The lengthy, ongoing circumstances and challenges from the Covid-19 pandemic are evolving and continue to be at large as new…
Interjet Cancels All Flights Through 2020
Mexican low-cost carrier (LCC) Interjet has notified its employees that it will not be operating any flights for the remainder of 2020. The airline’s operations are shut down from Dec. 18 through the end of Dec. 31, and sources close to the airline’s finances have mentioned to local news sources that the Mexican LCC may never resume operations.
Prior to this announcement, Interjet’s flights were already grounded for several days, and dozens of its flights have been canceled over the past two months. The airline doesn’t have the funds to pay for jet fuel and its employees are now owed over three months of unpaid wages and benefits. At present, the airline owes nearly six months’ worth of social security employee contributions, $131.3 million in unpaid fuel bills and $151.4 million in unpaid taxes. The airline made promises to pay back the government and its former and present employees earlier this year, but it has failed to keep its word.
Interjet has sought investors to acquire its shares and rescue the airline from its pending bankruptcy. It originally found two local investors who agreed to acquire 90% of the airline’s shares, leaving the original owners, the Alemán family, with only a 10% stake in the airline. However, one of those investors has already pulled out.
Earlier this week, the International Air Transport Association (IATA) further removed Interjet from its association. The association first removed it from its clearing house in late April, but this week suspended the airline’s participation in its billing and settlement plan, no longer allowing its network of affiliated travel agents to sell or issue the airline’s tickets.
Although the airline was already facing financial problems prior to COVID-19, the airline was at the time Mexico’s third-largest airline after Aeromexico and Volaris. At its operating peak between January and February of this year, the LCC was operating several flights from its bases in Mexico City, Guadalajara, Monterrey and Cancun to destinations across the U.S., Canada, Guatemala, El Salvador, Costa Rica, Cuba, Peru and Colombia. The airline suspended all international flights on March 24. According to Mexico City’s airport authority, the airline now only operates limited flights, approximately 18 daily flights, to the domestic destinations of Mexico City, Guadalajara, Monterrey, Cancun, Merida and Los Cabos.
Earlier this year due to COVID-19’s impact on travel demand, Mexico’s flag carrier Aeromexico became the third airline in Latin America — after Avianca and LATAM — to file for Chapter 11 bankruptcy protection in the U.S. With Mexico’s lack of travel restrictions both domestically and internationally, however, travel demand has improved significantly. Both Aeromexico and Volaris are now racing to fill the gap left by Interjet, and both airlines have increased flight frequencies and resumed services significantly at their hubs since August.
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