Latin America in March: Aeromexico, LATAM, Avianca, Chile, and Mexico

The Latin American aviation market in March had five main stories: Aeromexico’s Chapter 11, LATAM’s Chapter 11, Avianca’s Airbus order book, Chile’s new terminal in Santiago de Chile, and Mexico’s new airport in Mexico City. Let’s take a look at the biggest stories of the month. Aeromexico’s Chapter 11 and fleet On March 17, Grupo Aeromexico informed that it consummated its Plan of Reorganization and has successfully concluded its financial restructuring process and emerged from its Chapter 11. After more than a year and a half in the restructuring process, Aeromexico is ready to move on and has an equity value of approximately US$2.5 billion. The largest shareholders of Aeromexico now are Apollo Global Management (with around 26%) and Delta Air Lines (with about 20%). As a result of the plan, the airline gained access to approximately US$1.5 billion in new capital. In terms of fleet, Aeromexico announced it will receive 22 more aircraft through 2022 and will invest approximately US$5 billion in the next five years. Air Lease Corporation confirmed a new long-term lease agreement for nine Boeing 737 MAX aircraft with Aeromexico a few days later. The Mexican airline will receive two new B737-8 and seven new B737-9, scheduled to be delivered between July 2022 and August 2023. LATAM’s Chapter 11 On March 21, LATAM Airlines Group announced substantial progress in its Chapter 11 proceeding in the United States after the Court approved the airline’s Disclosure Statement. This resolution establishes that the documentation provided by LATAM in the process is sufficient to allow the group to commence solicitation of votes, during which it will seek approval of the Plan from creditors. A few days before, the Court approved LATAM’s new financing proposal enabling the company to access US$3.7 billion in liquidity and refinance its existing loan agreements. LATAM is now in the process of soliciting votes to approve the Plan. It has until May 2, 2022, to obtain the votes, and it will have a Confirmation Hearing on May 17 and 18. During the hearing, the Court will evaluate LATAM’s Plan, and if approved, the airline would emerge from Chapter 11 in the second half of 2022. Avianca’s fleet compromises In a statement, Avianca confirmed its commitment to order 88 new Airbus A320neo family aircraft from Airbus. The agreement also includes a purchase option for an additional 50 aircraft. Avianca expects to receive its 138 new aircraft on order between 2025 and 2031. Rohit Philip, Avianca’s Chief Financial Officer, said, "This is great news for our company, our people, and our customers, considering that the A320neo family is the most advanced single-aisle fleet in terms of efficiency, reliability, and comfort. This order highlights that we continue to make the required investments to grow our network in line with our business plan." Chile’s new T2 On February 28, Santiago de Chile International Airport unveiled its new Terminal 2 for international travel. The airport authorities invested over a billion US dollars to open this new Terminal 2. Since the grand opening, between February 28 and March 2, the 15 airlines operating international flights to and from Santiago de Chile have moved their services there. Terminal 2 allows the airport to have 76 boarding gates and increases the capacity from 16 to 30 million passengers per year. Mexico’s new airport Speaking of airports, the Mexican government inaugurated Mexico City’s new Felipe Ángeles International Airport in March. After three years of construction, and a controversial story, the new airport, which was designed to alleviate the saturation of Mexico City International Airport, opened its doors. It has six daily domestic routes (operated by Aeromexico, Viva Aerobus, and Volaris) and one weekly international route by Venezuela’s Conviasa. Despite opening, the airport is not fully concluded. The works inside and outside the terminal are still going. The Mexican authorities expect the new airport to receive up to five million passengers by next year.

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