Aeromexico Exits Mexico Stock Exchange as It Restructures

Anna Zvereva from Tallinn, Estonia, CC BY-SA 2.0 , via Wikimedia Commons

LONDON – Aeromexico (AM, México City Int’l) said in a statement ahead of the weekend that a majority of its shareholders had approved a proposed exit from Mexico’s main stock exchange as part of the airline’s bankruptcy restructuring.

Shareholders approved a plan to cancel registration of shares and their listing on the stock exchange in order to initiate a buyback program, the company said in a statement.

Aeromexico, which filed for bankruptcy in June 2020, after the coronavirus pandemic reduced travel demand, left bankruptcy protection in March with a $5 billion investment plan and changes to its fleet.

Delta Airlines (DAL), which held a 49 percent stake in Aeromexico before Chapter 11 bankruptcy proceedings, ended with a 20 percent stake. Private equity firm Apollo Global Management (APO.N) became the company’s largest shareholder after Chapter 11.

Aeromexico used its Chapter 11 debtor status to negotiate, by negotiating with aircraft leasing companies, Aeromexico was able to upgrade its fleet accordingly.

Aeromexico’s delisting is specified in the company’s registration rights agreement as part of the Chapter 11 proceedings, in which old shares are cancelled and new shares of the company are issued. Mexican law requires delisting as part of this process.

Aeromexico almost doubled revenue

Grupo Aeromexico recorded a 91.5 percent increase in revenue to 19.2 billion pesos ($928 million), with a 22 percent increase in revenue per available seat kilometre (RASK) year-on-year, according to the company’s unaudited consolidated results for the quarter. of 2022.

This follows the successful conclusion of the financial restructuring process on March 17, 2022 and the exit from the US Chapter 11 restructuring.

Earnings before interest, tax, depreciation, amortization and restructuring or rent costs (EBITDAR) was MXN 2.9 billion ($140.2 million), a year-over-year increase of MXN 1 billion ($48.3 million).

In the second quarter of 2022, operating profit was MXN 626 million ($30.2 million), an improvement of MXN 1.8 billion ($87 million) compared to the same period in 2021.

As of June 30, 2022, the group’s cash position stood at 17.8 billion Mexican pesos ($883 million). Excluding restricted cash, the group’s cash balance was 17.0 billion Mexican pesos ($845 million).

At the end of the quarter, Aeromexico contributed $430 million in equity to PLM capital stock as part of an agreement to acquire the remaining 49 percent of PLM, which operates the airline’s Club Premier loyalty program.

Grupo Aeromexico said its capacity, measured in available seat kilometres (ASKs), has increased 56.8 percent per year, mainly due to the successive recovery of domestic and international markets. Cost per available seat kilometre (CASK) in US dollars, excluding fuel, was $0.045, down 23.0 percent from the same period in 2021, reflecting structural profitability achievements.

As of June 30, 2022, Aeromexico’s operating fleet consisted of 140 aircraft, an increase of 22 aircraft compared to the second quarter of 2021.

To the NYSE?

On March 17, 2022, after more than a year of negotiations with its creditors, Aeromexico left protection under Chapter 11 bankruptcy law in the United States. Like most airlines around the world, Mexico’s largest airline has been hit hard by a 54.2 percent drop in travel demand in 2020, caused by the COVID-19 pandemic.

It entered Chapter 11 on June 30, 2020 to implement financial restructuring, Grupo Aeromexico’s financial statements recorded a loss of $18.7 million in 2021 compared to $42.5 million in 2020.

Total revenue in 2021 was $45.4 million compared to $28.5 million in 2020. Its assets in 2021 included $86.8 million compared to $79.7 million in 2020. Liabilities in 2021 were 141 $.3 million more than $112.6 million in 2020.

The group’s revenue for the first quarter of 2022 was 12.9 billion pesos ($608 million), an increase of 88.4 percent compared to the same period in 2021. The company recorded a loss operating income in the first quarter of 2022 of 763.4 million pesos ($35.9 million), an improvement of 2.7 billion Mexican pesos ($127.1 million) compared to the first quarter of 2021.

Mexican newspaper El Pais quoted Brian Rodríguez, analyst of the Mexican foreign exchange company that specializes in international transactions and payment services for commercial clients Grupo Financiero Monex expecting Aeromexico to list on the New York Stock Exchange (NYSE) before the end of 2022.

The reasoning explained: “It is more attractive for them to go to the United States because there is much greater marketability. The North American market is much bigger and it will be able to raise more capital. The two main shareholders – Apollo and Delta Air Lines (DL, Atlanta Hartsfield-Jackson) – are also American.”

Jorge Gordillo, director of Economic Analysis at CIBanco, said Aeromexico would have to recover the market share it lost to low-cost carriers Volaris (Y4, México City Int’l) and VivaAerobus (VB, Monterrey General Mariano Escobedo). For this, it needed more stable and solid capital, he explained.

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