Saturday 21 July 2018

Balfour Beatty joint venture clinches £1.4 billion contract at Los Angeles International Airport

Balfour Beatty is a member of the LAX Integrated Express Solutions (LINXS) joint venture alongside Fluor Corporation, Flatiron West and Dragados USA.

Balfour Beatty has gained a major US contract through a joint venture (PA)
Balfour Beatty has gained a major US contract through a joint venture (PA)

By Kalyeena Makortoff, Press Association City Correspondent

A Balfour Beatty joint venture has clinched a 1.95 billion US dollar (£1.4 billion) contract to build an above-ground transport system at Los Angeles International Airport (LAX).

LAX Integrated Express Solutions (LINXS) – whose members include Balfour Beatty, Fluor Corporation, Flatiron West and Dragados USA – will design, build, finance, operate and maintain a 2.25-mile system that is set to connect the LAX central terminal to a yet-to-be constructed rental car facility, six stations and a vehicle maintenance centre.

The so-called “automated people mover” will operate up to nine trains at a time with moving walkways to the terminals and parking garages.

The project is the first major public-private partnership in the US civil infrastructure market for Balfour Beatty Investments, which is a 27% equity owner in the LINXS joint venture.

Balfour Beatty Group chief executive Leo Quinn said: “This award at LAX, one of the world’s busiest airports, recognises our expertise and track record for delivering critical transportation infrastructure.”

LINXS is also 27% owned by Fluor Enterprises, with 18% held by Hochtief PPP Solutions GmbH, 18% held by ACS Infrastructure Development, and 10% by Bombardier Transportation (Holdings) USA.

Balfour Beatty was one of the firms hit by the recent collapse of construction giant Carillion, having been involved in a separate joint venture with the now failed firm.

The infrastructure group was involved with Carillion on three projects including Aberdeen Western Peripheral Route (AWPR), the A14 in Cambridgeshire and the M60 Junction 8 to M62 Junction 20 scheme.

It warned investors last month that as a result of Carillion’s liquidation, Balfour Beatty was likely to have to pump an extra £35 million to £45 million into those projects in 2018.

The additional financial burden will be booked as an exceptional non-underlying charge in its next set or results, but the company assured it does not have any other financial exposure to the failed business.

Neil Wilson, a senior market analyst at ETX Capital, said the LAX joint venture deal was “good news” for the company and should help the stock “shrug off the cloud of the Carillion mess” which left shares down over 10% last months.

He said: “Despite some setbacks in the share price following the collapse of Carillion, this is yet another sign of the solid progress being made under Leo Quinn and the Build to Last strategy.

“It’s the first major public-private partnership contract win in the US civil infrastructure market – one that could grow significantly in the coming years, particularly if we consider the shape of proposed infrastructure plans.

“The hope is that Donald Trump’s infrastructure spending plan will produce more such contracts for Balfour.

“Existing heavy US exposure means it is well placed to benefit, although it remains unclear exactly what the spending plan will eventually look like.”

Shares in the FTSE 250 firm were up 1.2% or 3.4p at 276.8p in morning trading.

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