Grupo Aeroméxico Reports 1Q20 Results

Grupo Aeroméxico, which operates Aeroméxico and Aeroméxico Connect, reported yesterday its results for 1Q20. The group’s finances were hit by an unfavorable market environment caused by the severe decrease in national and international travel due to the COVID-19 outbreak, the grounding of the Boeing 737 Max, a weaker peso and the slowdown of Mexico’s economy. These circumstances blew a heavy hit on Grupo Aeroméxico, which reported a 14 percent decrease in total revenue in 1Q20 compared to 2019.

The group’s operations had already been hit by the global grounding of the Boeing 737 Max after two crashes that cost 346 lives. Grupo Aeroméxico operated six 737 Max and while the group was at first optimistic that the airplane would be fit to fly soon after the crashes, the grounding continues more than a year after with no end in sight. Grupo Aeroméxico was further hit by the COVID-19 outbreak as governments closed borders and asked populations to stay home as much possible. These measures led to a global decline in air transport, which led Grupo Aeroméxico to cancel many national flights and international flights to Madrid, Barcelona, Paris, Amsterdam and London. The group reports that the lower demand led to a drop in Revenue Passenger Kilometers of 15.9 percent during 1Q20.

The sharp drop in capacity due to the COVID-19 pandemic is quoted by Grupo Aeroméxico as the main reason for the 14 percent decrease in revenue, which translates to MX$14.1 billion (US$57 million). The group also reported a net loss of MX$2.5 billion (US$102 million), which represents a negative 17.8 percent margin.