By Juan Pedro Sanchez Zamudio
Aeroméxico Plans for Bankruptcy Exit
In 2020, Aeroméxico voluntarily entered the Chapter 11 process for financial restructuring to be able to face the billionaire debt that reached up to $5 billion.
The Mexican carrier has debts with banking institutions, airport groups, Mexican government entities and suppliers including Boeing. Aeroméxico saw the number of passengers drop by more than 90% as governments suspended flights and travelers stayed home.
Despite being in this process and the situation in the world due to the COVID-19 pandemic, flights were not disrupted. The carrier continued working to get out as soon as possible from the bankruptcy process.
The Mexican flag carrier has known how to strengthen its financial position, as well as protect and preserve its operations and assets and implement the necessary operational adjustments to overcome the crisis. In addition, the Mexican carrier’s history is a success story of a company that managed to get out of a severe financial crisis.
Aeroméxico did not have the support from the Mexican government — unlike airlines from other countries that received funding from their governments. The Mexican airline had to find its own way out. Now, after 20 months of being in the restructuring process, the Mexican airline would be officially leaving the process.
Recently, the airline received approval from a New York Bankruptcy Court to eliminate $1.1 billion debt, by giving Aeroméxico’s stakes to Apollo Global Management. In the end, as in all restructuring processes, many shareholders, including the largest group, will lose a good portion of their capital.
With this Aeroméxico’s shares emission, the carrier’s shareholding composition would be as follows: Apollo will have 22.4%, Delta Airlines will go from 51% to 20%, the Mexican shareholders will have 4.1%, and 53.5% would be between new investors and creditors who capitalize their recognized credits.
In this sense, Aeroméxico will release more than 682 billion new shares that will be paid by capitalizing $3.4 billion in liabilities and injecting $828 million.
At the end of 2021, Aeroméxico transported more than 16.5 million passengers, thus becoming the second airline with the highest number of passengers transported, after Volaris.
Despite this, the company closed in 2021 with 20% below pre-pandemic levels. Aeroméxico plans to recover pre-pandemic levels in 2024.
By the end of 2025, the Mexican carrier plans to mobilize more than 32 million passengers, doubling the number of passengers it transported in 2021. Aeroméxico’s financial restructuring plan also contemplates an addition of 36 aircraft between 2022 and 2024.
In the last couple of months, Aeroméxico’s strategy was to strengthen its presence in the domestic market, as well as to continue contributing to the tourism reactivation in the main cities in the country.