Grupo Aeromexico SAB, Mexico’s second-largest airline, filed for bankruptcy in the U.S., becoming the latest in a string of Latin American carriers to seek court protection after the COVID-19 pandemic caused a severe downturn in travel.
The carrier will “continue operating and use Chapter 11 as a way to strengthen its financial position and liquidity,” according to a statement to the Mexican stock exchange Tuesday. Aeromexico said the goal will be “protecting and preserving its operations and assets and implementing the necessary operational adjustments to face COVID-19-related impact.”
Aeromexico saw the number of passengers it carried plummet more than 90% as governments grounded flights and travellers stayed home. The airline struck deals with labour groups and suppliers in May to cut costs by more than half to around $50 million a month while offering its employees unpaid leave.
Latin American airlines, unlike their counterparts in the U.S. and Europe, have received scant government support even as travel demand plunged and the coronavirus prompted countries to seal borders. The region’s largest carrier, Latam Airlines SA, filed for Chapter 11 bankruptcy in May just weeks after Avianca Holdings SA, Colombia’s biggest airline.
Aeromexico operates routes in Mexico, and internationally to the U.S., Canada, Europe and Asia, among others. Delta Air Lines Inc. is its biggest shareholder.