water and power departments, according to initial reports.
The cause of technical problems with the train is still under investigation, according to a recent report from the contractor’s technical advisor.
For the train to carry passengers, it must complete 30 consecutive days of testing without substantial issues. It must also receive sign-off from LAWA and an outside assessor. That 30-day testing period has repeatedly restarted.
Dispute between LAWA and LINXS
LINXS and airport officials have been at odds for months. LINXS filed a complaint against the city over the summer blaming the airport for the delays. Last month, LAWA disputed multiple claims the contractor made in its monthly brief on the project.
Meetings between chief executives of the contractor, airport officials and others, which began last year, stopped in August.
What the SkyLink project includes
The $3.3 billion train was initially slated to open in 2023. It is now about three years behind schedule and more than $1 billion over its original construction budget.
LAWA’s SkyLink project page describes the Automated People Mover as a 2.25-mile elevated guideway with six stations, three inside the Central Terminal Area and three outside. The page says the LINXS Joint Venture is comprised of “Fluor, Balfour Beatty, Dragados USA, Flatiron, HOCHTIEFF PPP Solutions, HDR, HNTB, Alstom (train manufacturer and operator).”
When it opens, the train is meant to shuttle travelers between terminals, parking lots, the LAX/Metro Transit Center and a new rideshare lot. The train is the centerpiece of the airport’s $30 billion overhaul.
Council has sought a report on delays
The delays have drawn attention at City Hall. In June, Councilwoman Monica Rodriguez introduced a motion in Council File 26-0954 dated June 26, asking LAWA to report on the delays and cost overruns of the people mover.
Dec. 8 date and testing remain pending
The Dec. 8 date is the next milestone for the project, and the 120-day buffer period begins after it. The train has not completed the 30-day testing period, and LAWA has not confirmed an opening date.
