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That means passengers in northeast Edmonton are still suffering reduced frequency. Rather than having Metro Line trains weave between the trains running every five minutes on the original Capital Line, city engineers have to re-route one in three northbound trains from Clareview to NAIT.

Thales was supposed to have the system ready for spring 2014, he said. “From the city’s perspective, we have bent over backwards trying to accommodate Thales.”

Issuing a notice of default is a very serious consequence, said Mayor Don Iveson. It gives Thales one more chance to fix the problem.

“If they don’t, then termination would follow,” he said. “We would look to have the alternate (signal system) in place before any proprietary technology is removed.”

Using the old fixed-block technology with red and green lights beside the track is one interim solution, he said. Ultimately, the city might switch to the new system planned for the Valley Line LRT between downtown and Mill Woods. That system runs on train signals connected to the traffic light system, which gives priority to trains without pre-empting the system.

City officials are due before council with an update on those signal options this summer.

But council had to act, said Iveson. Thales repeatedly let the city down and is not living up to the contract. “This is our line in the sand.”

The city has also been withholding $22 million of the $55 million in payment due Thales.

Watch the full news conference