THE LARGEST AIR CARRIER OF MEXICO IS GOING BANKRUPT

Mexican airline Aeromexico filed for bankruptcy in the court of the United States. A financial restructuring procedure may allow the company to continue to operate under judicial control, being protected from the risk of persecution by creditors. Now the company will seek new concessional financing necessary to fulfill the future obligations.   

As it was noted by the CEO of Aeromexico Group, the main reason for the impending bankruptcy was the COVID-19 pandemic. Analysts suggest that the size of the losses of Mexican airlines from the pandemic could be about $ 8 billion. 

Although the company's management is full of optimism and intends to increase the volume of international traffic by 4 times, June turned out to be a month of complete failure for Aeromexico.

In a statement sent to the Mexican Stock Exchange, the country's largest airline explained that, despite the upcoming process, it would maintain its operations in accordance with its obligations. The company’s planes will continue to fly maintaining the adopted epidemiological safety measures. All tickets, reservations, electronic vouchers and bonus points remain valid in accordance with current conditions.

The reason for the direct appeal to the court was the collapse of the airline’s shares, which occurred against the backdrop of information on a 90% decrease in the passenger traffic in April and May, as well as the difficulties in containing the pandemic and the economic uncertainty.

On Monday, Aeromexico announced the approval of financial support in the amount of $ 100 million from the Canadian company Aimia.

As a result, the shares of the company closed at 5.82 pesos on Tuesday, having showed a slight decrease of 0.51% compared with the previous day.

We should recall that Aeromexico is the third largest airline in Latin America (after LATAM and Avianca), which resorted to bankruptcy. According to the report made by the IATA (International Air Transport Association) experts, the number of flights in the region decreased by 93% by the end of May, resulting in losses of $ 18 billion. According to the IATA estimates, Latin American airlines will need up to three years to resume the number of flights and attract the number of passengers that existed before the crisis.