The CEO of AeroméxicoAndres Conesa said that the company must readjust its size, but that the business model is still in force, after the airline’s announcement to start a financial restructuring, which brought its shares to record lows.
Announcing the restructuring Tuesday afternoon, Aeroméxico, the country’s main airline, said it had entered a “voluntary” process under Chapter 11 of US law amid the havoc caused by the pandemic of the coronavirus.
With the plan, the company seeks to strengthen its financial position and liquidity, as well as “protect and preserve” its operations and assets and make operational adjustments to cope with the impact of the epidemic, which has hit the sector around the world.
“Four months ago we expected the crisis to last less than what is anticipated today,” Conesa told Radio Fórmula. “We believed that, for example, by this summer (boreal) we would already be recovered in the level of traffic passengers, at least close to last year. And it has not happened that way.”
“We believe that our business model is still viable, it is in force. But we have to change,” said the executive, who expects passenger levels to take up to two years to recover to levels prior to the coronavirus crisis.
Standard & Poor’s later announced a downgrade of global issuer and issuance credit ratings to ‘D’ from Aeromexico’s ‘B-‘ and said it estimates the company will likely fly only 50% of capacity by the end of year.
“Therefore, it will continue to seek extraordinary sources of liquidity that, together with its current available cash, will support the business during the reorganization procedures,” the ratings agency said in a statement.
Aeroméxico shares sank more than 65% to an all-time low of 2 pesos on Wednesday after the restructuring plan was presented, in a market that saw more challenges than opportunities for the company. The titles ended the day at 4.17 pesos, with a drop of 28.5%.
“Towards the future, it will be important to evaluate the agreements reached by the station in said restructuring, the evolution of the pandemic and the gradual recovery of travel,” said Brian Rodríguez, analyst at the Monex financial group.
After Avianca and Latam, Aeroméxico became the third airline in the region to file for bankruptcy protection in the United States, amid a crisis that has also hit rival Interjet, which announced a “deep” weekend. restructuring.