The reversal in Mexican economic fortunes, dragged down by the slump of the peso, is at least restoring some equilibrium in the airline industry. But the economic crisis could yet precipitate a reversal in policy, with the government pushing to re-regulate pricing and infusing both Aeromexico and Mexicana with new cash.
The change could spring from the decision to keep Aeromexico and Mexicana separate. After Aeromexico under Gerardo de Prevoisin bought a majority stake in Mexicana in 1993, the idea was to merge the two companies. De Prevoisin has since fled the country amid allegations of embezzlement, while both carriers have amassed overwhelming debt. They avoided bankruptcy by not paying aircraft leases; now creditor banks hold the reins.
Sources say the opposing sets of banks could not agree to merger plans. Aeromexico's creditors wanted to close Mexicana but Mexicana's creditors assumed there would be nothing left and baulked at the idea.
Still, capacity rationalisation has bumped domestic yields up, if only marginally so far. Aeromexico has grounded three DC-10s and returned two leased MD-80s. Mexicana has grounded its DC-10s and returned four B727s to GPA, while lessors ILFC and Orix each repossessed two A320s. Taesa has also returned aircraft to lessors and domestic carrier Saro closed, removing 13 narrowbodies from the market.
Mexicana says it turned an operating profit during the first four months of this year. But the net result must still be affected by $130 million in overdue lease rentals and debt of over $1 billion.
Source: Airline Business
