David Knibb/COLOMBIA

A decision may be near on whether Cintra, the holding company for Aeromexico and Mexicana, should be broken up. According to Mexico's secretary of transport and communications (SCT) a decision will be reached before presidential elections in July.

Surprisingly, an official from the semi-governmental bank protection institute (IPAB), which holds the largest chunk of Cintra shares, predicts an end to this long-running impasse as early as the end of April.

Observers have long predicted it would take a change of government to resolve the dispute. The competition commission has insisted that Cintra be broken up because of anticompetitive practices by Aeromexico and Mexicana in the domestic market.

The SCT has resisted because it believes the carriers need common ownership to compete effectively in international markets. Various government agencies own or control a majority of Cintra's shares, but they have been unable to break this deadlock.

SCT secretary Carlos Ruiz Sacristan says a decision will be reached "during the present administration", meaning before July's elections. Gustavo Castillo, adjunct secretary for assets at IPAB, thinks the government will "define a strategy" for Cintra's sale by the end of April. IPAB holds 56% of Cintra's shares after paying off debts that Aeromexico and Mexicana owed to banks.

Several forces favour an early decision. The government wants to sell its shares to recover some of the large sums of money it spent to bail out Mexican banks. The recent upgrade in Mexico's credit rating has enhanced the value of Mexican shares, making this an opportune time to sell.

The bankruptcy of Taesa, Mexico's third largest airline, has rekindled competition concerns. Mexicana complains that this impasse is delaying decisions about its fleet.

Castillo reports "very constructive talks" with the competition commission, but there are no hints on what the government will decide to do with Cintra.

Source: Airline Business