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Mexicana Suspends Ticket Sales as Labor Talks Sought

Aug. 5 (Bloomberg) -- Compania Mexicana de Aviacion, Mexico’s biggest airline by passengers, stopped selling plane tickets as it seeks talks with labor unions after filing for protection from creditors.

The company, a unit of Grupo Mexicana de Aviacion, will continue operating its flights normally, according to an e-mailed statement yesterday. Grupo Mexicana’s low-fare Click and Link units will keep selling tickets, the company said.

“This decision will offer certainty and confidence to consumers,” Mexicana said in the statement. The company said its goals are to protect passengers and “create greater space to bring to fruition negotiations” with labor unions.

Mexicana suspended ticket sales after the International Air Transport Association, known as IATA, stopped clearing the transactions, Chief Executive Officer Manuel Borja Chico said today in an interview with Mexico City-based Radio Formula. The company hopes to resume them in the coming days, he said.

Mexicana, which listed $500 million in assets and $1 billion in debt in a Chapter 15 bankruptcy petition filed on Aug. 3 in New York, seeks to reduce pay for pilots and flight attendants to compete with Volaris and Interjet. The smaller carriers started operations in the past five years and have gained 21 percent of the market.

The company, which handled 22 percent of passengers in the country last year according to government statistics, also submitted a bankruptcy filing on Aug. 3 in Mexico.

‘Doesn’t Help’

“Unfortunately, this doesn’t help with the negotiations,” said Lizette Clavel, secretary general of the Flight Attendants Union of Mexican Aviation, in a phone interview yesterday. “There’s the possibility of losing our jobs.”

Fernando Perfecto, secretary general of the union that represents Mexicana’s pilots, wasn’t immediately available to comment, a spokesman said.

Creditors have seized three of Mexicana’s planes since July 29. The company owns 9 of the 61 airplanes it operates, according to Borja.

In its U.S. filing, Mexicana cited debt of about 1.57 billion pesos ($126 million) held by Grupo Financiero Banorte SAB.

Mexicana flies to more than 65 national and international destinations, including the U.S., Canada, Europe and Latin America. In 2009, it transported 6.86 million passengers, while Click and Link carried 4.25 million. As part of the Oneworld alliance, Mexicana also shares reservations and destinations with carriers led by AMR Corp.’s American Airlines and British Airways Plc.

-- With assistance from Jonathan Levin and Jose Enrique Arrioja in Mexico City. Editors: Stephen West, Andrea Snyder

To contact the reporters for this story: Crayton Harrison in Mexico City at tharrison5@bloomberg.net; Jonathan Roeder in Mexico City at jroeder@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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