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Aeromexico seeks to trace the flight after the 737 MAX bump

2020-02-17T16:11:39.799Z


The Mexican airline records a drop in passengers and an increase in losses due to the suspension of aircraft


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Aeromexico wants to leave behind the financial and operations slump caused by the 737 MAX. Since the Boeing plane was quarantined after two plane crashes, the main Mexican airline has had to face a decrease in the number of passengers, losses on the stock market and the growing competition of low-cost- its rival Volaris has already unloaded on transported passengers. A recent compensation agreement with the US manufacturer has opened a window of optimism for the airline after a year in trouble.

Waiting for the end of the investigation by the US authorities on the failures of the device, the suspension of six 737 MAX of its fleet and the delay in deliveries of another 14 ships of the same model weigh on the results. The situation, which also involves sectoral factors such as the increase in the price of fuel or the appreciation of the exchange rate, has caused the company to close 2019 with a net loss of 2,369 million pesos, about 128 million dollars, according to data published this week. The figure represents an increase of 26% compared to the losses reported the previous year.

The impact has also been noted in the bag. In the last twelve months, Aeromexico's share has been left over 37% of the value, going from 24 pesos in January 2019, 1.3 dollars, to the current 13 pesos, 0.70 cents, according to data from the Mexican Stock Exchange . The company, however, highlights its “financial strength” and the improvement in the last months of the year.

In addition, the suspension of the MAX complicates a scenario in which the low cost are on his heels. Volaris, a direct rival, has momentarily snatched his scepter. In 2019, the Aeromexico Group transported, between national and international flights, just over 20.5 million passengers, compared to 22 million of the low-cost airline, according to data from both companies. It is quite a turnaround compared to 2018, when Aeromexico exceeded it by 3.5 million passengers. The fight for the skies has extended to international flights, the traditional bastion of the airline led by Andrés Conesa. There also the low cost have grown rapidly.

The agreement between Boeing and Aeromexico comes after more than 10 months of uncertainty. Without giving many details about it, the company said in a statement that "he hopes that once the equipment is rectified, operations will restart." Stock analyst Brian Rodríguez, from Monex Financial Group, is cautious. "We consider it beneficial, but not enough," he says. “It talks about 'mitigating' the costs derived from temporary suspension. It will not recover everything lost. ”

There is still no date for the reinstatement of the six planes. This has forced the company to fill the gaps with a pair of 737-700 aircraft, a model prior to the MAX and hire three devices from the French Transavia. In addition, it has used aircraft of less profitable routes to cover the gaps. The CEO, Andrés Conesa, recognized in October the complications to “adjust efficiently”. "If we had known in March that the plane was not going to fly the rest of the year, you have a way of adjusting better, but as we have been told that it was flying the following month, and then in summer, and then in October, and then in December" , he claimed.

Despite technical failures, Aeromexico has maintained its commitment to MAX. The company expects another 14 to be incorporated throughout the year. In addition to those on the ground because of the suspension, they would reach 20. In the opinion of the aviation expert and law professor at the National Autonomous University of Mexico (UNAM) Rogelio Rodríguez, this is the best option. “You can't have so much diversification because combining fleets is very complex. If you have three manufacturers, you need three different maintenance lines, three teams, ”he explains. His rival Interjet still carries problems derived from his attempt to incorporate Russian-made Sukhoi aircraft into a fleet composed mostly of Airbus.

The possibility of Aeromexico buying aircraft from Airbus does not seem immediate, although company sources assure this newspaper that there is an ongoing analysis and that “all types of aircraft” are contemplated. The example of Delta can influence. The US airline, which owns 49% of the Mexican's shares, has been making mass orders to the European manufacturer for several years. A situation that, according to expert Roberto Martínez, from the specialized Transponder 1200 portal, "can weigh on decisions." "Especially since from the 737 MAX stop, Boeing is going to have a strong delay in deliveries," he adds. As they admit on the airline, there is no calendar to receive orders.

There is still no easy way out. "As long as the problem is not resolved, it will continue with passenger traffic challenges in 2020 and the low-cost airlines will continue to benefit," says analyst Brian Rodriguez. The impatience is palpable. CEO Andrés Conesa said a few months ago that he would be aboard the first 737 MAX flight. Now I just need to take off.

Source: elparis

All business articles on 2020-02-17

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