By Hadeel Al Sayegh and Davide Barbuscia

DUBAI, Oct 7 (Reuters)Just over six years ago, Dubai-listed Arabtec Holding ARTC.DU had investors eating out of its hands.

At a lavish shareholder meeting at Abu Dhabi’s St. Regis Hotel, the contractor that helped build the world’s tallest skyscraper, Dubai’s Burj Khalifa, outlined plans for listings in London, Hong Kong and New York.

Those plans never materialised. After capital injections between 2013 and 2017, management changes, layoffs and rounds of restructurings, Arabtec’s shareholders, which include Abu Dhabi state fund Mubadala, decided last week that the Gulf’s largest listed contractor should file for insolvency.

Arabtec had around $2.75 billion in total liabilities at the end of June, including almost $500 million in bank borrowing.

The liquidation, likely to lead to further layoffs in a company which had a 40,000 strong workforce at the end of last year, marks the end of an era of plentiful construction for local contractors.

“A great company that is 45 years old disappeared off the face of the earth. I find it extremely sad that an iconic company like that disappeared,” Ziad Makhzoumi, chief financial officer of Arabtec from September 2008 to March 2013, told Reuters.

The coronavirus, low oil prices and production cuts have battered the Gulf economies this year, but the collapse of construction giants like Arabtec and engineering group Drake & Scull International in the United Arab Emirates has deeper roots.

Industry sources, analysts, and bankers point to an unsustainable business model used by some contracting firms in the region.

They undercut competitors on pricing and sometimes cost a project at a discount to win a tender in the hopes of making a profit through additional work when it starts running.

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It’s a model that works on the premise that supply

Experts say it will probably take years for such activities as air travel to return to normal. Meanwhile, governments will still have to figure out how to shore up aging infrastructure, alleviate traffic congestion, support mass transit and accommodate the flying public.

The Maryland Department of Transportation has proposed slashing nearly $3 billion from its six-year capital budget. The cuts include delaying $900 million in road projects and postponing construction of a $500 million baggage-handling system and terminal connection at Baltimore-Washington International Marshall Airport. The state also plans to temporarily scrap some service for commuter buses and MARC commuter trains, which have ridership hovering at about 10 percent of normal.

“Everything has been hit across our system,” Maryland Transportation Secretary Gregory Slater said. “We have to find the least amount of impact to people, but people will see and feel some of this.”

Slater said his agency is trying to avoid layoffs by scaling back in other areas. For example, roads that typically would get a new layer of asphalt might instead just have potholes patched. Road crews will mow less often.

“I think people are already starting to see grass getting a little bit longer or less litter cleanup,” Slater said.

Nationwide, 18 states and 25 localities have recently canceled or delayed transportation projects valued at $10.9 billion, according to the American Road & Transportation Builders Association (ARTBA).

With most governors having declared construction to be essential during the pandemic, many states took advantage of unusually light traffic during stay-at-home orders to step up paving and other work. But much of the work that continued in the spring and early summer fell under contracts signed in the one or two years before the pandemic.

Alison Black, ARTBA’s chief economist, said she was struck by a decline in new contracts