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Aeromexico Seeks Chapter 11 Bankruptcy Due To COVID-19

Aeromexico Seeks Chapter 11 Bankruptcy Due To COVID-19
Joe Cortez

Aeromexico is the latest airline seeking bankruptcy protection from U.S. courts, due to the COVID-19 pandemic. The SkyTeam-member airline filed for Chapter 11 bankruptcy, with the goal of restructuring and continuing “normal” operations.

The COVID-19 pandemic will force another Latin-American airline to seek bankruptcy protection. In a press release, Aeromexico announced the airline and certain affiliates will file for Chapter 11 bankruptcy in U.S. courts.

Aeromexico Faces “Unprecedented Challenges” From Global Pandemic

The decision to file for bankruptcy is based directly on the lack of flyers purchasing tickets since the novel Coronavirus outbreak began. The airline is hopeful that seeking court protection will allow them to restructure and continue normal business operations.

“Our industry faces unprecedented challenges due to significant declines in demand for air transportation,” Andrés Conesa, CEO of Aeromexico. “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. We expect to utilize the Chapter 11 process to strengthen our financial position, obtain new financing and increase our liquidity, and create a sustainable platform to succeed in an uncertain global economy.”

Under bankruptcy, Aeromexico is hopeful to restructure their debt through debtor-in-possession financing. If successful, the airline says they could have enough liquidity to “meet obligations moving forward.”

Aeromexico explains their plan to emerge from bankruptcy in a six-step infographic.

Infographic courtesy: Aeromexico

Business Operations Unaffected During Bankruptcy

Although the airline is filing for protection, the airline plans to maintain all of their normal business operations as they reset finances. In July, the carrier is planning to double the number of flights within Mexico, while quadrupling international flights. They also expect to meet contractual obligations with other airlines, including joint cooperation agreement partner Delta Air Lines.

According to the airline, all current tickets and reservations will be honored. They will also continue to operate their loyalty program, Premier Points, making all airline points and current vouchers valid and available for use.

As the Mexican carrier adds additional flights, they are also increasing their cleaning procedures to prevent the spread of COVID-19. Aeromexico is performing detailed manual cleaning of aircraft between flights, continually sanitizing of airport facilities, and offering medical exams for airport crews and staff.

With the announcement, Aeromexico is the second Latin-American airline to enter court protection. Colombian carrier Avianca declared bankruptcy in May 2020, citing a loss of revenue from the novel Coronavirus outbreak.

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1 Comment

  1. tkelvin69

    July 4, 2020 at 8:42 am

    They should be out of business with their business practice of refusing refunds from cancellations and charging call center fees to rebook flights THEY cancelled.

    Terrible airline that should not exist.

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