During the last few weeks, several airlines have taken advantage of the United States Bankruptcy Law to avoid their collapse and continue operating after the descent and losses caused by Covid-19.
Aeroméxico
The airline Aeromexico is considered the third Latin American airline that has decided to adhere to the U.S. Bankruptcy Law process after Avianca and Latam Airlines announced the same. This airline is a public company called Aeromexico Group which has active participation in the Mexican stock market; however, approximately 36% of its shares belong to the U.S. airline Delta Airlines.
Bankruptcy Law and Aeromexico
Chapter 11 of the United States Bankruptcy Law is a legal method that provides the option for a company with financial problems to restructure its debt. In addition, during the process, the creditors would receive their payment and the business would continue to operate as discussed in our previous article entitled What is the US Bankruptcy Law that Avianca and Latam have relied on?
Through a statement to the Mexican Stock Exchange (BMV), the CEO of the airline Andres Conesa announced that they have decided to use the advantages of Chapter 11 of the U.S. Bankruptcy Law to maintain and strengthen the financial position of the company, hoping to protect its operations and assets to overcome the negative effects of the Covid-19.
Also, the director of the airline mentioned that even though they are going through a financial restructuring, they are committed to continuing operating on a regular basis, so regular tickets and award tickets that are purchased with miles or points are available; they also announced that they do not plan to make personnel adjustments, for which their employees will continue to receive their salary regularly until the end of their current contracts.
What will the process be like?
By adhering to Chapter 11 and going through the process of legal protection, Aeromexico is planning to have new means of financing, which when combined with the amount of money available from the company, will provide sufficient liquidity for the airline to achieve its future plans and commitments.
In addition, management estimates that by July of this year Aeromexico will be able to double domestic and international flights compared to those scheduled for June, in other words, they announced that by the end of July will have passed the 6,000 flights and will increase as the restrictions of free transit decreed by the various governments is lifted, with it they can add more destinations and increase their operations.
What do you think about this issue? What do you think about Aeromexico’s new strategies?
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