MEXICO: Airline Mexicana de Aviacion to cease operations while owners struggle to find cash

Record ID: 303178

  • Title: MEXICO: Airline Mexicana de Aviacion to cease operations while owners struggle to find cash
  • Date: 28th August 2010
  • Summary: MEXICO CITY, MEXICO (AUGUST 27, 2010) (REUTERS) ***CONTAINS FLASH PHOTOGRAPHY*** VARIOUS OF EXTERIOR OF MINISTRY OF TRANSPORT AND COMMUNICATIONS GENERAL VIEW OF NEWS CONFERENCE OF MINISTER OF TRANSPORT JUAN MOLINAR PHOTOGRAPHER (SOUNDBITE) (Spanish) MINISTER OF TRANSPORT JUAN MOLINAR SAYING: "At midnight, a gradual shutdown will begin. By Saturday at noon, operations will definitively cease at the Mexicana de Aviacion company. This does not mean that the company has disappeared as it was clarified by the Minister of Labour (Javier Lozano), but rather it will continue in this preliminary phase until the company is restructured." GENERAL VIEW OF NEWS CONFERENCE (SOUNDBITE) (Spanish) HEAD OF THE PILOTS' UNION, FERNANDO PERFECTO, SAYING: "Within this orderly Mexicana restructuring process, which is not bankruptcy, its restructuring. We don't know if with our efforts to look and bring new investors - with knowledge, experience and training - will help us - together with authorities, syndicates as well as negotiating with creditors, in order to re-operate Mexican as soon as possible." VARIOUS OF PEOPLE AT MEXICANA AIRPORT COUNTER MEXICANA SIGN MORE OF PEOPLE AT MEXICANA COUNTER (SOUNDBITE) (Spanish) PASSENGER, CARMEN MARTINEZ, SAYING: "I arrived from Torreon this morning and I'm connecting to go to Cancun. I'm worried about being left stranded in Cancun. What am I going to do? At the counter I'm being told that they don't know anything. How are they going to send us to Cancun if they don't know how they will bring us back? They me 'You are going to leave, because at 6 o'clock the flight will depart,' but we don't know how we're going to return." FLIGHT DEPARTURE SCREEN MAN LOOKING AT DEPARTURE SCREEN
  • Embargoed: 12th September 2010 13:00
  • Keywords:
  • Location: Mexico
  • Country: Mexico
  • Topics: Economic News,Transport
  • Reuters ID: LVACL9V6PJNZIAJ7POUYA6ONVQEO
  • Story Text: Mexico's Transport Minster Juan Molinar says Mexicana will cease operations by midday after new owners, Tenedora K, declines to inject capital into the airline, saying its financial situation is too precarious.
    Mexicana de Aviacion, one of Mexico's two major airlines, will cease operations by midday Saturday while unions and new owners attempt one more time to find fresh cash to keep the ailing company alive.
    "At midnight, a gradual shutdown will begin. By Saturday at noon, operations will definitively cease at the Mexicana de Aviacion company. This does not mean that the company has disappeared as it was clarified by the Minister of Labour (Javier Lozano), but rather it will continue in this preliminary phase until the company is restructured," Transport Minister Juan Molinar said at a news conference on Friday (August 27).
    Two budget carriers affiliated with Mexicana, Link and Click, will also stop flying, he said, but added that the measure was only temporary.
    Last week, Tenedora K purchased a 95 percent stake in Nuevo Grupo Aeronautico, which controls Mexicana, Click and Link. But the new owners declined to inject capital into the holding after concluding that its financial situation was too precarious.
    Fernando Perfecto, head of the pilots union, said at the same conference that workers and management will keep looking for investors but gave no indication as to when the airlines could resume operations.
    "Within this orderly Mexicana restructuring process, which is not bankruptcy, its restructuring. We don't know if with our efforts to look and bring new investors - with knowledge, experience and training - will help us - together with authorities, syndicates as well as negotiating with creditors, in order to re-operate Mexican as soon as possible."
    Mexicana had already halted dozens of domestic and international routes and stopped selling tickets after requesting creditor protection earlier this month under Mexico's insolvency law, which is called concurso mercantil.
    The 89-year-old airline has also requested creditor protection in the United States, but has yet to be declared bankrupt in Mexico.
    It has struggled to find a buyer willing to help restructure its $800 million debt load.
    Passengers at the airport were worried about being left stranded at their destinations.
    "I arrived from Torreon this morning and I'm connecting to go to Cancun. I'm worried about being left stranded in Cancun. What am I going to do? At the counter I'm being told that they don't know anything. How are they going to send us to Cancun if they don't know how they will bring us back? They me 'You are going to leave, because at 6 o'clock the flight will depart,' but we don't know how we're going to return," said Mexicana passenger, Carmen Martinez.
    Another passenger Carmen Villalobos, was clearly upset by the announcement.
    "I'm worried but I'm also very irritated because the company released a fabulous promotion so they attract a lot of people with these promotions of low prices, so what happens? One knows they need money but knowing what was going to happen, because they know everything that will happen. So now they want to send people but how will they return them."
    Plans for getting rid of some 1,366 of its flight attendants to facilitate a takeover by Tenedora K were blocked earlier this week by the government.
    Mexicana controls many routes into the United States which would be among its most valuable assets. But restrictions slapped by U.S. aviation authorities on Mexico due to safety lapses mean Mexican airlines are not able to take over these routes for now.
    Mexicana is part of the Oneworld alliance, whose members include American Airlines, British Airways and Lan among its members.
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