Mexican Airlines Could Go Bankrupt in Eight Months: ALTA

As COVID-19 rampages through the aviation industry, associations continue to ask governments to support local airlines due to their importance to the economy, communication and transportation of essential goods. Lack of support, warns the industry, might be catastrophic for a sector that generates thousands of jobs just in Mexico.

The COVID-19 outbreak has brought the aviation industry to lows not seen in many years. In its most recent update, the International Air Transport Association (IATA) warned that the sector was on its way to lose over half of last year’s revenue for a total of US$314 billion. In Mexico, loses may ramp up to US$5 billion and put in danger over 97,000 direct jobs and 437,000 indirect ones, warns the association.

Part of the danger is that many airlines do not have the cash reserves necessary to continue paying employees, aircraft maintenance, parking fees and other expenses while their fleets stay grounded. The Latin American and Caribbean Air Transport Association (ALTA) warned that without support from local authorities, Mexican airlines may go bankrupt in just eight months. For that reason, both IATA and ALTA are urging local authorities to support the industry.

Peter Cerda, Regional Vice President for the Americas of IATA, explained that the association has asked Mexican authorities to reevaluate several infrastructure projects to account for the sharp decrease in demand caused by the pandemic, as airline associations expect the low demand to continue until 2021. According to the association, the construction of the Felipe Ángeles International Airport at the Santa Lucia military base is one of those projects that could be paused considering the sharp drop in air traffic. In an online press conference, Luis Felipe de Oliveira, Executive Director and CEO of ALTA, also urged Mexico’s government to reevaluate infrastructure projects and urged local authorities to redirect funds used for the refurbishing of Santa Lucia military base to airlines.