covid-19." data-reactid="32">(Bloomberg) – Grupo Aeroméxico (AEROMEX), the second largest airline in Mexico, filed for Chapter 11 bankruptcy in the US, joining a series of Latin American airlines that have requested judicial protection before the serious crisis in the travel sector caused by the covid-19 pandemic.
COVID-19 y crear una plataforma sustentable para el futuro”." data-reactid="33">With the Chapter 11 process, the operator “hopes to strengthen our financial position and increase our liquidity,” he said in a statement issued Tuesday to the Mexican stock market. Aeroméxico said its objective is “to use the Chapter 11 process to strengthen its financial position and implement the necessary operational adjustments to face the impact of COVID-19 and create a sustainable platform for the future.”
Aeroméxico’s passenger volume plummeted more than 90% as governments suspended flights and travelers stayed home. The airline reached agreements with labor groups and suppliers in May to cut costs by more than half, to around $ 50 million a month, and offered its employees unpaid vacations.
coronavirus. La mayor aerolínea de la región, Latam Airlines, se acogió al Capítulo 11 de la legislación de bancarrota en mayo semanas después de la misma medida por parte de Avianca Holdings, la mayor aerolínea de Colombia." data-reactid="35">Latin American airlines, unlike operators in the US and Europe, have received little support from governments despite the collapse in travel demand and the closure of the borders due to the coronavirus. The region’s largest airline, Latam Airlines, filed for Chapter 11 bankruptcy in May weeks after the same move by Avianca Holdings, Colombia’s largest airline.
Aeroméxico operates national as well as international routes to the United States, Canada, Europe and Asia, among other destinations. Delta Air Lines (DAL). it is its largest shareholder.
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Aeromexico check-in area at Benito Juarez International Airport in Mexico City. Photo: PEDRO PARDO / AFP via Getty Images.
Manhattan court
The application filed with a federal bankruptcy court in Manhattan lists assets and liabilities of between $ 1 billion and $ 10 billion and more than 100,000 creditors.
The company said in the request that it had been evaluating alternatives to improve its financial position after the impact of the crisis that affects all airlines worldwide.
The airline’s available cash and court approval to file for Chapter 11 will provide enough liquidity to meet future obligations in an orderly manner, Aeroméxico said. Existing tickets and reservations remain valid.
No bailouts
At the beginning of the crisis, Mexican President Andrés Manuel López Obrador ruled out bailouts for large companies. But even before the health crisis, Aeroméxico was under the impact of increased competition that reduced its market share.
S&P Global Ratings further downgraded the group’s rating within the trash range in May, citing the possible prolonged impact of the pandemic on the air travel sector. The rating agency said there was a high risk that containment measures would be maintained for a longer period than expected, delaying the recovery in Aeroméxico operations. This could cause the company’s indicators to weaken further in the next two years, the ratings agency said in a statement.
Aeroméxico issued five-year debt for US $ 400 million with a 7% return in early 2020, which gave it some liquidity before the travel crisis hit. Those bonds have lost value since then.
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