Aeromexico has become the latest Latin American to file for chapter 11 bankruptcy protection, as a result of the global COVID-19 pandemic. The airline joins Avianca and LATAM, who both filed for chapter 11 protection in the last two months.

In a statement on their website, Aeromexico states the legal process “will not affect the airline’s operations, reservations, vouchers or Premier Points”.

The chapter 11 restructuring process will see Aeromexico follow multiple steps including: debtor-in-possession financing, an initial court hearing, the development of reorganisation plans and approval of the plans.

At the end of the process, Aeromexico aims to emerge as a financially strengthened company. Furthermore the airline will go ahead with plans to quadruple international flights and double domestic flights in July, as COVID-19 restrictions ease.

“COVID-19 has had an unprecedented impact on the world economy and the travel industry. Today, more than ever, it is essential to be able to adapt quickly to meet the needs of travellers in an uncertain environment. We are committed to taking the necessary steps to secure our future by utilising the Chapter 11 process to become stronger and more resilient, while always putting the health and safety of our customers first.”

Andres Conesa, CEO Aeromexico

Bloomberg reports that Aeromexico saw a passenger decline of 90 percent, as governments grounded flights and forced people to stay at home.

To reduce operational costs, the airline offered employees unpaid leave whilst forming deals with suppliers and labour groups.

Aeromexico Airlines Flugzeug auf dem Rollfeld des Amsterdam Schiphol Flughafens

In an attempt to provide a lifeline, investment holding company Aimia Inc provided Aeromexico $50 million on Monday; adding on to the $50 million already handed out in May, as reported by Reuters.

Unfortunately the effect of COVID-19 has proven the $100 million insufficient, thus bringing the airline to its current position under chapter 11 guidelines.

How do you think Aeromexico’s Chapter 11 proceedings will go?

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