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Cash-strapped Aeroméxico rejects bankruptcy option

written by Sandy Milne | June 22, 2020
Aeromexico Boeing 737-300, pictured at LAX (Aeromexico).

Mexican flag carrier Aeroméxico has assured shareholders that it has no plans to file for Chapter 11 bankruptcy, following reports in local media that suggest the airline is tossing up the move.

On Friday, El Financiero reported that the airline had appointed financial advisers to help with bankruptcy proceedings, and was “following exactly the same steps” taken by Avianca and LATAM. The column’s author, Dario Celis, said that “the process to restructure debts is underway”.

In the hours to follow Aeroméxico shares slumped 5.4 per cent, causing the company to hit back at the suggestions.

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In a statement also posted Friday, the airline did say that “it has not initiated, nor has it made the decision to initiate, a restructuring procedure under Chapter 11 of the United States Bankruptcy Code”.

“We are currently identifying additional sources of financing to strengthen operating cash flows,” it adds. ”We are also analysing different alternatives to successfully achieve, in the short and medium term, an orderly restructuring of financial commitments, without affecting or disrupting operations.”

Aeroméxico has suffered losses of around US$100 million in the first quarter of 2020, as a result of the coronavirus pandemic. Like airlines in most other Latin American countries, it not received support from the central government – a point the IATA has been highly critical of.

Year-on-year passenger numbers were down 92.4 per cent in May for the airline, according to Reuters.

Mounting financial pressures caused two other regional giants, Chile’s LATAM and Colombia’s Avianca, to fold, with the latter filing for bankruptcy last month.

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