AEROMEXICO, THE largest carrier in Mexico, has completed a financial restructuring which gives banks and creditors 90% ownership of the airline. AeroMexico was owned by a group of investors when it was privatised several years ago.
The financial arrangement includes conversion of Np3.25 billion ($530 million) in debt to equity (common stock held in Mexico) by existing shareholders and creditors of the company and the issue of new five-year Euro-notes in exchange for $138 million outstanding short-term Euro-notes and Euro-commercial paper.
Ernesto Martens, AeroMexico's chairman, says that the airline's financial restructuring arises from strong support from customers, creditors, Government authorities, suppliers, lessors and airline workers.
He says, that the backing of a group of Mexican banks, involved in the restructuring since late 1994, was invaluable in allowing AeroMexico to survive the Mexican economic crisis.
In late July, AeroMexico announced second-quarter 1995 net income of Np614 million versus a loss of Np205 million in the same period in 1994.
The performance improvement was attributed to decreased operating costs, increased net income and a stronger Mexican peso. Operating expenses decreased to Np929 million, a 9% drop with respect to the same period in 1994.
This was accomplished by reducing the payroll by 600 employees, holding back pay rises and cutting the mainly wide body fleet from 58, to 51.
Source: Flight International