Mexicana relaunch pending on shareholder transfer

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Despite widespread Mexican media reports suggesting that bankrupt Mexicana might relaunch operations on 24 January, the lack of a final agreement over the transferral of the Mexicana shares currently owned by Tenedor K/Advent to a new group of investors identified as PC Capital is making an imminent return to operations looking increasingly unlikely.

Humberto Trevino, Mexico's Secretary of Transport and Communications (STC), sparked renewed hope for the grounded Oneworld airline with his bullish declarations made earlier this week when announcing an imminent agreement with creditors that would pave the way for Mexicana's relaunch on the 24th, admitting, however, that the "actual flight operations might not necessarily be resumed that day".

But on 5 January, Tenedora K/Advent, the current owner of Mexicana, and PC Capital, the carrier's potential buyer, had not yet reached an agreement on the terms of the transaction despite a number of mediation attempts from the Mexican secretaries of labour and of transport.

Tenedora K is the local fronting of the US Advent investment fund created to comply with Mexican foreign ownership rules for local airlines and the company that acquired Mexicana after its bankruptcy last summer for a symbolic sum of 1,000 pesos (US$80).

PC Capital is the purpose-created investment group willing to take over Mexicana. It affirms that it has presented the government a list of [not publicly announced] investors committed to making available US$200 million for the capital restructuring and relaunch of the airline.

According to a report by the El Universal daily newspaper, Tenedora K/Advent wants US$ 5 million for having administered Mexicana during the bankruptcy, although El Universal suggests that the real negotiation is between Advent and the Secretary of Communications and Transport (SCT) over a renewal of the soon-to-expire commercial areas concession at Mexico City Airport, which Advent acquired three years ago for US$80 million from Spain's OHL.

While no official source could be reached at SCT, a source at the ASPA pilots union tells ATI that these "conversations between SCT and Tenedora K/Advent" are a "very good sign" indicating that "things finally are moving now".

He says that PC Capital, which "has negotiated already a labour agreement with the Mexicana unions", has committed to making its investment effective "before 24 January", obviously pending a shareholder agreement with Tenedora K. He explains that half of the amount will be used to pay off labour debts which will allow Mexicana to slash its original workforce [of nearly 10,000] to "less than 2,000".

But he also sees no way to relaunch flights still this month. "Mexicana needs to renew its AOC and re-certify pilots licenses, so February could be the month which could see Mexicana back in the air."

He is also skeptical about media reports that Mexicana would relaunch with 28-30 aircraft. "As far as I know, initially there will be six, maybe nine Airbus A320 aircraft available as most aircraft have been repossessed by their lessors", he says, although "the intention is to grow quickly to 30 aircraft".

Mexicana owns nine A320-200 aircraft, built in 1991 and 1992, whose acquisition was financed by a loan facility provided by Mexican bank Bancomext. The bank has declared repeatedly that it is prepared to support Mexicana's recovery process by structuring a sale-leaseback deal to guarantee the bank repayment of the loan and Mexicana a core fleet for its relaunch.

The ASPA source says that the "new Mexicana", dubbed "Mexicanita" by the Mexican press because of its small size, would initially focus on recovering its US routes from Mexico City, Guadalajara and Cancun. "According to the last information I obtained, Miami, New York, Chicago, San Antonio, Las Vegas and Los Angeles will be part of Mexicana's initial network because these routes are the most profitable". He says that Mexicana's demise and Mexico's temporary FAA category two safety classification created a "drop in supply while demand continued to grow" on routes between Mexico and the US, "resulting in higher fares", making the routes very attractive for Mexicana.