Aug. 10 (Bloomberg) -- The pilots union for Compania Mexicana de Aviacion, Mexico’s largest airline by passengers, said it has spoken with as many as three possible investors as it tries to form a group to rescue the carrier from bankruptcy.
The union is interested in buying a stake in the airline and is willing to modify its collective bargaining contract to secure a deal, Fernando Perfecto, the group’s head, said in an interview in Mexico City yesterday. He declined to name the potential investors or concessions that the union could make.
“Time is of the essence,” Perfecto said. “We want to rescue Mexicana and if we have to assess our collective contract, without doubt we’ll do it.”
Mexicana, which filed for bankruptcy last week, has said it wants to pare pilots’ and flight attendants’ pay to compete with low-cost carriers such as Volaris and Interjet that have grabbed 21 percent of the market in less than five years. The Grupo Mexicana de Aviacion SA unit has cut flights and suspended ticket sales because its finances have “deteriorated.”
“The company’s income simply doesn’t meet its expenses,” said Carlos Davalos, a Mexican bankruptcy attorney who has written a book on the topic.
Pilots will defer salaries and benefits, the union said yesterday. Still, labor costs didn’t cause Mexicana’s financial difficulties, Perfecto said. Instead, the airline has failed to capture market share and should consider a strategic alliance with the country’s No. 2 carrier, Grupo Aeromexico SA, he said.
“Very, very rigid positions” taken by stakeholders at both airlines derailed talks on a potential partnership in recent months, Perfecto said.
$1 Billion Debt
Mexicana listed $500 million in assets and $1 billion in debt in a Chapter 15 bankruptcy petition filed on Aug. 2 in New York. The carrier, which handled 22 percent of Mexico’s air passengers last year, cited a rise in jet-fuel prices, a 2009 flu epidemic that damped tourism and the global recession.
The airline has said its financial troubles have affected sales at affiliates Mexicana Click and Mexicana Link, which are not part of the bankruptcy filings.
Mexicana flies to more than 65 national and international destinations, including in 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 flights with carriers led by AMR Corp.’s American Airlines and British Airways Plc.
The U.S. case is Compania Mexicana De Aviacion SA de CV, 10-14182; U.S. Bankruptcy Court, Southern District of New York (Manhattan).
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