Mexicana's suspension creates remarketing challenges

Washington DC
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Grupo Mexicana ceasing all operations could create several difficult aircraft remarketing propositions as the company operated niche aircraft types such the Airbus A318 and Boeing 717.

Boeing Capital may again need to find new homes for 25 ex-Midwest Airlines Boeing 717s which Mexicana only agreed to lease last year. GECAS will have to remarket 10 Airbus A318s, an unpopular type which is already coming out of the fleets of Frontier Airlines and Chile's LAN. GECAS and Export Development Canada will also have to remarket Mexicana's 15 CRJ200s, another type that has glutted the used aircraft market in recent years, and could see further value erosion following Comair's decision earlier this week to remove 49 CRJ200s from its fleet.

The 15 CRJ200s were only leased by Mexicana last year for its new regional unit Link. At almost the same time it forged its deal for 25 717s, which were being used to replace Fokker 100s at its Click unit. While the last of 25 717s came out of Midwest's fleet last November, so far 20 had been re-delivered to Click with the last five originally slated for delivery by the end of this year.

Although the 717 is only operated by a handful of carriers worldwide, a Boeing Capital (BCC) spokesman says "with the exception of the few remaining 717s that were intended for Click, BCC doesn't have uncommitted 717s on the ground. And as evidenced by AirTran's recent lease from us of two additional 717s that were available, the 717 continues to fill a need in the marketplace."

The BCC spokesman adds it "remains in close contact with our Click customer and is evaluating our options. In the meantime, we're taking prudent actions to ensure the safety of our airplane assets there."

A GECAS spokesman declined to comment on prospects for its A318s. ILFC, which owns several aircraft in Mexicana's 50-plus strong A319/A320 fleet, also declined to comment.

The A319s and A320s should be much easier to remarket than the A318s, 717s or CRJ200s. Some of them may even stay in Mexico as the country's third and fourth largest carriers - Interjet and Volaris - both operate the type and are looking to expand.

Interjet already took an ex-Mexicana A320 in July, growing its fleet to 17 A320s. Volaris in August took delivery of two additional A319s, giving it a fleet of 21 A319s and two A320s.

Mexicana also operated two A330s, which it took from CIT early last year to support the launch of transatlantic services, and four 767s.

Mexicana was Mexico's largest airline group in terms of passengers carried. While Aeromexico was slightly larger domestically and had a larger long-haul operation, Mexicana was a larger player on US routes.

Mexicana, Click and Link all ceased operations on 28 August. While some or all of the carriers could potentially be re-launched later this year by new owners, their fleets at the very least will be significantly smaller.

It is too early to say which aircraft types would be favoured in a potential re-launch but widebodies would almost certainly not be part of the initial fleet. New owners could also take a clean sheet approach and opt for an entirely new batch of aircraft under a re-launch scenario. Mexicana's unions are now hoping for a re-launch in December but they first must secure new investors and agree to new labour contracts.

Mexicana, which filed for bankruptcy protection in Mexico and the USA in early August, returned several of its A320 family aircraft prior to ceasing operations. Aircraft that were not returned last month, including all the aircraft at Click and Link, could potentially be stuck in Mexico for several months.

Bankruptcy proceedings in Mexico are notoriously slow and previously it has taken lessors months and even years to repossess aircraft. For example, it took over a year for GECAS and other lessors to get back 10 CRJ200s that had been leased to ALMA, a Mexican regional carrier that filed for bankruptcy and ceased operations in November 2008.