Aeroméxico Reports Further Pandemic Losses in 4Q20
While demand, capacity and revenue rose during 4Q20 in comparison to the previous quarter, Mexico’s flagship airline closed the last stretch of the year with operating losses amounting to MX$6.4 billion (US$315 million).
Grupo Aeroméxico, which includes Aeroméxico and Aeroméxico Connect, reported a troublesome 4Q20 as the airline continues grappling with the COVID-19 pandemic. The company has been dealing with financial issues since the arrival of the virus to Mexico paralyzed demand for air travel. In its 3Q20 report, the group reported a total of MX$4.7 billion (US$220 million) in revenue, which represents a 74.5 percent contraction year-on-year, a negative MX$381 million (US$18.1 million) EBITDAR and a MX$3.6 billion (US$170 million) loss. During 4Q20, Aeroméxico managed to improve its capacity, demand and revenue versus the previous quarter but these figures are still below 2019’s levels. The group received MX$7.2 billion (US$353 million) in revenue, a 53.5 percent increase over the previous quarter but a 58.4 percent contraction year-on-year. Altogether, Grupo Aeroméxico saw a negative MX$1.9 billion (US$93.6 million) EBITDAR and MX$6.4 billion (US$315 million) operating loss during the quarter.
The airline is gradually rebuilding its capacity from the lowest point of the pandemic and reopened some domestic and international routes, including those connecting Mexico City to the US, Guatemala, Brazil, Argentina and other destinations.
The drought in demand led the airline to file for Chapter 11 Bankruptcy protection in a US court in June 30, which gave it some breathing room while it underwent a financial restructuration. From that point on, Aeroméxico focused on optimizing its finances and securing loans, including an agreement with investment firm Apollo Global Management Inc. for a US$1 billion loan, reported MBN. The airline, however, faced several issues to access said loan as it had to renegotiate its Collective Bargaining Agreements (CBA) with its pilot (ASPA), flight attendant (ASSA) and flight operator (STIA) unions, which dragged for weeks.
On Jan. 27, a few days after the initial deadline, both parties reached an agreement that would save the airline US$350 million, according to Expansión. The final agreement was deemed “favorable” by ASSA, which declined further comment, and ASPA, which agreed to a 5-15 percent salary reduction and other changes valid until September 2024. Althogether, Aeroméxico’s restructuring costs amounted to MX$4.9 billion (US$241 million), which include one-off and non-cash adjustments.