Purchase of Mexicana de Aviación Formalized by Gov

DALLAS — The Mexican government has announced that the purchase and sale of the Mexicana de Aviación (MX) brand have been formalized in a "historic agreement that will bring justice to 7,407 workers, who will recover part of the severance pay to which they are entitled after 13 years of labor struggle" working at what was once Mexico's oldest airline.

The new airline is named after a partly state-owned carrier that went into bankruptcy in 2010. The 8,500 laid-off former employees of MX are longtime supporters of President López Obrador, who sees the armed forces as honest and a bulwark against corruption.

https://twitter.com/GobiernoMX/status/1689791366073606145?s=20

The New Mexicana

The new MX aims to offer LCC fares between 18% and 20% cheaper than existing airlines by leveraging synergies with other state operators. The plans presented this week for the launch of the new state airline do not involve the granting of subsidies to the airline. It remains to be seen if other airlines will perceive this as potential unfair competition. MX and NLU are managed by the Mexican military.

The objective of this new state-run LCC is to generate more competitiveness in the local market. General Luis Cresencio Sandoval, the Secretary of National Defense who oversees Mexicana de Aviación, announced that the main base of the airline will be at Felipe Ángeles International Airport (NLU), another symbol of the aeronautical work of the López Obrador administration.

Additionally, a second base will be established at Felipe Carrillo International Airport (FCQ) in Tulum, Quintana Roo, upon completion of construction.

The airlines' network of destinations will include flights from NLU to Cancun, Monterrey, Guadalajara, Tijuana, Campeche, Chetumal, Merida, Puerto Vallarta, Ixtapa-Zihuatanejo, Cozumel, Los Cabos, Hermosillo, Ciudad Juarez, Villahermosa, Huatulco, Oaxaca, Acapulco, Mazatlan, La Paz, and Leon.

The above routes are not new, and their viability will depend on how the low-cost model fares. According to Cirium data, a total of 1,660 weekly flights and almost 300,000 seats are available from Mexico City International Airport (MEX) and NLU as of August 2023.

In parallel, infrastructure works will be carried out at the airports of Apodaca, Tulum, Ciudad Ixtepec, Ciudad Victoria, Nuevo Laredo, Ciudad del Carmen, Ciudad Obregón, Loreto, Palenque, Nogales, Puebla, Tamuín, Uruapan, Matamoros, Colima, and Guaymas, so that they are ready to receive operations with the airline's Boeing 737-800s.

Fleet, Staffing Details

Mexicana de Aviación plans to lease ten Boeing 737-800 aircraft, each with a capacity of 180 passengers. Three of these planes are set to arrive in September, with the remaining seven scheduled for delivery by October 30. The total investment for this fleet expansion amounts to approximately MEX4 billion (US$235 million).

Mexicana de Aviación has received guidance from Boeing in developing its business plan and continues to receive support from the manufacturer in the process of obtaining the air operator's certificate. The airline aims to begin scheduled flights in December.

The Aviacionline report adds that each MX aircraft will have three Mexican crews. The livery of the planes will feature the characteristic colors of the Mexican flag: green, white, and red.

On April 3, 2014, following a period of almost three years and eight months of suspended operations, MX was declared bankrupt after a lengthy process that involved no agreements between the parties involved. The Federal Government's lack of political will to resolve the conflict not only left 8,500 workers defenseless but also led to the downfall of a prominent player in the domestic airline industry.

In January 2023, the Mexican government signed an agreement to buy the Mexicana brand for MEX815 million (US$45 million). The payment for the acquisition of the brand will be distributed among the former workers. As of August 15, pilots, flight attendants, and workers will begin to receive payment under the agreement.

According to aviacionline.com, the airline currently employs 209 individuals. This number is expected to increase to 745 by the time scheduled operations begin.

Featured image: Mexicana's Airbus A330 (retired in 2010) at Cancun International Airport with its new look. Photo: De Hidalgo Cahue, Trabajo propio, CC BY-SA 3.0