Aeromexico is sending 19 aircraft back to their owners. The airline is taking advantage of the Chapter 11 bankruptcy restructuring process. Earlier this month, Aeromexico obtained court authorization to terminate the leases on 19 planes. It’s all part of a broader effort by Aeromexico to streamline its fleet and put the business in the best possible position going forward.
Heading back to their owners are five Boeing 737-800s, five Boeing 737-700s, and nine Embraer A170 LR planes. Additionally, four General Electric CF34-8E5 engines will go back to their lessors.
These aircraft make up around 15% of Aeromexico’s current fleet. Judge Shelley Chapman of the Southern District of New York Bankruptcy Court approved Aeromexico’s request. Daniel Martinez Garbuno at Simple Flying flagged the request earlier this month.
Aeromexico senior management busy restructuring the airline
Aeromexico filed for bankruptcy protection in the United States at the end of June. It was the third major Latin American airline to do so in as many months. In a statement at the time, Aeromexico said it wanted to implement a financial restructuring, strengthen its financial position, implement necessary operational changes, and create a sustainable future.
“Our industry faces challenges we’ve never seen before due to an incredible reduction in passenger demand globally. We are committed to adopting the necessary measures to operate continuously and efficiently under this new reality,” said Aeromexico’s CEO, Andres Conesa when announcing the airline had sought bankruptcy protection.
Before entering into Chapter 11, the Mexico City-based airline was operating 68 planes to 88 destinations throughout Mexico, the Americas, Europe, and as far afield as Japan. Aeromexico could trace its origins back 85 years.
Despite this, the publicly listed airline was in a sorry state. In 2017, it lost just over US$3 million. This increased the following year exponentially when Aeromexico lost approximately $83 million. In 2019, the airline lost around $105 million. Things in 2020 were looking even worse. Aeromexico lost over $110 million in the first quarter of 2020. That was before the worst of the travel downturn began to impact.
The decision to send back 19 planes part of a restructuring strategy
Aeromexico says the decision to send these 19 planes back to their owners is part of their restructuring strategy. They want to make the fleet “more efficient” and create a more economically viable airline. The court approving the return of the aircraft will automatically see leasing and maintenance costs cut.
The airline now operates a predominantly Boeing 737 and 787 fleet. Factoring in the six grounded Aeromexico MAX 8s, there are five different aircraft models across the 68 strong fleet.
Forty-five planes within Aeromexico’s 68 plane strong fleet are leased. This includes 32 Boeing 737s and 13 Boeing 787 Dreamliners.
While saying the decision to send the planes back strengthens Aeromexico’s business plan and future prospects, the airline says it will have no material impact on current operations. The return of the aircraft will not impact the range of current destinations and schedules.
While restructuring, Aeromexico continues to fly. But it doesn’t rule out further changes. Aeromexico says it will use Chapter 11 bankruptcy provisions to make any necessary adjustments to strengthen its financial position and preserve its operations.
