1x 1 - Exit Mexico’s $13 Billion Airport

Exit Mexico’s $13 Billion Airport

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1x 1 - Exit Mexico’s $13 Billion Airport

Lopez Obrador ditched an airport project backed by some of the nation’s wealthiest businessmen By Andrea Navarro

What once was a busy construction site, with many thousands of workers building an airport on land the size of Manhattan, is slowly becoming a ghost town since Mexicos’s incoming president, Andres Manuel Lopez Obrador, pulled the plug on the project late last month. Cranes are coming down; teams are packing up. Even though the construction won’t be officially canceled until Dec. 1, when Lopez Obrador takes office, some companies have started preparing for the inevitable. Bloomberg News photographer Brett Gundlock took his third trip to the construction site, where he estimates that only about 25 percent of the workforce remains. Word has it that a holiday party has been moved up to next week—because who knows who will be around to celebrate in December?

1x 1 1 - Exit Mexico’s $13 Billion AirportLopez Obrador had campaigned against the hub, one of Mexico’s biggest infrastructure projects, saying it was a waste of money and rife with graft.

1x 1 2 - Exit Mexico’s $13 Billion Airport

Workers disassembling cranes at the control tower construction site. The incoming government’s decision to cancel the new Mexico City airport in Texcoco is a game-changing event for the Mexican peso, said David Duong, HSBC Senior FX Strategist for Latin America, in a Nov. 6 note.

1x 1 3 - Exit Mexico’s $13 Billion Airport

3000x 1 - Exit Mexico’s $13 Billion AirportA map illustrating the new International Airport of Mexico City (NAICM) and the existing Mexico City International Airport (MEX) hangs at the NAICM project office. The list of potential losers from the cancelation of Mexico City’s $13 billion airport project starts with the nation’s richest man and goes on to include businesses, investors, airlines and passengers.

1x 1 4 - Exit Mexico’s $13 Billion AirportBillionaire Carlos Slim’s construction company is heavily involved in the project. His Grupo Carso teamed up with Empresas ICA and others to build the futuristic terminal designed by renowned British architect Norman Foster in a contract worth close to $4 billion. Carso is also building one of the runways, the whose estimated cost was about $400 million when the contract was awarded.

 

Mexico could end up paying billions of dollars more in borrowing costs after a decision to scrap the capital city’s new partially built airport. Mexico’s airlines—Aeromexico, Volaris and Interjet—have been very vocal about the need to continue constructing the new airport, complaining that the existing Benito Juarez facility is saturated. The overcrowding makes it hard for them to add flights and frequencies. While the incoming president said there were funds available to protect those who had invested in $6 billion of airport bonds, the bigger concern is the impact on investor confidence.

According to Banco Bilbao Vizcaya Argentaria SA, the cost of canceling the new airport could come to as much as $10.5 billion. The project is already 32 percent complete, according to an estimate by the outgoing presidential administration of Enrique Pena Nieto in September, and much of the money for its completion has been raised.

3000x 1 - Exit Mexico’s $13 Billion Airport
3000x 1 - Exit Mexico’s $13 Billion Airport
3000x 1 - Exit Mexico’s $13 Billion Airport
3000x 1 - Exit Mexico’s $13 Billion Airport

 

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