So close, yet so far.
The long-delayed $3.3 billion SkyLink automated people mover project at Los Angeles International Airport is 99.6% complete, according to a recent bond rating service report. All that’s left is the train and system testing and the finalization of interagency agreements.
But the project in recent weeks has become entangled in a legal morass, as the contractor consortium filed suit against the agency running the airport. What’s more, credit rating agency Fitch Ratings Inc., in a recent downgrade report on bonds issued by the contractor consortium, noted the prospect of consequences for missed deadlines.
All of this could mean yet more delays for the beleaguered train system. There is even a remote possibility that it might not be operating in time for the 2028 Summer Olympic and Paralympic Games, a prospect that was unthinkable a year or two ago.
“We have placed the project back onto our watch list of troubled municipal projects,” said Matt Fabian, president of Municipal Market Analytics, a Bradenton, Florida-based municipal bond market and credit analysis firm.
Easing access to LAX
The 2.25-mile automated people mover system, recently dubbed SkyLink, is designed to provide an alternative to using the often-congested central terminal loop to pick up and drop off air passengers.
SkyLink has six stations: three in the central terminal area, one next to the economy parking lot and ground transportation center, a station that connects to the Metro C and K line trains and the final station at the consolidated rent-a-car facility near the 405 Freeway. Trains are expected to run every two minutes during peak times and will take about 10 minutes to travel one way along the route.
Construction on what was originally supposed to be a $1.9 billion project began in 2019, with a target completion date of 2023. However, the project has faced repeated delays and disputes that have driven up the cost to $3.34 billion and push back completion.
In the last three years, there has been a series of disputes between Los Angeles World Airports, the city agency overseeing LAX, and the construction consortium tasked with building the rail system. The consortium, known as LAX Integrated Express Solutions, or LINXS, now has four main contractors: Fluor Corp. (based in Irving, Texas), Balfour Beatty (London), Grupo ACS (Madrid) with its Atlanta-based subsidiary Flatiron/Dragados, and Alstom S.A. (Saint-Ouen-sur-Seine, France).
In 2024, LAWA agreed to pay LINXS $550 million in a global settlement that was supposed to resolve disputed costs dating back to the start of construction.
New dispute leads to lawsuit
But in 2025, according to LAist, came problems with a power metering cabinet that needed additional repairs. Then came a power loss to the system for more than three months, setting back train testing. LAist reported that the $36 million repair cost is at the center of a new dispute that has so far eluded resolution.
On July 9, LINXS filed a breach-of-contract lawsuit in Los Angeles Superior Court against Los Angeles World Airports, alleging that LAWA concealed facts and altered conceptual drawings in an attempt to shift the blame for delays to LINXS.
LAWA declined to comment on the lawsuit.
However, in an April interview with the Business Journal, LAWA Chief Executive John Ackerman said, “This is a complicated project with many companies involved and it’s not unusual for disputes to come up.”
Ackerman added, “We’re disappointed that we’ve had to wait this long on this train. But we are doing our best to get through this and we are laser-focused on getting that train safely into operation.”
Fitch Ratings downgrade
On July 21, New York-based Fitch Ratings issued a rating report on $1.2 billion worth of bonds that were issued in 2018 on behalf of the contractor consortium LINXS shortly after LAWA awarded the contract to the consortium but before main phase construction started the following year. The bonds were downgraded from BB+ (the highest tier in the “junk bond” or speculative investment category) to BB, deeper into junk bond territory.
Fitch also placed the bonds on “negative watch,” which signals the possibility of further downgrades.
In its report, Fitch called attention to two upcoming “longstop dates” in the fourth quarter. A longstop date is the final deadline by which the issuer must complete a specific obligation. These bonds have two longstop dates: a lender’s longstop date of Oct. 8 – just six weeks from now – and a project longstop date of Dec. 8.
The lender’s longstop date is the deadline by which regulatory approvals, third-party consents, loan documentation and other conditions must be completed. The project longstop date is the deadline by which the project is deemed 100% complete – in this case, ready to take on passengers.
Breaching either of these deadlines puts the project in a state of technical default on the bonds, Fabian said.
He noted that technical default is not the same as a full or payment default, where bond payments are missed. Technical default simply means that one or more conditions stipulated in the bond agreement are not met by the given deadlines. He added that a technical default can be cited as a reason for moving to switch contractors.
In the report, Fitch noted that the project was 99.6% complete but still undergoing system demonstration, with other items outstanding — including utilities interconnection agreements — needed to achieve Passenger Service Availability.
Fitch’s commentary attributed the downgrade to the shrinking cushion before the longstop dates, pointing to project delays and growing discord between LAWA and LINXS over unresolved claims — even though both sides remain financially motivated to finish the job.
The credit rating agency warned that missing either deadline could trigger a technical default, and while both parties have publicly reaffirmed their commitment to completing the project, Fitch noted the recent litigation as a sign of the strained relationship. “This leaves the project in a precarious position with a limited margin of safety before it could breach the lenders’ longstop of Oct. 8, 2026, and the project longstop date of Dec. 8, 2026,” the commentary said.
Reaction from SkyLink developers
In response to Business Journal questions about the ratings downgrade, Los Angeles World Airports issued a statement.
“At this time, LAWA does not intend to comment on matters related to private financing arrangements, lender discussions, contractual milestones, or rating agency decisions involving the LINXS consortium,” according to the statement. “Our focus remains on the safe, reliable, and successful delivery of SkyLink, including completion of testing, safety verification, and regulatory approval processes. We will continue to provide updates regarding project progress and milestones when appropriate.”
Attempts to reach the contractor consortium LINXS were unsuccessful. LINXS as an entity has no spokesperson. That’s not unusual for contractors on major projects as they tend to defer media calls for comment to their clients. Calls to spokespeople at one of the constituent companies, Fluor, were not returned.
Risk of having to switch contractors
Given that construction of the SkyLink people mover project is 99.6% complete, Fabian of Municipal Market Analytics said it is “extremely unlikely” that LINXS would be replaced as the construction contractor if the Dec. 8 project longstop date is not met.
But Fabian said there is a significant chance that LINXS could be replaced as the operations and maintenance contractor once the SkyLink system is certified as ready for passengers, though he said it is still more likely than not that LINXS would continue in this role.
“If there is a settlement that comes out of this, it’s conceivable that it could involve the currently stipulated operator of the system being replaced by another operator,” Fabian said, noting that the operations and management portion of the contract is 25 years in length. He cited the current state of discord between LAWA and LINXS.
“While there is a tendency to think that LAWA might make the move to terminate that portion of the contract, there’s also the possibility that LINXS might not want to operate and maintain the system once it’s complete given the current state of relations between it and LAWA,” he said.
If it was decided that LINXS would not operate and maintain the SkyLink people mover system, getting another operator to take over would take several months, he said. Under that scenario, the deadline to have the SkyLink system smoothly shuttling airport passengers in advance of the 2028 Summer Olympic and Paralympic Games would loom very large, with only a few months of wriggle room.
As a result, Fabian said, LAWA would be at a disadvantage should it have to seek another operating team for the SkyLink system.
“Look, there’s no question that there are other operators of rail systems out there who could take this on,” he said. “But given the deadline here of the Olympics, the longer this drags out, the more LAWA would have to pay to get another operator.”
But Fabian believes in the end, LAWA and LINXS will once again iron out their disputes and that LINXS would remain on board for the operations and maintenance phase, calling that outcome “more likely than not.” The operations and management portion of the contract carries lower risk of failure than the design-build portion and therefore has a higher chance of delivering returns for LINXS investors, he said.
“Both sides have the incentive to settle as they have done in the past,” he said. “The airport authority is a bit over the barrel because of the Olympics deadline. But LINXS as the contractor also has 10 years of sunk costs put into this project,” which includes the bidding process and pre-construction work.
“LINXS investors will be looking for their reward, which would only come with system operation,” Fabian said.
