Grupo Aeromexico intends to address fleet surplus while in bankruptcy

By Caroline Salls

Pittsburgh, July 1 – Grupo Aeromexico SAB de CV listed $1 billion to $10 billion in both assets and debt on its Chapter 11 bankruptcy petition filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, Aeromexico has filed bankruptcy to implement a financial restructuring while continuing to operate.

Chief financial officer Javier Sanchez Baker said in a statement filed with the court on Wednesday that the Aeromexico debtors intend to use the Chapter 11 proceedings to streamline their ongoing operations and reorganize its pre-bankruptcy obligations.

Given the current economic climate, Baker said the company has a surplus of aircrafts in its fleet, and Aeromexico may seek to reject, renegotiate, and/or assume and assign some of its aircraft leases to revitalize the size and makeup of the fleet.

“Ultimately, the debtors expect to emerge from bankruptcy a strengthened airline in a more favorable economic climate,” Baker said.

Aeromexico said in a Tuesday news release that it is in talks to obtain new, preferential financing for the company as part of the restructuring within the reorganization procedure.

The company said it is confident that it will finalize formal commitments for debtor-in-possession financing that, along with available cash and subject to court approval, would provide sufficient liquidity for Aeromexico to meet its obligations going forward.

The company intends to use the Chapter 11 process to strengthen its financial position, implement necessary operational changes to address the impact of the ongoing Covid-19 pandemic, and create a sustainable platform for the future, the release said.

According to the petition, Aeromexico’s largest unsecured creditors are the Bank of New York Mellon of New York, with a $411.36 million 2020 international issuance claim; Aeropuerto Internacional de la Ciudad de Mexico SA de CV, with a $61.95 million trade claim; Banco Bilbao Vizcaya Argentaria, SA, with a $25.72 million guarantee claim; HSBC Mexico SA of Mexico City, with a $17.04 million guarantee claim; Aeropuertos y Servicios Auxiliares, with a $16.18 million trade claim; Tesoraria de la Federacion, with a $14.88 million taxes claim; World Fuel Services of Vina del Mar, Brazil, with a $10.34 million trade claim; General Electric of Fairfield, Conn., with a $9.19 million trade claim; Panasonic Avionics Corp. of Bothell, Wash., with an $8.32 million trade claim; and Banco Bilbao Vizcaya Argentaria, SA of Frankfurt, with a $7.94 million short-term loan claim.

Grupo Aeromexico, a holding company for commercial aviation, is based in Mexico City. The Chapter 11 case number is 20-11563.

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