Aeromexico files for bankruptcy, third Latin American carrier to restructure

Jul 1, 2020

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Mexico’s largest airline Aeromexico has filed for Chapter 11 bankruptcy in the U.S., joining peers Avianca and LATAM Airlines in restructuring amid the devastating impact of the coronavirus pandemic on the global aviation industry.

The Mexico City-based carrier will continue flying as it restructures its balance sheet through the courts, Aeromexico said late on Tuesday. This includes plans to double the number of flights it offers in Mexico and quadruple the number of flights it offers internationally in July compared to June. Still, schedules will still be down nearly 70% year-over-year, underscoring the broader impact of the pandemic.

Aeromexico’s bankruptcy will not impact its Club Premier loyalty program, the airline said. All points, as well as vouchers and other credits, remain valid.

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“Our industry faces unprecedented challenges due to significant declines in demand for air transportation globally, hence we are committed to taking the necessary measures so that we can operate effectively in this new landscape,” Andres Conesa, CEO of Aeromexico, said in a statement.

From a U.S. perspective, Aeromexico is the third Delta Air Lines partner to restructure, following Virgin Australia and LATAM. Delta owns a 51% stake of Grupo Aeromexico, the Mexican carrier’s parent company, and the two airlines have a joint venture partnership that allows them to coordinate flights between Mexico and the U.S.

Aeromexico called its partnership with Delta “critical” to its business in a court filing on July 1. It plans to maintain all of its agreements, including the joint venture, with the U.S. carrier through the restructuring process.

Delta has yet to comment on Aeromexico’s bankruptcy but has previously said that it stands behind LATAM. However, with both LATAM and Aeromexico, Delta stands to lose hundreds of millions of dollars in equity investments.

Related: Delta Air Lines stands by new partner LATAM, despite bankruptcy

 

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Wedding night? Soon to be joint venture partners, Aeromexico and Delta.

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While airlines around the world have been hit hard by the crisis, few governments in Latin America have stepped up and offered aid to carriers. So far, Brazil is among the few that have offered financial support to its airlines. Elsewhere, bankruptcies have hit two region’s largest carriers, Avianca and LATAM.

Avianca has shut its Peruvian subsidiary and received court approval to return at least 12 aircraft to their leasing firms. LATAM has shut its Argentinian operation and is working to return 24 jets to lessors.

Aeromexico does not have operations outside of Mexico, but may try to shrink its fleet through bankruptcy. The airline and its regional partner Aeromexico Connect flew 119 jets, including 35 Boeing 737-800s and 19 Boeing 787s, at the end of March.

Related: Ultimate Guide to Aeromexico Club Premier

Updated with comment from Aeromexico on importance of its partnership with Delta.

Featured image by Nick Ellis/The Points Guy.

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