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Balfour Beatty wins share of $2bn LAX airport shuttle contract
Balfour Beatty has won a share worth around £420m of a huge contract to design and build an 'automated people mover' at Los Angeles International airport.
The LINXS joint venture, in which Balfour has a 30% stake, was awarded the $1.95bn (£1.4bn) contract to construct the above-ground shuttle system connecting the LAX central terminal area to a new rental car facility as well as six stations and a vehicle maintenance building. As well as nine shuttle trains, the system includes moving walkways to the terminals and parking garages.
LINXS also won the contract to finance, operate and maintain the people-moving system, with the infrastructure construction specialist's investment arm having a 27% stake in this side of the contract. This is Balfour Beatty Investments' first major public-private partnership in the US civil infrastructure market.
Leo Quinn, Balfour's chief executive, said: "This award at LAX, one of the world's busiest airports, recognises our expertise and track record for delivering critical transportation infrastructure."
The FTSE 250 company has seen its shares suffer in recent weeks due to its connection to collapsed contractor Carillion, with which it was involved in two joint ventures.
Balfour, Carillion and Galliford Try worked together the troubled £550m Aberdeen Western highway contract and Balfour Beatty was also partner with Carillion on the A14 in Cambridgeshire and the M60 Junction 8 to M62 Junction 20 scheme.
Balfour last month revealed its cash impact from these JVs would be an outflow of £35-45m in 2018 as it continued to work to meet the commitments of the contracts.
In December, Balfour sold off two chunks of its stake in Connect Plus, the company which operates the M25 orbital motorway, for £103m and £62m in order to pay down debt.
BBY shares were up 1.2% to 276.77p in early trading after the LAX contract award on Friday.
The contract award "should help the stock shrug off the cloud of the Carillion mess that has left the shares down more than 10% in the last month", said analyst Neil Wilson at ETX Capital.
"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."