The $3.34 billion train system that's supposed to end the traffic nightmare at LAX is nearly finished. Whether it opens before the 2028 Olympics is now an open question.

LAX's SkyLink automated people mover is 99.6% complete, with rail cars already running test laps on the 2.25-mile elevated guideway. But a breach-of-contract lawsuit filed July 9 by the project's contractor consortium, a further Fitch Ratings downgrade deeper into junk territory on July 21 and two fast-approaching deadlines in October and December have put the project's timeline in serious jeopardy, according to LA Business Journal reporting published Aug. 24.

"Both sides have the incentive to settle as they have done in the past," Matt Fabian, president of Municipal Market Analytics, told the Business Journal. "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."

What happened

The contractor consortium building SkyLink, known as LAX Integrated Express Solutions (LINXS), filed suit in Los Angeles Superior Court against Los Angeles World Airports, the city agency that runs LAX. LINXS alleges LAWA concealed facts and altered conceptual drawings to shift blame for delays. The dispute centers on a $36 million repair cost tied to a power metering cabinet failure that knocked out system power for more than three months.

Twelve days later, Fitch Ratings downgraded $1.2 billion in bonds issued in 2018 by the California Municipal Finance Authority on behalf of LINXS from BB+ to BB. Fitch also placed the bonds on "negative watch," signaling possible further downgrades.

The deadlines

Two "longstop dates" now loom. The lender's longstop date of Oct. 8 requires all regulatory approvals, third-party consents and loan documentation to be completed. The project longstop date of Dec. 8 requires SkyLink to be 100% complete and ready for passengers. Breaching either deadline triggers a technical default on the bonds.

Technical default is not the same as missing a payment. It means conditions in the bond agreement haven't been met, and it can be cited as grounds to replace the contractor.

Fabian said it is "extremely unlikely" LINXS would be replaced as the construction contractor given the project is 99.6% done. But he said there is a "significant chance" LINXS could lose the 25-year operations and maintenance contract once the system is certified for passengers.

Municipal Market Analytics placed SkyLink back on its watch list of troubled municipal projects.

A long, expensive road

Construction began in 2019 with a $1.9 billion budget and a 2023 target completion. Costs have since ballooned to $3.34 billion. In 2024, LAWA paid LINXS $550 million in a global settlement to resolve years of disputed costs.

A 2024-25 L.A. County Civil Grand Jury investigated more than $880 million in change orders paid to LINXS and found the contractor was largely to blame for delays, concluding that LINXS "leveraged the change order process by implicitly holding out the threat of prolonged litigation to force LAWA to agree to the change orders."

SkyLink already missed its target of opening before the 2026 FIFA World Cup this summer. L.A. City Councilmember Monica Rodriguez introduced a motion, which passed, requiring LAWA to report back on the repeated delays, according to the Los Angeles Times.

LAWA's response

LAWA chief executive John Ackerman said in an April interview that the agency is "laser-focused on getting that train safely into operation." In response to questions about the Fitch downgrade, LAWA issued a statement declining to comment on matters related to private financing arrangements, lender discussions, contractual milestones or rating agency decisions involving LINXS.

When complete, SkyLink's six stations will connect terminals to the Metro C and K lines, a consolidated rental car center near the 405 Freeway, parking lots and the rideshare pickup area. Trains are expected to run every two minutes during peak hours, covering the full route in about 10 minutes.

The Oct. 8 lender deadline arrives in six weeks. Extensive 30-day testing and operational reviews must still be completed before SkyLink can carry its first passenger.