Mexico's Aeromar Shuts Down After Financial Difficulties

DALLAS – A statement posted on the official website of Mexican airline Aeromar (VW) announced the end of its operations.

According to the company, the decision was made due to "a number of financial issues" and "difficulty in concluding sustainable agreements for its long-term operation." It also stated that it could never fully recover from the Covid-19 pandemic.

The airline was established in 1987 and was the longest-operational Mexican carrier without service interruption. Before its demise, it operated a fleet of ATR 42 and 72 turboprops on various routes from Mexico City International Airport (MEX) to 21 destinations across Mexico, Cuba, Havana and Texas.

Cause and Effects

The Mexican Airports and Auxiliary Services (ASA) had set the date as the deadline for the debt that Aeromar owes for the fuel supply. Thus, on February 15, MEX concessionaire stated that it would only permit the airline to operate there once it paid the more than 500m pesos (about US$26.7m) it owed.

The grounding will result in close to 700 individuals losing jobs. The corporation claimed that VW employees had consistently received their base pay except for a few salary-related issues. 

Information will be provided to passengers affected by the unexpected halt in service "once alternatives are available in conjunction with the competent authorities."

The obligations that Aeromar owes to ASPA-affiliated social security institutions, employee savings funds, AICM, ASA, and the lessors of its aircraft have ultimately resulted in its demise.

Way Forward

Despite continuing to offer commercial services until last week, the company's timetable has substantially changed due to the economy and the reduced number of available aircraft. Aeromar's financial situation was dire, and it would be impossible to pay off its debts without the help of an outside investor.

The hope is that Nella, an American company led by a Brazilian businessman, may attempt to buy Aeromar. 

However, until last week, it was anticipated that the holding company's representatives would meet with the government to present a debt restructuring plan for the airline. It is currently unknown what the holding company will do in response to the suspension.

Featured Image: ATR