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Mexicana Seeks to Resolve ‘Critical’ Financial Ills (Correct)
(Corrects spelling of union leader’s first name in seventh paragraph of article originally published July 30.)
Grupo Mexicana de Aviacion, Mexico’s biggest airline by passengers, said its financial situation is “critical” and the company will present shareholders with proposals to keep the carrier operating.
Executives and investors held an extraordinary meeting today in Mexico City to review the airline’s “difficult” financial circumstances, and couldn’t decide on whether to file for bankruptcy, said Adolfo Crespo, a Mexicana spokesman.
“The company is analyzing all options and resources,” said Crespo said, who declined to elaborate on the airline’s finances. Mexico City-based Grupo Posadas SAB bought Mexicana from the government in 2005.
The discussions came a day after lessor Air Canada seized two planes in what Mexicana called a misunderstanding. Mexico City’s El Universal newspaper reported yesterday that Mexicana told its pilot and flight attendant unions it was considering bankruptcy, a sale to the labor groups or an operational restructuring plan.
Humberto Trevino, an undersecretary with the Communications and Transportation Ministry, said today that Mexicana won’t go bankrupt “at this time.”
The ministry is studying the airline’s situation and its financial restructuring plan looks “very viable,” Trevino said in a press conference in Mexico City today.
Union Reaction
Mexicana is proposing to lay off 500 attendants, reduce salaries in as much as 50 percent and eliminate most non- economic benefits, said Lizette Clavel, secretary general of the workers’ union. Mexicana is also seeking a 60 percent cut in overtime payments, Clavel said today.
“We are willing to keep our jobs, but under the Mexican laws, and if the company can prove that its financial situation is real and not an induced one,” Clavel said in a telephone interview from Mexico City. “We want guarantees that the airline will keep operating,” she said.
Clavel said Mexicana gave the union, which represents about 1,300 attendants at the airline, an Aug. 9 deadline to reach a new labor agreement. Crespo declined to comment on the airline’s proposal.
Earlier, Mexicana canceled two flights from Montreal and Calgary to Mexico City when a creditor asked Canadian authorities to ground planes to clarify “rumors” about the company’s debts, the airline said.
‘Operating Normally’
“The company is operating normally and our lawyers in Canada are reviewing this matter,” Crespo said. “We don’t expect any other airline to take similar measures.”
Mexicana has faced financial pressure in recent months. In June 2009, Mexicana asked for government loans of 1.5 billion pesos ($112.7 million) after the swine-flu epidemic cut revenue in half. In May, development bank Bancomext rejected a request to partially support a $60 million structured bond. Mexicana said at the time it wasn’t seeking a government rescue.
Mexicana flies to more than 65 national and international destinations, including the U.S., Canada, Europe and Latin America. In 2009, Mexicana transported 11.1 million passengers, according to data published on the company’s website.
The airline operates 69 planes under the Mexicana brand and 35 aircraft under MexicanaClick, which it started in 2005. MexicanaLink, unveiled last year, has 15 planes, according to the website. Mexicana also has 165 sales locations.
“Mexicana’s problems are totally separate from MexicanaClick and MexicanaLink,” Crespo said.
Mexicana is part of the Oneworld alliance, sharing reservations and destinations with carriers led by AMR Corp.’s American Airlines and British Airways Plc.
To contact the reporter on this story: Jose Enrique Arrioja in Mexico City at jarrioja@bloomberg.net
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