Mexico walks back faster bond payoff for canceled airport

By Kylie Madry

MEXICO CITY (Reuters) – The Mexican government is no longer planning on moving up the timeline to pay off some $4.2 billion in outstanding bonds issued to finance a partly built airport on the outskirts of Mexico City that was later canceled, a senior transport official said on Friday.

The canceled Texcoco project was meant to alleviate pressure at the capital’s decades-old airport, but shortly after he was elected in 2018, President Andres Manuel Lopez Obrador ordered construction on the new facility halted, blasting it as too expensive and stained by corruption.

His government initially paid off around $1.8 billion of the $6 billion in bonds issued to finance the ill-fated Texcoco airport, and now plans to stick with the established payback plan for the long-term bonds.

“The finance ministry asked for everything to stay the same, so that’s what’s going to happen,” Deputy Transportation Minister Rogelio Jimenez Pons told reporters.

Jimenez had previously said that the finance ministry was considering an earlier payback schedule, as the funds used to pay off the bonds for the canceled airport currently come from a usage tax generated by the existing Mexico City International Airport (AICM).

The Navy will soon take over the AICM and a handful of other airports currently run by the transportation ministry, and Jimenez had said the AICM would be turned over to military administration without the bond payback burden.

“Everything will be paid back in the same way. It stays the same,” stressed Jimenez.

Once the Navy runs the AICM, which Jimenez said he expects to happen later this year, it may decide to renegotiate a buyback with the finance ministry, he added.

Lopez Obrador opened the farther-away Felipe Angeles International Airport (AIFA) last year as an alternative to the Texcoco airport on an active military base.

Through his administration, the president has increasingly turned aviation activities over to the armed forces.