In Mexico City Mud, Pena Nieto’s $13 Billion Airport Project Bogs Down

  • A series of mishaps at new airport may weigh on 2018 election
  • Replacing overcrowded hub has been key promise for president

Outside Mexico City, on a muddy stretch of land about the size of Manhattan, plans to build a shiny, new airport at a breakneck pace are at risk of unraveling.

A rail line designed to ferry materials is late. So is one of the runways. A key contractor filed for bankruptcy, the project coordinator sued the airport operators and a bridge linking up to a highway collapsed in last week’s earthquake.

A truck pours gravel during construction on the grounds of the New International Airport of Mexico City in April.

Photographer: Susana Gonzalez/Bloomberg

Anyone who’s ever worked on a construction site -- especially a major public works one in Latin America -- will attest that mishaps and delays are all part of the job. But in the case of the New International Airport of Mexico City, the constant stream of troubles could come with some pretty hefty consequences for President Enrique Pena Nieto.

Replacing the nation’s grossly overcrowded main airport has been a key promise during Pena Nieto’s six-year term. Further delays to the $13 billion airport would be a stain on his record that goes beyond just hurting the chances of the next guy running on his party’s ticket. The left-leaning opponent who wants to take Pena Nieto’s place has vowed to scrap the project altogether.

“The new airport is the most important infrastructure project of this administration,” said Alejandro Schtulmann of political risk consultancy Empra in Mexico City. “And although it won’t be finished before his administration ends, it will always be attributed to Pena Nieto.”

The new facility is being built to handle as many as 68 million passengers a year by 2020 and includes a futuristic terminal designed by architect and Pritzker Prize winner Norman Foster and Fernando Romero, the son-in-law of billionaire Carlos Slim. The entire airport will be housed in a single X-shaped glass-and-steel structure that will collect and recycle rainwater and take advantage of natural light to boost sustainability.

In its first stage, it’ll have two main runways, with a third, back-up landing lane designated for military use. A second stage is planned to be completed in 2062.

“It’s a new master plan, extremely innovative in heat, natural ventilation and with great architectural quality,” Romero said in an interview from Kiev, Ukraine. “It’ll be an extraordinary achievement for the country to build that airport.”

Workers carry drainage tubes on the grounds of the New International Airport of Mexico City in April.

Photographer: Susana Gonzalez/Bloomberg

But the airport is up against an ambitious timeline if it wants to accelerate the pace in time for the 2018 presidential elections and wrap up work by 2020. It won’t be easy. The site sits atop an old waterlogged lake bed that requires some major engineering might to tame.

Tezontle Paving

Before work could even begin, the 12,400-acre parcel had to be paved with tezontle, a reddish volcanic rock. The runways will need three more coats, plus two layers of basalt, that will sink about two meters into the ground, squeezing out whatever water is left in the soggy earth so that the runways are strong enough to absorb the impact of landing planes day after day.

Headaches exist beyond the geologically thorny terrain. A railway that was supposed to be the main vein for transporting heavy materials was held up by land disputes and then heavy rain, forcing traffic onto adjacent truck routes and tearing up the roads. The line is due to start operating next month, more than a year behind schedule. The No. 3 runway is also a few months late, a delay that could potentially stall the inauguration of the whole project if it doesn’t clear safety tests and certifications in time.

Despite the setback, the group behind the project said it’s still operating with the 2020 deadline in sight. “We work every single day to meet the goals established in our Master Plan so the project is finished on time and in form,” spokesman Octavio Mayen said in an email.

A visitor views a model replica of a terminal of the New International Airport of Mexico City in April.

Photographer: Susana Gonzalez/Bloomberg

That may turn out to be overly “optimistic,” said Bijan Vasigh, an aeronautics expert and professor of economics and finance at Embry-Riddle Aeronautical University in Daytona Beach, Florida.

“When you have a lake, a river, and you’re building on top of it, it’s very difficult,” he said. “Somehow, they’ve tried to minimize the potential problems that may happen in the future. Or they don’t really know what could happen.”

Andres Manuel Lopez Obrador, the left-leaning and outspoken candidate in next year’s presidential election, thinks the project is too big a risk. He has called the entire thing too expensive and probably corrupt. While he hasn’t provided any evidence to back up those claims, he said he’s ready to scrap it anyway.

He’d rather solve Mexico’s overcrowded airport problem by building two new runways at a military base 30 miles away and then connecting the two facilities, although he hasn’t given more details on how that would work.

Major Blow

Communications and Transportation Minister Gerardo Ruiz Esparza has said canceling the project would be a major blow to the nation’s finances given that credit lines would have to be paid up.

The new airport is being funded by a mix of public and private funds, including bank loans and international bond sales. The yield on the $1 billion bond due 2046 has dropped almost 1.2 percentage point since peaking at 6.48 percent in December.

Interest and principal on the bonds are being paid back using a fee on passengers traveling through Mexico City’s current airport.

The airport group plans to issue at as much as $4 billion in debt if market conditions are right, spokesman Mayen said. The sale is part of a plan to offer as much as $6 billion in bonds, with the rest of the financing coming from the federal budget.

Renderings are displayed at an exhibition room on the grounds of the New International Airport of Mexico City.

Photographer: Susana Gonzalez/Bloomberg

For Hector Ovalle, director of Grupo Coconal, a company that is building runway No. 2, the months ahead won’t be easy but he’s certain his company can overcome the geological hurdles and tight timeline to deliver what was promised.

“We have a 67-year construction history on our backs,” he said. “Building up a reputation has cost us a lot of work and it only takes one day, one sinkhole, to destroy it. We don’t just build things, we build them right.”

— With assistance by Kateryna Choursina

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