The federal government has reached an agreement to buy the brand and some assets of defunct airline Mexicana de Aviación (better known as simply Mexicana) for more than 800 million pesos.

Government officials signed a deal last Friday – worth 815 million pesos (US $42.6 million), according to an El Universal newspaper report – with several unions that represent former Mexicana workers.

The agreement comes after President López Obrador said late last year that an army-run commercial airline would begin operations in late 2023. The state-owned carrier is slated to be called Mexicana, which was the name of Mexico’s flagship airline until it ceased operations in 2010.

El Universal reported that the government, via the Ministry of Infrastructure, Communications and Transport, agreed to purchase the Mexicana de Aviación brand and associated sub-brands as well as a building in Guadalajara, a section of a building in downtown Mexico City, a training center near the capital’s airport and a flight simulator.

José Alonso, a spokesman for the pilots’ union, ASPA, told Reuters that a time frame for the payment has not yet been agreed. The news agency reported a slightly lower purchase figure of 811.1 million pesos.

Alonso said that the government will lift existing legal actions against Mexicana on Monday.

The airline’s downfall was marked by corruption and mismanagement, and it left over 8,000 employees without jobs. López Obrador has said that the new airline, consisting of a fleet of 10 leased planes, will be staffed by the former workers.

Alonso told Reuters that the government’s payment will be divided between ASPA, the flight attendants’ union ASSA, the former aviation workers’ union AJTEAM and the transportation workers’ union SNTTTASS. The amount each will get will depend on what members were owed when Mexicana ceased operations, he said.

Alonso said that the government payment is only a small fraction of what was owed to Mexicana workers, but that “it’s a little bit of justice after 12 years.”

López Obrador has said that the Defense Ministry’s airline and tourism firm, Olmeca-Maya-Mexica, will run the new state-owned airline.

The airline will lower the cost of airfares while serving cities that current routes do not frequently reach, according to the president, who has also proposed allowing foreign airlines to fly domestic routes to cut costs for passengers.

With reports from El Universal and Reuters