Mexicana is the biggest airline to go bankrupt since Japan Airlines, another Oneworld Alliance member, JA went bust in January. Mexican airlines have faced tough conditions lately, battling the deepest recession in the Americas (Mexico’s economy shrank 9.7% in the year to June 2009, though it has since recovered). Last year the country’s tourism industry was hit by the outbreak of the H1N1 virus, first reported in Mexico and quickly affected the hotels of Cancún as the visitors left in droves.
The result for Mexicana has been a loss of $350m since 2007. The company claimed its losses were mainly caused by high wage bills. Mexicana pilots earn 49% more than pilots working for the big American carriers, and 185% more than pilots who work with Mexican low-cost airlines such as Volaris and Interjet.
Flight attendants earn 32% more than their American counterparts, and 165% more than those with Mexican budget carriers.
Fernando Perfecto, the director of the pilots’ union, has said that the company’s salary figures are “inexact”, his organisation has not provided its own figures to deny the claims. The company maintains that once the big wage bill is excluded, its operating costs are slender—30% lower than the big American airlines, it says. Indeed, it claimed that if wage contracts had been “more competitive”, it would have posted $350m of profits rather than losses.
Whatever the likelihood of that, lowering those wage bills has so far proved impossible. On July 1st, 500 Mexicana pilots and cabin crew marched through Mexico City’s Benito Juárez airport in protest at proposals for pay cuts and layoffs. Mexicana’s proposals are swingeing: pay cuts of 41% for pilots and 39% for flight attendants, and a 40% cut in the workforce. The company has laid out another option, of selling the business to the unions for the sum of one peso. The unions have yet to respond.
For now, Mexicana is doing its best to keep its 69 aircraft out of the hands of worldwide creditors. Two 'planes were seized in Calgary last week by Air Canada, which had leased the planes to Mexicana and apparently heard a rumour that bankruptcy was in the offing. Other attempts have reportedly been made in Chicago and at JFK airport in New York.
If Mexicana goes under, it will mean a big gap in the market: the airline transported more than 11m passengers last year. It would be bad news for passengers on some routes that already suffer from a severe lack of competition. The Mexico City to London route, the only other operator is the strike-prone British Airways!
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