Skylink debt rating falls to B- as December 8 deadline looms

The financial status of the Los Angeles International Airport people mover worsened this week. Fitch Ratings downgraded the project's $1.2 billion in bonds from BB to B-. This move places the debt four notches deeper into junk bond territory. The rating agency cited the high likelihood that the train will not be operational by December 8.

The downgrade reflects concerns that the city's airport department may default on the debt. Fitch analyst Seth Lehman described the action as uncommon in severity. He noted that the agency previously believed there was enough cushion for the contractor and the airport to resolve disputes. That buffer has now diminished.

The contractor, LINXS, has already stated the train will not be ready until February 2027 or later. A spokesperson for the consortium said LINXS remains committed to working with Los Angeles World Airports. The goal is to deliver an automated people mover for the Los Angeles region. LINXS declined to provide further comment.

Los Angeles World Airports officials did not offer an immediate comment on the new rating. The December 8 deadline is critical. While the airport or contractor can terminate the contract at that point, a 120-day buffering period exists. This grace period allows time to settle issues before final decisions are made.

Lehman said the question after the buffer period will be whether both parties continue working together or seek separation. Tensions have been high. LINXS filed a complaint against the city over the summer, blaming the airport for delays. Last month, the airport disputed multiple claims made by the contractor in a monthly project brief. Meetings between chief executives that began last year stopped in August.

The project is reported to be 99% complete, yet unresolved issues remain. Agreements for solar energy have not been signed with the city's water and power departments. Technical problems with the train are still under investigation. To run, the train must undergo 30 days of consecutive testing without substantial issues. It also requires sign-off from the airport and an outside assessor. The testing period has restarted multiple times.

The $3.3 billion train is a key part of the airport's $30 billion overhaul. It was originally scheduled to open in 2023, ahead of major sporting events. The project is now three years behind schedule and more than $1 billion over its original construction budget. When it opens, the train will move travelers between terminals, parking lots, the transit center, and a new rideshare lot.

Lehman noted that many major airports operate similar systems, making the delays at LAX confusing. He observed that each time a path toward opening appears, a setback follows. The next major step is the December 8 deadline, which will trigger the start of the 120-day buffering period.