Mexico’s Interjet Approves Coming into Chapter Proceedings

Yesterday Interjet’s administration and stakeholders authorized submitting a chapter and reorganization course of below Mexican legislation. After almost 5 months of not flying, the Mexican low-cost provider will try and reorganize and relaunch financially.

Interjet is submitting for a Mexican chapter course of. The airline plans to exit financially reorganized. Picture: Getty Pictures.

The plan is to maintain flying

Interjet stopped flying on December 11, 2020. Previous to the COVID-19 pandemic, the Mexican airline had three years of steady web losses. Then, the worldwide disaster served as the ultimate nail within the coffin, and Interjet misplaced its fleet, its market share, and even its popularity.

Amongst Mexican vacationers, Interjet was a favourite. It had service, with respectable connectivity all through Mexico, the US, Central, and South America. However now, the Interjet model drags a heavy weight of unreliable schedules, unredeemable journey vouchers, and misplaced cash.

Nonetheless, Interjet stakeholders imagine there could be a approach out of all this. That’s why the airline is submitting for a Mexican chapter course of. In a press release, the airline stated,

“The target of this settlement is to renew operations as quickly as doable whereas respecting the staff’ labor rights.”

Interjet’s former workers are at present on strike. They’ve taken Interjet’s belongings, like airplanes, hangars, and airport desks since January. Earlier than the airline’s unofficial stop of operations, among the employees had seven months with out fee.

Interjet Getty
Interjet hasn’t operated since December of final 12 months. Picture: Getty Pictures

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The second airline to enter chapter mode because of the disaster

Presently, two out of the pre-pandemic high 4 Mexican airways are in chapter processes. These are Aeromexico and Interjet.

The primary goes via a Chapter 11 in america. It appears to be doing simply nice; final week, it introduced a lowered Boeing order, and plans to exit from Chapter 11 later this 12 months.

Interjet’s course of in all probability may have a distinct consequence. A number of chapter attorneys have acknowledged that the Mexican legislation shouldn’t be as useful because the US Chapter 11. Plus, airways in Mexico don’t have a sound observe of exiting alive from these monetary reorganizations. Mexicana de Aviación was the final main provider to sink whereas making an attempt to emerge restructured.

Throughout Latin America, a number of airways have both filed for chapter or disappeared altogether within the final 12 months. Everyone knows in regards to the huge three Chapter 11 processes. However smaller carriers like EasyFly in Colombia are additionally within the monetary reorganization course of, and airways like TAME in Ecuador and One Airways in Chile have folded.

Simply extra may observe. Latin American governments haven’t offered monetary help to the airline trade, and a few carriers have gone via in depth journey restrictions.

Interjet
Previous to the pandemic, Interjet was probably the most necessary carriers in Mexico. Picture: Daniel Martínez Garbuno/Easy Flying

Interjet’s transient historical past

Interjet launched operations in 2005. The airline gained prominence just a few years after, proper after the exit of Mexicana from the home market. Together with Volaris and Viva Aerobus, the three carriers introduced the low-cost mannequin to the nation.

Not like its two opponents, Interjet drifted away from one of many traditional pillars of low-cost concept, fleet commonality. It purchased 30 Sukhoi Superjet 100, which precipitated super ache on the corporate.

In 2013, Interjet additionally stopped paying taxes, increase a debt that will by no means be paid. Whereas the airline provided low fares and reached as much as ten nations throughout America, it additionally tried to compete with legacy provider Aeromexico. It couldn’t do each.

Since 2013, the airline was worthwhile solely in 2013, 2015, and 2016. Between 2017 and 2019’s first quarter, Interjet had a mixed web lack of over US$211 million.

Since Interjet’s exit, the Mexican market has adjusted effectively. Volaris and Viva Aerobus have seized the hole, protecting the markets Interjet provided, even in South America. Even when it achieves reorganization, Interjet would have an extended technique to go to realize again that misplaced market share and public belief.

Do you suppose going into chapter 11 was Interjet’s most suitable choice? Tell us within the feedback.  

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