They warn that Mexican airlines could fall into bankruptcy due to coronavirus emergency

With estimated losses of USD 6.4 billion and up to 85% of its operation stopped, Mexican airlines fly through one of the worst crises in their history without a government parachute, who refuses to rescue them despite the pandemic.

The reduction in passengers since March, the first month of COVID-19 in the country, and the prolongation of the health emergency, at least until May 30, could even mean the bankruptcy of some of the companiesRodrigo Pérez-Alonso, a partner at the consulting firm Koalsulting México, explains this Monday to Efe.

“There is such a possibility, so much so that, in the industry in the United States, which is much more important than in Mexico, the government itself had to come to the rescue through different mechanisms”, explains Pérez-Alonso, ex-director general of the National Chamber of Air Transport (Canaero).

The Mexican airline industry could lose 117,000 jobs and $ 6.4 billion this year, 45% less revenue than in 2019, due to the impact of the coronavirus, according to the International Air Transport Association (IATA).

Thus, IATA and Canaero have requested the intervention of the Mexican Government, which has not yet responded to your request.

For Pérez-Alonso, a rescue of President Andrés Manuel López Obrador, who is unlikely He has repeatedly rejected that his Administration will save large companies despite the economic crisis of the pandemic.

“But the other 50% of the probability corresponds to reality, which is, if you let these companies go bankrupt, you are going to generate a significant social impact of layoffs, obviously of job loss and significant loss in economic matters”, qualifies the consultant.

The coronavirus has caused 8,772 infections and 712 deaths in Mexico since the first confirmed case on February 28.

Only in the first month of the disease in the territory, the Mexico City International Airport (AICM), the main one in the country, reported a 35.3% drop in total passenger traffic compared to March the previous year.

A similar fact was reported by the group of Aeropuertos del Sureste (Asur), which includes Cancún, with an annual fall of 35.8%.

While, the drop was 30.2% for the Grupo Aeroportuario del Pacífico (GAP) and 32.6% for the Grupo Aeroportuario del Centro Norte (OMA), each with 13 airports.

But when considering only international passengers, in all cases the death is close to 40%.

For this reason, Brian Rodríguez, analyst at the Monex Financial Group, warns of increased vulnerability for airlines operating international routes.

“We have observed a greater vulnerability in the case of Aeroméxico, which, as we well know, is the leading airline in international passenger traffic in the country, and is just the station where we see the biggest drop“Observe.

While Aeroméxico reported in March an annual decrease of 41.5% of total passengers and of 51.4% only in the international marketRodríguez details that his low-cost competitors showed greater resistance.

Volaris carried 12.8% passengers less while Viva Aerobús even reported an increase of 1% derived from focusing on the national market.

Although uncertainty persists, Pérez-Alonso recalls that it took the airline industry almost three years to recover after 2009, when the financial crisis and the epidemic of the AH1N1 influenza accelerated the bankruptcy of Mexicana de Aviación, the country’s largest airline until its closure in 2010.

Instead, the Monex analyst shows confidence in the Mexican tourism sector, which represents more than 8% of GDP, for the international appeal it represents.

“It could move forward towards the end of this year, and by 2021, already in the long term, we would be seeing a significant recovery”, esteem.

The financial specialist considers that, despite the increase in operating costs due to the depreciation of the peso, falling fuel prices will help airlines.

He also sees an opening of new routes “at all-time highs”.

Still, he agrees that the federal government should intervene to prevent any of the Mexican airlines from crashing.

“It is important that there is support for the airlines. In case there is not, in addition to all the problems we mentioned, towards the future problems could come from a debt that could hardly cover the flow that they are generating in this period“he concludes.