Aeromexico gets approval of its restructuring plan |

On January 11, the Mexican carrier Aeromexico has got the approval of its restructuring plan from creditors. This approval will allow the airline to take one step closer to exiting Chapter 11 bankruptcy proceedings in the United States. Following the Court’s approval of Aeromexico’s Joint Plan of Reorganization, the airline has been gathering the support of creditors to approve the Plan. Nonetheless, there have also been several unsecured creditors lobbying against it, as it favored “company insiders, including Delta Air Lines and certain Mexican shareholders and directors.” Despite the challenges, “the solicitation process concluded on January 7, 2022, with strong creditor support throughout the Company’s debt structure,” said Aeromexico in a statement. According to the airline, there were submitted votes on account of claims totaling approximately US$2.68 billion. Of this total, about 86% (or the equivalent of US$2.3 billion) in votes were submitted in favor of the Plan. Aeromexico added: “The conclusion of voting and the strong support from the company’s creditors represents a key milestone in Aeromexico’s restructuring process and well-positions the company to obtain court approval of the plan. Aeromexico will continue working with all of its key stakeholders to obtain court approval of the plan and emerge from Chapter 11 as expeditiously as possible.” Plan confirmation coming soon Following yesterday’s announcement, Aeromexico will now hold a shareholder meeting on January 14. During this reunion, the shareholders will “discuss and adopt corporate resolutions required to effectuate the plan.” Then, the airline will have a Court hearing to consider confirmation of the Plan on January 27. Aeromexico could become the second carrier of the three Latin American airlines currently in Chapter 11 to exit the proceedings. Avianca was the first in late November 2021. LATAM is presently waiting for the Court’s approval on its restructuring plan and has faced pressure and objections from creditors. Aeromexico’s Chapter 11 restructuring will allow the company to raise approximately US$720 million of new capital and US$762.5 million of new debt, in addition to the equitization of a large portion of the airline’s recognized debt. These movements will put the airline in a robust financial position and enough liquidity to emerge in the best conditions. Nonetheless, creditors will suffer dilution once the Plan is approved. Aeromexico's projections The Mexican carrier expects to regain profitability in 2022 by having a net income of approximately US$26 million (versus a projected US$487 million net loss in 2021). In 2023, Aeromexico’s net income will rise to US$139 and up to US$379 by 2025. Aeromexico projected a Passenger Revenue of $1.9 billion for 2021, a decline of 41% compared to the airline’s results for 2019, due to ongoing disruptions from border closures and continued COVID-19 uncertainty. Between 2019 and 2025, Passenger Revenue is forecast to increase at a compound annual rate of 7% to a total of $4.9 billion in 2025. The increase is due to demand recovery following the COVID-19 pandemic, market consolidation, and market growth combined with a recovery in unit revenues. Finally, Aeromexico projects its fleet to grow from 125 aircraft in 2021 to 154 by 2025, including 133 narrowbodies and 21 widebodies.

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