Recession Casualty: Mexicana Files for Bankruptcy

Travel News — By Jules Auger on August 11, 2010 at 11:30 am

Though the spotlights seemingly forever trained on the current worldwide recession appear to be dimming ever so slightly, more and more companies, ranging from local to multinational, continue to succumb to debt and financial failure. It appears now that Mexicana de AviaciĆ³n, a major Mexican airline, may be joining the ranks of Aloha and Zoom Airlines– other transit companies that hung up their pilot caps following the notorious ‘credit crunch’.

The airline had been dealing with debt for some time, and it would appear that the cancellation of international flights and wage reductions of up to 40 percent are simply setting the stage for what the CEO and shareholders knew would happen a long time ago.

The recession was not the only factor to contribute to Mexicana’s $800 million debt. The 2009 H1N1 flu virus (swine flu) outbreak contributed to the sharp drop in Mexico’s tourism industry, which proved too much to handle for the already struggling airline. During the second week of the flu epidemic, 80 percent of rooms in Cancun hotels were unoccupied – a 60 percent rise in vacancy at a time where hotel business should be booming.

Mexicana has filed for Chapter 15 bankruptcy protection. For now, wage cuts are expected to help the company subsist for a short while longer, though long-term plans are still unclear.

[Image: Boeing]

Tags: airline, bankrupt, flu, mexicana, Mexico, recession, swine

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