Mexicana woes continue, talks of merger

MEXICANA Airlines, which has filed for bankruptcy protection and cut 15 international routes, is now saying it needs US$150 million investment to keep flying.

Mexico’s largest carrier lost $320 million over the last four years and has debts of almost $800 million. It blames its problems on having to pay its employees more than twice what its competitors pay theirs. The airline has proposed 40 per cent pay cuts and 40 per cent staff cuts.

So far the cabin crew have negotiated suspending their pay for two months and a similar deal has been made with the pilots. In return for these and other changes in employment terms workers have been given a stake in the company, although the details are so far unknown. However, further deals are still being negotiated making the carrier’s future uncertain.

“If we don’t reach an agreement very soon, we’re going to run out of cash, and I’m talking about very soon,” said Adolfo Crespo, the airline’s senior vice-president for corporate communications and customer service.

However, while Mexicana is claiming high staff costs and the global economic troubles, analysts are saying that its biggest problem is mismanagement by the hotel company Grupo Posadas.

There is now speculation that Mexicana will have to merge with Aeroméxico, but Aeroméxico isn’t in much better health.

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