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Financing Plan for Aeroméxico Must Respect Law: ASPA

By Antonio Gozain | Fri, 09/24/2021 - 16:37

Mexican Pilots Union (ASPA) urged Grupo Aeroméxico to respect the law as it undergoes the financial reorganization it started after filing for Chapter 11 bankruptcy protection. The law requires that Mexican investors keep the majority of voting shares of the airline.

“ASPA supports this legal requirement. Aeroméxico is the flag carrier of Mexico and as such it must be controlled by our fellow citizens. Therefore, it is crucial that the final financing package respects Mexican law and gives a group of Mexican shareholders majority control to help Aeroméxico emerge successfully as the company reorganizes after the pandemic,” wrote in a press release Humberto Gual Ángeles, General Secretary of ASPA.

Aeroméxico delivered to its Debtor in Possession (DIP) creditors the final valuation materials and the refinancing qualification certificate pursuant to the DIP Credit Agreement on Sept. 10, 2021, reported Aviacionline. According to this agreement, DIP lenders had to notify on Sept. 20 at the latest if they decided to convert their loans into equity of the reorganized company at the value set in the final valuation materials Aeroméxico presented.

Apollo Global Management, one of the DIP lenders, is currently analyzing the final valuation materials presented by Aeroméxico, reported A21. Apollo alleged that the delivery did not comply with the requirements of the DIP Credit Agreement and is still preparing its Notice of Election Subscription. The private equity company could opt to redeem US$1 billion, a portion of its investment, through DIP financing and convert the loans into equity in the reorganized Aeroméxico for US$800 million or offer a new financing exit package.

ASPA union also urged Grupo Aeroméxico to exit Chapter 11 as soon as possible and provide resources to “flourish as the most important airline in Mexico in an increasingly competitive Latin American market.” The union also requested that the alliance with Delta Air Lines is preserved due to its importance for Aeroméxico and its workers. “It is imperative that Delta supports the terms and structure of the financing exit package and continues providing Aeroméxico with financial, operational and strategic support,” said ASPA.

The COVID-19 pandemic plunged Aeroméxico’s demand and operation. However, filing voluntarily for financial restructuring enabled the airline to continue operating and recover in revenue, capacity and demand during 2021. In its 2Q21 report, Aeroméxico highlighted that capacity increased by 9 percent in comparison to 1Q21. Revenue was also up by 46.2 percent in the second quarter in comparison to the first, for a total of MX$10 billion (US$500 million).

The data used in this article was sourced from:  
MBN, Aviacionline, A21, Grupo Aeroméxico
Antonio Gozain Antonio Gozain Journalist and Industry Analyst