Jaime Corredor Esnaola, the new head of Cintra, takes over the holding company for Aeromexico and Mexicana Airlines at a challenging time.

After replacing Ernesto Martens, who retired at the end of August, one of his first moves was to announce that Mexico's federal government has an even stronger grip on Cintra's shares, and thus on the company's future.

This followed the Government's take-over in July of Grupo Financiero Serfin, one of the original banks that converted Aeromexico and Mexicana debt into shares when Cintra was formed three years ago.

Various government agencies, ranging from the Treasury to the recently formed institute protecting consumer savings, now hold a clear majority of Cintra's shares. Accounts vary depending on which semi-autonomous agencies are included, but together they control at least 53% and perhaps as much as 70% of Cintra's equity.

Cintra revised its governing board in early September to reflect these changes, making it clearer that Cintra's fate lies in the hands of public officials. So far, however, those officials remain at stalemate. The federal competition commission continues to argue that Aeromexico and Mexicana should be split into separate companies, while the Secretary of Transportation continues to argue that consolidated control gives the carriers more clout to match foreign rivals.

Making matters more complicated, Aeromexico has signed as a founder member of the Delta Air Lines/Air France alliance, while Mexicana is a partner in the rival Star Alliance.

Martens, who was a successful industrialist before taking control of Cintra, made no progress in resolving this dispute. Corredor's background, which includes public service as a Finance Secretariat official and as director general of Airports and Auxiliary Services, may give him a better opportunity of discovering a solution.

In the meantime, Corredor faces brushfires stemming from Aeroperu's bankruptcy. Cintra once held a 70% stake in Aeroperu before selling half of it to Delta. Cintra and Delta precipitated the crisis at Aeroperu earlier this year when they refused to inject more working capital into the money-losing carrier.

The financial impact of Aeroperu's demise on Cintra is minimal. Despite a 20% plunge in its share value following the announcement of Aeroperu's bankruptcy, Cintra had already written off most of its investment in the Peruvian flag carrier.

Minority shareholders are threatening to challenge Cintra's decision not to rescue Aeroperu. Corredor may be more worried, however, about a congressional inquiry launched in Lima, where Peruvian legislators are claiming that Cintra exploited Aeroperu's South American routes for the benefit of Aeromexico and Mexicana rather than Aeroperu.

Source: Airline Business