Mexico's state-owned airline is facing a hefty lawsuit for at least $841 million over alleged breaches of contract.
A Mexicana 737-800 in Tijuana (Photo: Aquintero82, CC0, via Wikimedia Commons)
Mexico’s state-owned airline, Mexicana, is facing a major legal hurdle. On Wednesday, a Texas-based company, SAT Aero Holdings, filed a lawsuit in a Manhattan federal court. The lawsuit seeks at least $841 million in damages for alleged breaches of contract that crippled their efforts to help launch the airline.
Per a Reuters report, SAT claims they were hired by the Mexican government in 2023 to provide a critical array of services to get Mexicana off the ground. These services included securing aircraft and necessary insurance, along with recruiting and training qualified pilots and crew members. However, the lawsuit paints a stark picture of how Mexicana’s alleged actions hindered this critical partnership.
According to SAT, Mexicana repeatedly undermined their efforts from the very beginning. The lawsuit details several specific breaches of contract. One critical allegation is that Mexicana failed to pay a minimum of $5.5 million in deposits for leased aircraft.
This initial financial hurdle significantly hampered SAT’s ability to secure the necessary aircraft for Mexicana’s launch, hindering the airline’s operational setup. Furthermore, the lawsuit alleges that Mexicana refused to sign crucial documents required for the airline’s operations. These documents could have been essential for securing landing rights and establishing flight schedules, potentially causing significant disruptions for Mexicana’s early operations.
SAT also accuses Mexicana of actively poaching pilots and crew members they had specifically recruited to assist with the launch. This alleged poaching of personnel could have significantly impacted Mexicana’s ability to function smoothly in its early stages, potentially causing delays and safety concerns.
SAT argues that these alleged breaches significantly hampered their ability to fulfill their contractual obligations and ultimately hindered Mexicana’s launch. They are seeking $838.5 million in damages to compensate for the alleged lost revenue and wasted efforts incurred during their partnership. In addition to the core contractual damages, SAT is also seeking compensation for over $2.4 million in “out-of-pocket” costs they claim to have accrued during their work with Mexicana.
The lawsuit comes amidst Mexicana’s ongoing struggle to establish itself in the Mexican aviation market. Launched in late 2023, the airline was intended to be a more affordable alternative to established carriers like Aeroméxico. However, the company initially faced difficulties acquiring aircraft, starting operations with a limited fleet of leased and military planes. President López Obrador recently announced plans for Mexicana to purchase 20 new aircraft by October 2024.
SAT said it agreed with Mexicana that contract disputes could be addressed in New York courts under that state’s law. Mexicana, which has not yet responded to the lawsuit, could face significant financial strain if the court rules in favor of SAT. The legal battle is expected to be lengthy and complex, and the court’s decision will have a major impact on the future of Mexico’s state-owned airline.
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