The top management reshuffle at Aeromexico and Mexicana and a push for them to work closer together are not a prelude to merger, insists holding company Cintra.

Merger speculation started in March when Arturo Barahona suddenly left Aeromexico after only eight months as director general, and was replaced by Mexicana's top man, Fernando Flores. Despite common ownership, the two airlines have long regarded each other as rivals with separate cultures and no cross-over in management.

The merger rumour was fuelled further by the exit of other Aeromexico executives, changes in directors at both airlines, and more visible roles by Mexicana managers in Aeromexico operations. Mexicana's unions even started worrying about this new focus on Aeromexico and the appointment of relatively unknown Emilio Romano as Mexicana's new head.

Ever since late 2000, Cintra has been under orders from Mexico's competition commission to split Mexicana and Aeromexico into separate ownership. But the government has delayed floating its majority stake because of initial foot-dragging by Cintra and more recently by the lack of a market for its shares.

Cintra has lost nearly $500 million in the past three years. It expects to break even this year, but Rogelio Gasca Neri, who took Cintra's controls in December, is impatient for more improvement.

Instead of Mexicana and Aeromexico continuing to treat each other as rivals, Gasca is directing them to co-ordinate flights and routes, start joint procurement, and look for other back-office co-operation that would cut costs by 8% and boost revenue by 9%. One early sign of this change is their unprecedented codeshare on flights to Los Angeles and Las Vegas.

Gasca insists these moves are not aimed at merging the two airlines, but at improving their results enough to make them viable for sale. He said that Cintra does not want to lose the advantages of maintaining separate brands for the two carriers or to fall foul of Mexico's antitrust legislation. Cintra predicts their privatisation could come as early as next year.

Source: Airline Business