Mexicana gets creditor protection to restructure

A Mexican judge has granted airline company Grupo Mexicana protection from creditors while it seeks to carry out what will likely be a drastic overhaul of its business in coming months, repored Dow Jones Newswires.

The move allows the Communications and Transport Ministry, or SCT, to name an administrator for Mexicana as well as an arbitrator in the restructuring process, Communications and Transport Minister Juan Molinar said.

"Starting tomorrow, we'll be able to have the story much clearer, because the SCT will be in charge of administration," Molinar said. He reiterated that the government isn't planning to put any money into the company.

Mexicana's former owners, led by hotel chain Grupo Posadas, sold the company for a symbolic amount to an investor group known as Tenedora K on August 20, just weeks after flagship airline Mexicana de Aviacion filed for bankruptcy protection in Mexico and the US.

Tenedora K injected "several million dollars," possibly a lost investment, to keep Mexicana de Aviacion and domestic subsidiaries MexicanaClick and MexicanaLink operating until August 28, Molinar said.

"What did Tenedora K do? Acquire a company with negative value in hopes of restructuring it and making it work," he said.

Mexicana listed debts of more than $1 billion in its filing for Chapter 15 bankruptcy protection in the US. Among Mexicana's creditors are airports, aircraft lessors, the Mexican government, local banking group Banorte, flight crews who deferred their salaries in the airline's final weeks of operation, and ticket holders who were scheduled to fly after the airline was grounded.

Further details on how much debt has accumulated on Mexicana's books since its August 3 bankruptcy petition are unavailable, as Tenedora K and the government remained quiet while awaiting the outcome of Mexicana's local filing. Molinar declined to say how much capital would likely be required to save Mexicana from liquidation.

When asked how investing in Mexicana – with all the liabilities that would imply – could be preferable to simply starting a new airline, Molinar said Mexicana has "a series of assets, among them intangible assets, that are very valuable".

He noted Mexicana's brand as the country's oldest carrier, adding, "And it's very likely that in putting together a new company, none of those intangible assets would be had."

A more tangible asset of Mexicana's lies in the coveted take-off and landing slots that it has at the Mexico City International Airport.

"We're temporarily assigning the slots to other airlines so as not to lose connectivity, but the slots continue belonging to Mexicana," Molinar said.

Eduardo Perez Motta, president of federal antitrust regulator CFC, stressed the importance of assigning the slots fairly so as not to favour any one company, such as Mexicana's rival legacy carrier Aeromexico.

"If that happens, what will occur is that they'll increase the prices for these services, there will be a drop in the quality of service, and I think that's what we have to avoid," Perez Motta said at a separate event. "Competition must be maintained in the interest of passengers."
(Source:www.cargonewsasia.com)