Aeromexico files for Chapter 11 bankruptcy

With Latin American (LaTam) governments refusing to bail out their struggling airlines, Aeromexico has become the latest LatAm carrier to file for Chapter 11 bankruptcy as the effect of the Covid-19 pandemic continue to wreak havoc with the travel industry.

Aeromexico has made it clear that the bankruptcy filing was totally “voluntary” and that to all intents and purposes it would carry on with its current plans. This included quadrupling the number of international flights and doubling the number of domestic ones in August as restrictions on travelling are lifted. The Mexican carrier has confirmed that tickets, reservations, electronic vouchers and Premier Points will remain valid.

Aeromexico is following in the footsteps of Chile’s LATAM Airlines Group and Columbia’s Avianca Holdings, both of which filed for Chapter 11 restructuring in May, though Aeromexico is looking to find preferential financing as part of the restructuring deal, also known as debtor-in-possession financing. There is a fair level of concern being shown that if more LatAm carriers fold, a lack off competition will lead to a hike in ticket prices.

U.S. carrier Delta Air Lines holds a 49% stake in Aeromexico and a 20% stake in LATAM, so the bankruptcy process could well result in a substantial reduction in the value of both its investments.