Interjet Restructures Operation, Reestablishes Routes

Interjet is preparing a capitalization plan to deal with the economic impact of the COVID-19 health emergency based on a financial and commercial restructuring, according to Forbes. Part of this change will include a strategy to avoid laying off its 6,000 employees. The company will also make health and safety a key element of its quality offering. Since from July 1st, the airline made COVID-19 tests available to all passengers at no cost. Taking the test will be mandatory to take a flight for the time being.

Now let’s jump into the Week in Aerospace!

Aeroméxico Files for Bankruptcy Protection in US Court

After months of low demand and financial trouble caused by the COVID-19 outbreak, Grupo Aeroméxico, which includes Aeroméxico, Aeroméxico Connect, Aeroméxico Cargo and CECAM, filed yesterday for bankruptcy protection in a US court. The airline is now the third major in Latin America to file for bankruptcy in the wake of the pandemic. 

Mexico’s flagship airline has been facing trouble since the pandemic arrived in the country as demand dried up thanks to shelter-in-place policies in local and foreign destinations. In its latest traffic report, Aeroméxico reported that it had transported 92.4 percent less travelers year-on-year during May. Also, demand measured in revenue passenger kilometers (RPK) dropped by 94.4 percent, while capacity shrank by 76.6 percent in available seat kilometers (ASK).

Boeing Faces Troubled Future Amid Mounting Cancellations

Boeing, which had been grappling with the crisis caused by the crash of two 737 Max that killed 346 people, has found itself in a much worse position with the spread of COVID-19. The OEM began 2020 with a strong 5,049-unit backlog, which included 4,079 orders for the 737 Max. But the COVID-19 crisis quickly brought numerous cancellations. Just in March, Boeing had 150 cancellations for the 737 Max, which would only continue to add up. Boeing reports that during the first five months of the year it accumulated a total of 602 negative net orders, as those of the troubled 737 added to those of the 747 and 777 to surpass the few orders for new 767s and 787s. 

Air Cargo Sees Small Recovery

IATA expects that the sector will recover as production continues to gradually ramp up thanks to easing lockdowns. But the association also warns that the disruption global supply chains suffered earlier in the year will continue to be a problem. “Prospects for air cargo remain stronger than for the passenger business but the future is very uncertain. Economic activity is picking up from April lows as some economies unlock. But predicting the length and depth of the recession remains difficult,” said Alexandre de Juniac, Director General and CEO of IATA.

Mexican Aviation Industry to Lose US$8.13 Billion: IATA

While IATA had previously warned that the sector could lose US$6.4 billion, it revised its estimates to US$8.13 billion. The association took into account recent reports in domestic and international traffic and the extension of border closures. “(Latin America’s) situation becomes increasingly complex by the day. The numbers increased because we have already entered the fourth month and several markets have not yet opened their operations, while others, such as Colombia and Argentina, are not planning to do so until September,” said Peter Cerdá, Regional Vice President for the Americas at IATA, in a press conference reported by El Economista. While Mexico has not closed its borders, it has been impacted by border closures of major hubs in the region. During May, Mexican airlines saw demand disappear. Aeroméxico reported that its demand fell by 94.4 percent year-on-year, Viva Aerobus’ demand fell 85.71 percent and Volaris’s demand by 88.1 percent.