Aeromexico CEO says company must ‘transform’ as shares sink after bankruptcy filing
July 1, 2020
By Noe Torres and Raul Cortes Fernandez
MEXICO CITY (Reuters) – Mexican airline Aeromexico will offer fewer flights and have fewer planes in the short term as it begins a Chapter 11 restructuring process, Chief Executive Andres Conesa said on Wednesday, after shares plummeted to record lows.
Shares in Aeromexico <AEROMEX.MX> fell another 28.5% on Wednesday, after plunging as much as 65.7% after it said late on Tuesday it had begun Chapter 11 proceedings. Mexico’s stock exchange briefly suspended trading in the shares.
Aeromexico is the third airline to file for bankruptcy protection in Latin America, where carriers have been hit harder by the coronavirus crisis than anywhere else worldwide.
Speaking on Mexican radio, Conesa said Aeromexico’s business model is valid but that the company needed to adjust its size. The fact that 30% of its fleet is self-owned would help the carrier obtain liquidity, he added.
“We had a very healthy Aeromexico, but the impact of this crisis has been so significant that you need to transform,” Conesa told Radio Formula. “We have to prepare ourselves for the worst-case scenario, and that’s what we’re doing.”
The hit from the pandemic has been much sharper than the company originally anticipated, he added.
The company’s stock slumped to 2.00 pesos in the morning before closing at 4.17 pesos.
Unions representing the Mexican airline industry on Wednesday expressed support for Aeromexico’s Chapter 11 restructuring process.
Mexican rival Interjet has also been struggling under the burden of coronavirus-imposed travel and tourism restrictions, as has the entire industry.
Mexican aviation has had its fair share of ups and downs.
Mexicana airlines, formerly one of Mexico’s two largest airlines, was forced to ground flights due to a heavy debt load. It was declared bankrupt in 2014.
U.S. carrier Delta Air Lines <DAL.N> holds a 49% stake in Aeromexico.
(Reporting by Noe Torres and Raul Cortes Fernandez; Writing by Anthony Esposito and Julia Love; editing by Jonathan Oatis and Bill Berkrot)