Mexico's flagship airline, Aeromexico, had applied to begin a voluntary process of financial restructuring under Chapter 11 in the US due to coronavirus impact on the sector.
Mexican airline said that the process will not affect its services to costumers and will continue to fly.
Aeromexico is the latest Latin American airliner to file for Chapter 11 in the US, following Chile's LATAM and Colombia's Avianca.
Chapter 11 is a form of bankruptcy that involves a reorganization of a debtor's business affairs, debts, and assets, and for that reason is known as "reorganization" bankruptcy. The Company intends to use the Chapter 11 process to strengthen its financial position and implement necessary operational changes to address the impact of the ongoing COVID-19 pandemic and create a sustainable platform for the future.
“Our industry faces unprecedented challenges due to significant declines in demand for air transportation,” said Andrés Conesa, Chief Executive Officer 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.”
Aeromexico’s operations will continue. In July the Company expects to double the number of its domestic flights and quadruple the number of international flights as compared to June. Aeromexico is committed to continuing to safely expand flight service in the coming months, in line with local regulations and customer demand.
This U.S. Chapter 11 process is designed to allow companies to maintain regular operations and all current tickets, reservations, electronic vouchers and Premier Points will remain valid and available for use by customers according to the Company’s existing terms and conditions.
Aeromexico will continue to operate in accordance with existing permits and concessions throughout this process.
The Company does not expect to be any changes to employees’ day-to-day job responsibilities, and employees will continue to be paid and receive benefits in the ordinary course of business.
Aeromexico also intends to continue ordering goods and services from its suppliers and expects to meet its current commercial agreements with partner airlines, including its key and industry leading Joint Cooperation Agreement with Delta Air Lines.
Aeromexico is also in talks to obtain new, preferential financing for the Company, as part of the restructuring within the reorganization procedure (which is known as “debtor-in-possession” or “DIP financing”). Aeromexico is confident that it will finalize formal commitments for DIP financing that, along with the Company’s available cash and subject to Court approval, would provide sufficient liquidity for Aeromexico to meet its obligations going forward.
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