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An Aeromexico 737-800 departs from LAX (Photo: AirlineGeeks | William Derrickson)

Aeromexico Chooses Chapter 11 Restructuring as COVID Battle Rages On

Aeromexico parent group, Grupo AeroMexico SAB., has voluntarily opted to further its restructuring via the Chapter 11 bankruptcy process, the company reported on Tuesday. This comes as other Latin American carriers struggle to restructure themselves in the wake of the COVID-19 epidemic.

Aeromexico has faced competition from rising names such as InterJet and Volaris, who have risen in the wake of Mexicana’s bankruptcy in 2010. However, those carriers have now joined AeroMexico in the struggle to reduce excessive spending as travel declined. InterJet has also shown the devastation of coronavirus on aviation, utilizing just a handful of Sukhoi Superjets after starting 2020 with a fleet of over 75 Airbus A320 family and Sukhoi Superjets.

Meanwhile, Mexico’s largest carrier Volaris has seen its route map over halved as a result of the virus. The airline began the year with 200 destinations but has diminished those numbers down to just 70.

But for the longest active Mexican airline, the goal is to restructure itself to survive the economic crisis.

Aeromexico has had a rough time with the coronavirus as an aircraft grounding by the government, a 90% drop in commercial traffic and a lack of a bailout from the government has forced the airline to look for desperate ways to cut spending. The airline has reworked multiple outsourcing contracts and cut staff as a way to reduce spending in response.

The carrier did land a $100 million backing from Canadian company Aimia Incorporated on Monday. This deal allowed the airline to immediately gain access to half the cash infusion for the brand in the short-term. However, the airline had already been considering the process of restructuring through the United States bankruptcy courts since mid-June.

Talking about the issues facing Aeromexico, the airline’s CEO Andres Conesa said, “The COVID-19 pandemic has had an unprecedented impact on the world economy and the travel industry. Today, more than ever, being able to adapt quickly to meet the needs of travelers in an uncertain environment is essential. We are committed to taking the necessary steps to secure our future by voluntarily entering the Chapter 11 process to become stronger and more resilient.”

 

In a statement on its official website, the airline noted that airlines will occasionally use the Chapter 11 process in the United States to strengthen their financial outlook in a legally supervised environment.

For now, flights will not be disrupted by the restructuring and the airline plans to add capacity in July. The airline’s Tweet and statement have been emblazoned with the phrase and hashtag ‘Seguimos y seguiremos volando’ which translates to ‘We keep on and we will keep on flying.’

Ian McMurtry
Ian McMurtry
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