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Bloomberg
Grupo Aeromexico SAB is considering a Chapter 11 bankruptcy filing in the US as the coronavirus pandemic ravages the airline industry, said people familiar with the matter.
The Mexican carrier is weighing its options and no final decision has been made, the people said, asking not to be named because the discussions are private. The company is working to coordinate with creditors on a restructuring, and is considering all the alternatives, one person said.
An Aeromexico bankruptcy would be the third in six weeks by a major Latin American airline, after Latam Airlines Group SA and Avianca Holdings SA sought court protection. Passenger traffic in the region fell by 96% in April amid the pandemic, according to the International Air Transport Association. But Latin American governments, unlike their counterparts in the US and Europe, have been reluctant to offer support for airlines.
Aeromexico said it hasn’t initiated or made a decision to initiate restructuring under Chapter 11.
“At this moment, we’re identifying additional sources of financing to strengthen our operative flows,†the company said in a securities filing. “We’re also analysing different alternatives to successfully reach, in the medium and long term, an orderly restructure of our financial commitments without disrupting operations.†Aeromexico is coordinating with unions, creditors and lessors, it said.
Aeromexico is being advised by White & Case LLP and Citigroup, according to business columnist Dario Celis, who reported the potential filing.
Mexican President Andres Manuel Lopez Obrador has repeatedly said he opposes bailouts for companies, leaving Aeromexico with little hope of government support.
The company, with an international network stretching from Europe to Asia as well as the US, was hit earlier by the pandemic than its domestic rivals because of its higher exposure to international flights. Expecting an 80% reduction in capacity, the Mexico City-based airline reduced fixed costs to about $2 million a day, but its indebtedness worsened as earnings fell.
Most of the airline’s fleet —made up of Boeing and Embraer jets — has been grounded since the virus took hold of the region. Some charter flights to and from China to transport medical supplies have helped bring in cash, the company has said.
In April, Aeromexico said its liquidity program was sufficient to meet upcoming bond payments and that it had decided not to manage its financial liabilities through a restructuring.