• Tom Jordan

Aeromexico files for Chapter 11 Bankruptcy

One of Aeromexico's 787 Dreamliners being pushed back at Tokyo Narita. Photo by Ernest Leung | AeroNewsX

Mexico's largest airline and flag carrier Aeromexico has today filed for Chapter 11 Bankruptcy proceedings in the USA, which the airline relates to "unprecedented challenges facing the aviation industry."

Aeromexico was founded in 1934 with a single Stinson Reliant piston aircraft and began a rapid expansion after World War II with the help of US airline giant Pan Am which owned a 25% stake in the airline. In 1959, the airline was nationalised by the Mexican Government and soon began adding its first jet aircraft, the Douglas DC-8, to its fleet. In 2000, Aeromexico joined the world airline stage by becoming a founding member of the global SkyTeam alliance, along with Delta Air Lines and Air France. In 2007, the airline passed into private hands once again whilst preparing to modernise its ageing widebody fleet of Boeing 767s and Boeing 777s with brand-new Boeing 787 Dreamliners. The latter have become the backbone of the airline's long haul fleet. The airline also placed a landmark order for 90 Boeing 737 MAX aircraft which strengthened its plans to operate one of the most modern and simplified airline fleets in Latin America.

However, like the vast majority of airlines around the world, Aeromexico has struggled through the Coronavirus pandemic which heavily affected Mexican airlines that were forced to cease almost all flights for several weeks while the country was placed in lockdown. This issue, as well as the ongoing one of Aeromexico's Boeing 737 MAX 8 aircraft, has pushed the airline's financial situation to a unhealthy low.

Today, the airline announced it was looking to rectify its financial issues by filing for Chapter 11 Bankruptcy Protection through the US Federal Court. According to Aeromexico CEO Andres Conesa, "Our industry faces unprecedented challenges due to significant declines in demand for air transportation." He also stated that the airline was taking these strong measures in order to ensure Aeromexico would remain viable as Mexico's national carrier for the future.

Despite filing for bankruptcy protection, CEO Conesa strongly emphasised the airline's operations would continue as normal, with passengers continuing to fly and employees continuing to be paid as they always have. Aeromexico also plans to continue increase its flight schedule as air travel rebounds from an all-time low during the COVID-19 pandemic.

The airline also stated today that it would double its domestic capacity throughout Mexico and quadruple its international flight capacity in July compared to its operations in the month of June. But in spite of the significant increases to its schedule during July, Aeromexico will only be operating at 70% of its pre-COVID 19 capacity on domestic and international routes.

Aeromexico is the third airline in the Latin American region to file for Chapter 11 Bankruptcy Protection in the USA. Today's announcement follows the individual announcements by Colombia based Avianca Group and Chile based LATAM Group to file for restructuring of their businesses. Changes at Avianca and LATAM, however, have been more radical with LATAM opting to close its Argentine subsidiary and return up to 24 aircraft to their lessors, while Avianca closed its Peruvian subsidiary Avianca Peru last month.

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