Mexican carrier Aeromexico announced it had started restructuring under Chapter 11 proceedings on Tuesday, making the airline the latest Latin American aviation group to face severe trouble as the global health crisis continues to deal a heavy blow on commercial flight.
Aeromexico classified the Chapter 11 filing as voluntary in a statement, and disclosed it was sticking to its objective of improving passenger operations in the weeks to come.
Aeromexico becomes the third Latin American carrier to file for bankruptcy proceedings, where the pandemic has hit airlines hard more than anywhere else in the globe.
Aeromexico saw the volume of travelers it was servicing drop over 90 percent as airlines were halted by governments and travelers stayed home. In May, the airline signed agreements with labor unions and suppliers to slash costs by over 50 percent to about $50 million per month, while providing unpaid leave for its workers.
Unlike their counterparts in Europe and the United States, Latin American carriers have been granted very limited government assistance even as travel demand plummeted and the pandemic forced countries to shut down their borders.
Latam Airlines SA, the biggest air company in the country, filed for Chapter 11 bankruptcy in May just weeks after Avianca Holdings SA, the largest airline in Colombia.
According to Aeromexico chief executive officer Andres Conesa, the airline industry is hounded by unprecedented challenges as a result of huge drops in demand for air travel. "We're committed to taking the necessary steps so we can effectively operate in the new landscape," Conesa said, as quoted by Michelle Toh and Natalie Gallón of CNN Business. The Aeromexico CEO pointed out that they hope to be very prepared for a successful future when the crisis is over.
Like many carriers, Aeromexico has been forced to cut down the volume of its operations as global demand for commercial flights has nearly collapsed. In the past couple of months, the carrier has parked part of its air fleet, and in March it announced it would start putting back to service its cargo-only flights for the first time.
Aeromexico said that several major carriers around the globe have turned to Chapter 11 to boost their financial situation, and they continue to be stable firms that serve customers across many parts of the world. Thus, filing for bankruptcy is just the right option for Aeromexico, company officials said.
Despite the financial troubles, Aeromexico said it was sticking to its strategy of quadrupling its international operations and doubling local flights this month, as the coronavirus-triggered lockdown measures are loosened. Reservations, ticketing, electronic vouchers and Premier Points remain valid, the carrier said.
