Category Archives: AeroMexico

AeroMexico requests termination of ASPA and ASSA collective bargaining agreements to labor authorities

Grupo Aeroméxico, S.A.B. de C.V. has announced that, as a follow up to its previous relevant events dated December 29 and 31, 2020 and January 8, 2021, it has not yet been possible to satisfactorily conclude the negotiations of the Collective Bargaining Agreements (“CBAs”) with the Asociación Sindical de Pilotos Aviadores de México (“ASPA”) and the Asociación Sindical de Sobrecargos de Aviación de México (“ASSA”).

The acceptance, by said unions, of the adjustments presented by the Company to the CBA is essential to: (i) face the adverse financial, operational and structural effects caused globally to the airline industry by the COVID-19 pandemic, (ii) comply with the commitments and objectives required by the DIP lenders under the Senior Debtor in Possession Credit Facility (“DIP Financing”), obtained within the Company’s voluntary financial restructuring process, under Chapter 11 of the Bankruptcy Code of the United States of America, and (iii) comply with the necessary conditions to have access to the next disbursement under Tranche 2 of the DIP Financing, resources that are essential not only to preserve the ordinary course of business but to avoid generalized defaults on Aeromexico’s obligations with financial creditors under the DIP Financing.

Aeromexico was able to obtain an extension to the term provided in the corresponding Credit Agreement, in order to comply with the DIP Financing conditions and obligations. The new term expires on January 27, 2021. However, the serious situation of the pandemic and the consequent continuation of the restrictions derived from the declaration of force majeure issued by government authorities, in Mexico and abroad, continue to reduce the demand for flights and undermine the Company’s finances.

Aeromexico requires ongoing access in a fast and timely manner to the DIP Financing funds to meet its payments and commitments in the ordinary course of business with key suppliers, authorities, and contributors. Consequently, the Company has decided to request termination, due to the fact of force majeure that undoubtedly affects the Company, the current CBA with the ASPA and ASSA unions, which has been duly submitted, on this date, to the competent labor authorities in full compliance with the applicable provisions of the Federal Labor Law (Ley Federal de Trabajo).

Based on the force majeure situation in which Aeromexico is, it has requested termination of the collective bargaining relationship, as well as the individual agreements with a certain number of pilots and flight attendants in order to reflect the new operating reality of the Company. This situation of force majeure has forced Aeromexico to carry out a workforce reduction as a consequence of the decrease in its ordinary activities.

This decision seeks to guarantee the continuity of our operations to continue offering the best possible service to customers, without affecting their rights.

Aeromexico reiterates that it is in the best position to continue conversations with both ASPA and ASSA, within the period indicated above, looking to find schemes that comply with the necessary conditions to continue accessing the available resources. We appreciate all the support received by our contributors and regulatory authorities during our restructuring process.

Aeromexico will continue pursuing, in an orderly manner, the voluntary process of its financial restructuring under the Chapter 11 process, while continuing to operate and offer services to its customers and contracting from its suppliers the goods and services required for operations. Likewise, it will continue using all the available instruments at its disposal to avoid going from the current financial restructuring situation to a liquidation situation, with the consequent loss of the source of employment affecting thousands of direct and indirect jobs.

AeroMexico reports third quarter results

Grupo Aeromexico S.A.B. de C.V. has reported its unaudited consolidated results for the third quarter 2020.

KEY FINANCIAL HIGHLIGHTS FOR THE THIRD QUARTER 2020

  • On June 30th Aeromexico announced that it and certain of its affiliates had filed voluntary Chapter 11 petitions in the United States to implement a financial restructuring, while continuing to serve customers. The Company intends to use the Chapter 11 process to strengthen its financial position and liquidity, protect and preserve its operations and assets and implement necessary operational changes to address the impact of the ongoing COVID-19 pandemic.
  • Grupo Aeromexico’s third quarter capacity, measured in available seat kilometers (ASKs), increased by 67.6% compared to second quarter 2020, primarily driven by a sequential recovery in domestic market recovery. Total ASKs for the third quarter decreased by 64.1% year-on-year due to the impact of the COVID-19 pandemic.
  • Grupo Aeromexico’s third quarter 2020 revenue reached $4.7 billion pesos, a 79.1% increase compared to the second quarter of 2020 and a 74.5% year-on-year decrease. During the quarter, revenue per ASK (RASK) in pesos increased by 6.9% compared to second quarter 2020 due to market demand improvements and decreased by 29.0% year-on-year.
  • EBITDAR for the period amounted to negative $381 million pesos, an improvement of $4.6 billion pesos versus second quarter 2020. Third quarter 2020 operating loss amounted to $3.6 billion pesos an improvement of $19.8 billion pesos compared to second quarter 2020.
  • During the quarter, the Company started to recognize aircraft ownership costs in accordance with the temporary Payment by the Hour agreements (PBH) reached with operating lessors.
  • Cost per ASK (CASK) in pesos reached $2.091 pesos, a 77.2% decrease compared to second quarter 2020 and a year-on-year increase of $0.792 pesos. CASK in dollars reached $0.095, a 75.9% decrease compared to second quarter 2020 and increased year-on-year by $0.028 dollars.
  • Aeromexico generated $108 million pesos positive cash flow from operating activities. Aeromexico´s cash position as of September 30th, 2020, including restricted cash, amounted to $7.8 billion pesos equivalent to approximately $352 million dollars. Aeromexico´s cash including restricted cash to last-twelve-month revenue ratio was 20.2%.
  • As of September 30, 2020, Grupo Aeromexico’s operating fleet comprised 101 aircraft excluding the six Boeing 737 MAX aircraft temporarily grounded.

Grupo Aeroméxico confirms that its voluntary process of financial restructuring under Chapter 11 of the legislation of the United States of America, will be carried out in an orderly manner while it continues operating and offering services to its customers with the same quality that characterizes it, contracting from its suppliers the goods and services required for its operation. The Company will use the advantages of Chapter 11 to strengthen its financial position and liquidity, protect and preserve its operations and assets, and implement the necessary adjustments to face the impact of COVID-19.

AeroMexico reaches agreement with lessors

Grupo Aeroméxico, S.A.B. de C.V. has announced that the Company received approval by the United States Bankruptcy Court for the Southern District of New York to modify the majority of its existing aircraft equipment leases into power by the hour agreements (“PBH Agreements”) that will substantially reduce Aeromexico’s monthly aircraft and engine costs for the duration of the PBH period. PBH Agreements allow for Aeromexico to reset monthly lease costs based on utilization of the equipment at today’s market rates, with significant monthly savings, when compared to Aeromexico’s original contracted rates.  Such PBH Agreements were entered into between Aeromexico and 27 different leasing companies covering 82 aircraft and 14 spare engines.

Andrés Conesa, Aeromexico´s CEO said: “This is a significant milestone in Aeromexico’s restructuring process, which paves the way to negotiate long-term agreements with our leasing company  and financing partners on the aircraft equipment that makes sense to retain in our strategic fleet”.

Aeromexico will continue pursuing, in an orderly manner, the voluntary process of financial restructuring under the Chapter 11 process, while continuing to operate and offer services to its customers and contracting from its suppliers the goods and services required for operations. The Company will continue to use the advantages of the Chapter 11 proceeding to strengthen its financial position and liquidity, protect and preserve operations and assets, and implement the necessary adjustments to manage the impact of COVID-19.

AeroMexico aircraft photo gallery:

AeroMexico files for Chapter 11 bankruptcy reorganization

Grupo AeroMexico has made this announcement:

Grupo Aeromexico S.A.B. de C.V has announced on June 30, 2020 that it and certain of its affiliates have filed voluntary Chapter 11 petitions in the United States to implement a financial restructuring while continuing to serve customers. The Company intends to use the Chapter 11 process to strengthen its financial position and implement necessary operational changes to address the impact of the ongoing COVID-19 pandemic and create a sustainable platform for the future.

“Our industry faces unprecedented challenges due to significant declines in demand for air transportation,” said Andrés Conesa, Chief Executive Officer of Aeromexico. “We are committed to taking the necessary measures so that we can operate effectively in this new landscape and be well prepared for a successful future when the COVID-19 pandemic is behind us. We expect to utilize the Chapter 11 process to strengthen our financial position, obtain new financing and increase our liquidity, and create a sustainable platform to succeed in an uncertain global economy.”

Aeromexico’s operations will continue. In July the Company expects to double the number of its domestic flights and quadruple the number of international flights as compared to June. Aeromexico is committed to continuing to safely expand flight service in the coming months, in line with local regulations and customer demand.

Business Continuity

This U.S. Chapter 11 process is designed to allow companies to maintain regular operations and all current tickets, reservations, electronic vouchers and Premier Points will remain valid and available for use by customers according to the Company’s existing terms and conditions. Aeromexico will continue to operate in accordance with existing permits and concessions throughout this process.

The Company does not expect to be any changes to employees’ day-to-day job responsibilities, and employees will continue to be paid and receive benefits in the ordinary course of business. Aeromexico also intends to continue ordering goods and services from its suppliers and expects to meet its current commercial agreements with partner airlines, including its key and industry- leading Joint Cooperation Agreement with Delta Air Lines.

Aeromexico is also in talks to obtain new, preferential financing for the Company, as part of the restructuring within the reorganization procedure (which is known as “debtor-in-possession” or “DIP financing”). Aeromexico is confident that it will finalize formal commitments for DIP financing that, along with the Company’s available cash and subject to Court approval, would provide sufficient liquidity for Aeromexico to meet its obligations going forward.

Commitment to Health and Safety

Since the beginning of the pandemic, Aeromexico has implemented measures to protect the health and safety of its employees and customers in all phases of its operations, observing stringent health protocols and guidelines recommended by international authorities.

Grupo Aeromexico, S.A.B. de C.V. is a holding company whose subsidiaries are engaged in commercial aviation in Mexico and the promotion of passenger loyalty programs. Aeromexico, Mexico’s global airline has its main hub at Terminal 2 at the Mexico City International Airport. Its destinations network features the United States, Canada, Central America, South America, Asia and Europe. The Group’s operating fleet of 119 aircraft is comprised of Boeing 787 and 737 jet airliners and Embraer 170 and 190 models.

AeroMexico aircraft photo gallery:

AeroMexico reports a $102.8 million loss in the first quarter 2020

Grupo Aeromexico S.A.B. de C.V. (AeroMexico) has reported its unaudited consolidated results for the first quarter 2020.

KEY FINANCIAL HIGHLIGHTS FOR THE FIRST QUARTER 2020

  • Grupo Aeromexico’s first quarter capacity, measured in available seat kilometers (ASKs) decreased by 9.1% year-on-year, resulting primarily from the impact of the COVID-19 pandemic. Additionally, year-on-year capacity was negatively impacted by the grounding of the Boeing 737 MAX aircraft since March 2019.
  • Grupo Aeromexico’s first quarter 2020 revenue reached $14.1 billion pesos, a 14.0% year-on-year decrease. During the quarter, revenue per ASK (RASK) in pesos decreased by 5.3% while yield increased by 0.9%. International yield increased by 2.8%, partially offset by domestic yield which reduced by 3.5% compared to the same period of 2019.
  • Year-on-year cost per ASK (CASK) in pesos increased by 2.7%. CASK in dollars decreased by 1.1% compared to the same period of 2019. CASK was affected by reduced operations derived from the impact of the COVID-19 pandemic.
  • First quarter EBITDAR reached $1.5 billion pesos. EBITDAR margin was 10.7%.
  • For the first quarter of 2020, Grupo Aeromexico reported an operating loss of $1.8 billion pesos, equating to a 12.7% negative operating margin
  • Aeromexico reported a net loss of $2.5 billion pesos ($102.8 million) for the first quarter 2020 for a negative net margin of 17.8%.
  • First quarter cash flow generation from operating activities reached $3.3 billion pesos. Aeromexico´s cash position as of March 31st, 2020 was $13.2 billion pesos, equivalent to $563 million dollars. This brings Aeromexico´s cash to last-twelve-month revenue ratio to 19.9%.
  • As of March 31st, 2020, Grupo Aeromexico’s operating fleet comprised 119 aircraft, excluding the six Boeing 737 MAX aircraft temporarily grounded.

Grupo Aeromexico’s financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). The International Accounting Standard 1 (IAS 1) “Presentation of Financial Statements” establishes that in the Consolidated Statement of Comprehensive Income additional items, headings and subtotals can be presented when they are relevant to understanding the financial performance of the entity.

AeroMexico aircraft photo gallery:

AeroMexico is now flying three of its nineteen Boeing 787 Dreamliner aircraft for cargo-only purposes between China and Mexico

AeroMexico has made this announcement:

Due to the ongoing COVID-19 health crisis, Aeromexico is using part of its grounded fleet for cargo-only flying through its airfreight division, Aeromexico Cargo.

This is an unexpected turn in Mexico’s aviation industry, as Aeromexico is now flying three of its nineteen Boeing 787 Dreamliner aircraft for cargo-only purposes between China and Mexico.

The three aircraft left for Shanghai, China on April 9, with a layover at Narita airport in Japan. The Government of Mexico, through the Ministry of Foreign Affairs, organized one of the three operations, using the aircraft registered as N783AM.

While there is a significant reduction in passenger demand worldwide, we have seen that air cargo transportation has taken on an important role, not only for the transport of medical equipment but also for other necessary goods to keep supporting the economy and businesses.

“These operations were made possible by an extraordinary effort from our customers, national authorities and our employees. Additionally, our flight attendants, pilots, airports, maintenance crew, cargo and ground staff have being very strategic and supportive for this operations, applying strict sanitary measures in all of our aircraft and facilities”, said Alejandro Méndez, Senior Vice President of Aeromexico Cargo.

It is the first time that three Aeromexico long-range passenger aircraft have flown simultaneously and to the same destination for the exclusive transport of cargo.

AeroMexico aircraft photo gallery:

 

AeroMexico to use passenger aircraft for cargo

AeroMexico has made this announcement:

Due to the health contingency and, supporting the continuity of economies and businesses, Aeromexico will use part of its grounded fleet for cargo-only through its airfreight division, Aeromexico Cargo.

At this time, air freight is essential for shipping supplies, medicines, medical equipment, food, and other products. Today’s flight will take off from Mexico City to Frankfurt shipping 15 tons.

The service is operated as a charter, meaning on demand and for shipping perishable products, live animals, high-value goods, technology and medicines, among others.

Domestically, Aeromexico can transport cargo to 41 airports, and abroad, to the United States, Canada, Central and South America, Asia and, Europe.

The Boeing 787-9 on with which this first service will operate is one of the most modern aircraft in the world and friendly to the environment. This equipment emits compared to other aircraft, 57% less noise pollution during take-off and landing and 20% less carbon dioxide (CO2) emissions. The airline also has its fleet of Boeing 737 aircraft to perform similar services.

AeroMexico aircraft photo gallery:

AeroMexico reports fourth quarter 2019 results

Grupo Aeromexico S.A.B. de C.V. reported its unaudited consolidated results for the fourth quarter 2019.

KEY FINANCIAL HIGHLIGHTS FOR THE FOURTH QUARTER 2019

  • Grupo Aeromexico’s fourth quarter capacity, measured in available seat kilometers (ASKs) decreased by 4.9% year-on-year, resulting from the temporary grounding of the 737 MAX aircraft.
  • During the quarter Aeromexico reached a partial confidential compensation agreement with Boeing to mitigate the financial impact arising from the temporary grounding of the airline’s Boeing 737 MAX aircraft. The reported financial results reflect certain elements of this agreement. Other elements under the agreement will be accounted for in future years as a reduction in the cost of aircraft, which is expected to decrease depreciation expense.
  • Grupo Aeromexico’s fourth quarter 2019 revenue reached $17.2 billion pesos, a 6.7% year-on-year decrease. During the quarter Revenue per ASK (RASK) in dollars increased by 0.9% and yield in dollars increased by 1.2% compared to the same period of 2018.
  • Year-on-year Cost per ASK (CASK) in dollars decreased by 8.4% and CASK excluding fuel in dollars decreased 8.2%, highlighting Grupo Aeromexico´s ongoing focus on optimizing unit costs.
  • Fourth quarter EBITDAR reached $4.7 billion pesos, an increase of $2.3 billion pesos year-on-year. EBITDAR margin was 27.2%.
  • For the fourth quarter of 2019, Grupo Aeromexico reported an operating profit of $1.7 billionpesos, equating to a 10.1% operating margin. This is a $2.7 billion peso year-on-year improvement compared to the same period of 2018.
  • Aeromexico reported a net loss of $57 million pesos for the fourth quarter 2019 for a negative net margin of 0.3%.
  • For full year 2019, Grupo Aeromexico revenue reached $68.8 billion pesos, a 2.1% year-on-year decrease compared to the same period of 2018. Grupo Aeromexico delivered an operating profit of $2.8 billion pesos, equating to 4.0% operating margin. The Company reported a net loss of $2.4 billion pesos.
  • Fourth quarter cash flow generation was positive with $4.3 billion pesos in incremental cash flow generated from operating activities. Aeromexico´s cash position as of December 31st, 2019 was $9.1 billion pesos. This brings Aeromexico´s cash to last-twelve-month revenue ratio to 13.2%.
  • During the quarter, the Company received four aircraft: one Boeing 787-9 and three Boeing 737-800s. As of December 31st, 2019 Grupo Aeromexico’s operating fleet comprised 125 aircraft, excluding the six Boeing 737 MAX aircraft temporarily grounded. Boeing has expressed that it expects the aircraft to be re-certified by the Federal Aviation Administration (FAA) during summer 2020.

All figures are expressed in millions of pesos unless otherwise indicated. Grupo Aeromexico’s financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). The International Accounting Standard 1 (IAS 1) “Presentation of Financial Statements” establishes that in the Consolidated Statement of Comprehensive Income additional items, headings and subtotals can be presented when they are relevant to understanding the financial performance of the entity.

AeroMexico aircraft photo gallery:

AeroMexico announces compensation agreement with Boeing

Grupo Aeromexico S.A.B. de C.V. advises that it has recently reached a confidential compensation agreement with The Boeing Company) to mitigate Aeromexico’s costs arising from the temporary grounding of the airline’s Boeing 737 MAX aircraft.

The details of this agreement with Boeing are privileged and confidential. Grupo Aeromexico grounded its Boeing 737 MAX aircraft on Marc 11, 2019. The Company remains in constant communication with Boeing and the national and international aeronautical regulatory authorities and is looking forward to the aircraft reinitiating operations, once it has been recertified.

Aeromexico reiterates to its passengers, investors and the public its unwavering commitment to safety and offering customer service excellence.

Delta, AeroMexico working together to create a seamless travel experience

Delta Air Lines has made this announcement:

  • Over 80% of customer experience seams closed.
  • Technology and innovation focus drives customer satisfaction.
  • Investments continue in 2020.

Delta Air Lines and Joint Cooperation Agreement partner Aeromexico are focused on providing their customers with a consistent experience when traveling between the two airlines. Over 3.2 million Delta and Aeromexico customers connect across the transborder network every year and creating a truly seamless journey is paramount. Thus, by looking at all aspects of the customer journey together, and using technology to enhance the digital experience, the two airlines have established a foundation to benefit their shared customers by aligning products, polices and services.delta-aeromexico-flight-attendants.jpg

How do airlines achieve seamless processes?

It all starts with technology. When technological tools don’t talk to one another, customers experience gaps in service. Ensuring these journeys are free from technological roadblocks is the first step to ensure a great experience from the moment of booking, and in every step where airlines interface to serve the customer along the way.

“The two airlines are dedicated to a world-class customer experience and we’ve eliminated 83% of the service differences between us, ensuring consistency in processes and services – which is key to a stress-free connection experience,” said Jeff Moomaw, Delta’s Managing Director – Alliance Experience.  “Our joint customers can now purchase tickets for our branded products in all our booking channels, reserve their seats, take advantage of free messaging onboard as well as see alignment on checked and hand luggage policies.”

Improving customer experience

  • An aligned booking process across the two airlines, with ability to view the product offerings with real-time availability and pricing, as well as choose seats.
  • For frequent travelers, there is now elite status recognition at the time of travel as well as full earn and spending opportunities between the two airlines.
  • Customers enrolled in the TSA Pre-Check program will now have this emblem printed on their boarding passes when traveling with either airline – saving time and stress in the airport security line as customers enter, connect or exit the United States.
  • The airlines’ reservation specialists are now able to access, rebook and reissue tickets using the SkyTeam Rebooking feature, for customers flying with any of SkyTeam’s 18 other members, in a matter of minutes when a customer is impacted by a travel disruption.
  • For corporate travelers, Delta and Aeromexico introduced the Corporate Priority program, which gives corporate travelers consistent benefits around the world. These benefits include check-in recognition, priority boarding, priority service recovery, denied boarding and downgrade protection.
  • The airlines can now share passenger information to provide service request consistency with aligned unaccompanied minor and special assistance policies, as well as agreed procedures for animals traveling in the cabin.
  • A joint operations control center in Mexico City Airport also provides operational excellence and improved service recovery.employee-helping-customer-skyteam-rebooking.jpg
    “At Aeromexico and Delta we have a clear vision to be the number one option in the transborder market,” said Andrés Castañeda, Chief Digital and Customer Experience Officer at Aeromexico. “With more than a thousand flights per week, it is our job to offer a seamless experience to our joint customers. Along with Delta, we have achieved key goals that go from aligning processes and policies, technologies and making teams work closer, so we can provide our customers a journey tailored to their needs. Even though we have accomplished a lot, we want to better understand them, to keep raising the bar, and give them a more differentiated product.”

What’s coming for customers in 2020

  • Seamless check-in capability through the airline’s websites and apps
  • Improved bag tracking technology
  • Pre-flight communications highlighting the partner’s flight experience, so customers know what to expect when traveling with both airlines.
  • Expanded Corporate Priority benefits

The airlines will also be working together to better understand customer satisfaction through joint post-travel surveys, which will be introduced this month. This feedback will drive future investment in technology and products for the benefit of customers as well as support the airlines’ focus on decreasing customer complaints.

Delta and Aeromexico have a long history of working together. They launched their first codeshare in 1994 and launched their joint cooperation agreement in May 2017.

2019 Delta and Aeromexico Seams Closure Infographic