Amid New Delay Dispute, LAX APM Project Files Formal Claim

In late October, the concessionaire for the LAX Automated People Mover (APM) project filed a formal claim for two cost and schedule relief events against the project’s public sponsor, Los Angeles World Airports (LAWA). The claim sheds new light on the cause of recent delays and disputes on the project, which is nearly complete. It is also a sign that the concessionaire and public sponsor for the APM project are back at loggerheads, just over a year after they negotiated a global settlement for the project’s previous set of cost and schedule claims.

That settlement, which set a new delivery date for the project in late 2025, was a sign that the project team had turned over a new leaf for the final year of the construction timeline, which mostly consisted of a rigorous testing schedule prior to handoff.

The project’s current reporting estimates a Passenger Service Availability (PSA) date in May 2026 instead. According to a recent report by the Lender Technical Advisor for the project’s debt, the formal claim filing in October was requested by LAWA as a precursor to further negotiations over the relief events included. LAWA will now have 60 days to respond or negotiate before litigation over the claim can be filed.

According to the project’s concession agreement, the formal claim process and litigation are the next steps to resolving a claim dispute if one of the parties rejects the findings of a third-party evaluator, or “project neutral.” The project neutral for the project held a hearing on the two relief events covered by the claim earlier this year and issued decisions in August. LAWA rejected both of the decisions and did not participate in the hearing.

The formal claim covers two relief events on the project, one of which led to significant delays in the PSA date earlier this year. That is relief event 212, which covers some repairs ordered by LAWA for some equipment in a power metering cabinet that the project handed over to the Los Angeles Department of Water and Power (LADWP) back in 2022. The repairs were directed after an inspection found moisture and debris damage to the equipment in February. The repairs required partial power shutdown of the system and thus significant delays to the project’s testing schedule.

The other relief event covered by the claim is 213, which is to remove a large amount of “noncompliance points” that LAWA gave LINXS earlier this year after claiming that the concessionaire’s January and February “recovery schedules” were not contractually compliant.

The delays and formal claim come just a year after the project’s global settlement in July 2024. That settlement resolved a series of outstanding schedule claims extended the project’s completion date past the lender’s longstop date. The delays led ratings agencies to downgrade the project’s debt amid what appeared to be a straining relationship between the project sponsor and concessionaire. The settlement was not only a resolution of the outstanding claims, but it appeared to be a sign that the partnership could move forward to complete the project more constructively. The settlement also reportedly created a new escalation process so issues could be raised before significant schedule impacts. According to project reports, the earned value progress at the time of the settlement was approaching 98%.

The LAX APM project will deliver a 2.25-mile rail system providing an automated transit connection between LAX’s terminals, the airport’s new consolidated rental car facility, and LA Metro’s broader transit network via transfer to the C and K lines. The project was procured as a DBFOM P3 and started in 2018. A key objective was to complete the project well ahead of the 2028 Summer Olympics and 2026 FIFA World Cup, but several delays have pushed the project’s completion date dangerously close to the latter event.

LINXS is a joint-venture between Fluor Enterprises, Balfour Beatty, Hochtief PPP Solutions, ACS Infrastructure Development, and Bombardier Transportation. The design-build team for the project includes Fluor, Balfour Beatty, Flatiron and Dragados. The lead design firm for the project is HDR Engineering. The project’s financing included $1.2 billion in senior-lien Private Activity Bonds as well as $400 million in commercial bank loans and $200 million in subordinate-lien revenue bonds.

Resolving Relief Events

The concession agreement for the LAX APM project has a process to resolve disputes over relief events through an independent third-party evaluation. The formal claim filing from LINXS revealed that LAWA not only rejected the findings of the third-party evaluator for these two claims, but didn’t even participate in the dispute resolution process.

The main source of the project’s recent delays is the electrical repair work the subject of relief event 212. According to the independent third-party evaluator’s report, LINXS installed metering equipment in an electrical cabinet for one of the project’s Traction Power Systems, located in the project’s maintenance and storage facility, and turned the equipment over to LADWP back in 2022. A joint inspection in February found “tracking” damage to the equipment in the cabinet caused by moisture and debris. According to the independent evaluator report, LINXS electrical subcontractor concluded that the seals in the cabinet were intact and that the damage was due to a lack of proper maintenance.

The dispute covered by relief event 212 is over who was responsible for maintaining the power equipment in the cabinet in the years after LINXS handed it over to LADWP. LAWA contends that LINXS was responsible and ordered the contractor to repair the equipment. LINXS objected to the claim that it was responsible for the equipment but conducted the repairs and reserved the commercial claim. Still, the power equipment repairs required months of delays to the system’s testing schedule.

Relief event 213 has to do with a dispute over a “recovery schedule” requirement in the LAX APM concession. According to the third-party evaluator’s report the concession agreement requires LINXS to submit a “recovery schedule” should the forecasted PSA date for the project be more than 14 days late. The concessionaire submitted monthly recovery schedules in December 2024 and January and February of this year. In March and then April, however, LAWA rejected the January and February recovery schedules and informed LINXS that it would be awarding daily noncompliance points. A total of 340 noncompliance points were awarded before mid-April, when LAWA informed LINXS that it would pause adding more noncompliance points. According to the independent evaluator’s report, just 400 noncompliance points would have been cause for a developer default under the project concession agreement. LINXS’s relief event 213 claims that the noncompliance points were wrongfully assessed and seeks to remove them.

The independent evaluator agreed with LINXS’s position on both relief events. For the electrical system repairs, it concluded that the work warranted a change order as well as schedule relief for the testing delays that occurred as a result of the repairs. It concluded that the noncompliance points under relief event 213 should be invalid.

With LAWA’s rejection of the independent evaluator’s decisions, and the formal claim filed, the current LAX APM dispute will either be resolved via negotiation or litigation.