The progress on the multi-billion-dollar people mover project at Los Angeles International Airport faced yet another setback last week when Fitch Ratings affirmed the speculative-grade BB-plus rating on California Municipal Finance Authority’s $1.2 billion senior lien revenue bonds. This affirmation came as the project’s completion date was extended by another six months, adding to the series of challenges that have plagued the initiative. The project, led by LAX Integrated Express Solutions (LINXS), has been a part of the $5.5 billion Landside Access Modernization Program aimed at providing a crucial connection to the regional transit rail system.
Despite being 96% complete, the people mover project still requires a year of testing before it can become operational. Fitch analysts highlighted concerns over ongoing negotiations between LINXS and the Los Angeles World Airport (LAWA) for schedule relief and cost compensation claims, emphasizing the potential risks if agreements are not reached promptly. The delay in the project’s opening from June to April 2025 further exacerbated funding concerns, with Fitch warning about the tight timeline between the construction deadline and the longstop date set by the lenders. Failure to meet this deadline could lead to complications in releasing construction funds, potentially jeopardizing the project’s progress.
The current Passenger Service Agreement (PSA) date of October 30, 2025, extends beyond both the lenders’ and concession agreement longstop dates, raising the specter of default under the financing documents and concession agreement. However, ongoing discussions between LINXS and LAWA on schedule relief claims offer a glimmer of hope in avoiding default risks. The technical advisor’s certification of the PSA date occurring before the lenders’ longstop date acts as a critical condition for drawing on the design-build loan, providing some respite amid the prevailing uncertainties. LINXS’ commitment to leveraging sponsor equity contributions earlier than scheduled reflects an effort to ensure timely payments to the design-build contractor, thus averting potential defaults on contractual obligations.
Once operational, the people mover project is expected to demonstrate a strong revenue-paying capacity, supported by well-defined operating standards and the backing of a reliable grantor. Fitch Ratings underlined the importance of resolving schedule relief claims and adhering to funding commitments to enhance the project’s credit profile. The affirmation of the speculative-grade rating, coupled with the negative outlook, underscores the need for proactive measures to address existing challenges and mitigate risks associated with the delayed completion timeline. As the project navigates through these hurdles, stakeholders must work collaboratively to uphold financial viability and operational efficiency, ensuring the long-term success of the people mover initiative at Los Angeles International Airport.