Aeromexico is filing for bankruptcy protection in the United States, making it the latest carrier to succumb to the pressures of the economic crisis caused by Covid-19.
The airline said “this legal process will not interrupt the airline’s operations” and that all tickets, reservations and bonus points would continue to be honored.
“Our industry faces unprecedented challenges due to significant declines in demand for air transportation,” CEO Andrés Conesa said in a statement. “We are committed to taking the necessary measures so that we can operate effectively in this new landscape and be well prepared for a successful future when the Covid-19 pandemic is behind us.”
Like many airlines throughout the world, Aeromexico has been squeezed by a decline in travel due to the coronavirus pandemic.
In a statement, Aeromexico wrote that “many leading airlines throughout the world have used Chapter 11 to strengthen their financial position, and they continue to be solid companies that serve passengers across the world now. That is what we intend to do.”
Mexico’s government has refused to bail out large private companies, even those battered by the pandemic.
Over the last few months, the airline has grounded part of its fleet, and it announced in March that it would start operating “cargo-only flights for the first time.”
The company is the latest Latin American carrier to file for Chapter 11 in the United States. In May, Chile’s LATAM and Colombia’s Avianca (AVH) also started bankruptcy proceedings, citing the loss of business from the pandemic.
The company is also hinting at a gradual recovery. As air travel begins to rebound in some countries, Aeromexico will “expand flight service” imminently, with plans to double its domestic flights and quadruple international capacity in July compared to levels from last month, it said.
The airline still faces a tough road ahead. The International Air Transport Authority has estimated that it could take more than three years for international travel to return to pre-crisis levels.
From a U.S. perspective, Aeromexico is the third Delta Air Lines partner to restructure, following Virgin Australia and LATAM.
Delta owns a 51% stake of Grupo Aeromexico, the Mexican carrier’s parent company, and the two airlines have a joint venture partnership that allows them to coordinate flights between Mexico and the U.S.
It is unclear how Aeromexico’s bankruptcy will affect its relationship with Delta. The U.S. carrier has said it stands behind LATAM. However, with both LATAM and Aeromexico, Delta stands to lose hundreds of millions of dollars in equity investments.
Late breaking, Aeromexico filed for Chapter 11 bankruptcy today. Its pre-pandemic maps in April: https://t.co/aWeUqKKiGu pic.twitter.com/naFGm0CQvR— Airline Maps (@airlinemaps) July 1, 2020