Monday, June 17, 2024

Mexican airlines running at 15% capacity; threat of bankruptcy looms

Mexican airlines are operating at just 15% of their capacity due to the coronavirus pandemic, according to the International Air Transport Association (IATA), a situation that could lead some into bankruptcy if no government support is forthcoming.

Peter Cerdá, IATA vice president in the Americas, told a virtual press conference on Monday that Mexican airlines stand to lose almost US $5.3 billion in income between March and May as a result of the drastic downturn in demand for air travel.

If the government doesn’t provide financial support for the airline sector, some carriers will be at risk of collapse, he said.  That would pose a threat to Mexico’s connectivity with the rest of the world, Cerdá added.

The IATA official also said that almost 97,000 direct jobs and 437,000 indirect ones will be at risk of disappearing if the federal government doesn’t help the airline industry through the current crisis.

Cerdá said that the IATA has written to federal authorities on four occasions to ask for assistance for the sector but has not received a response.

“We don’t see any support for the airlines from the Mexican government,” he said, charging that the authorities have shown a lack of leadership.

Cerdá stressed that financial assistance for the sector is especially important because Mexico depends on tourism for a substantial portion of its GDP. Governments of countries that depend less on tourism revenue have already announced packages to support airlines, he said.

The IATA, which represents some 290 airlines around the world, is also seeking discounts on the taxes and fees Mexican airports charge airlines to land, take off and park their aircraft. In addition, it is seeking to buy more time for airlines to make aviation fuel payments to the state oil company Pemex.

During Monday’s press conference, Cerdá predicted that the airline industry will be very different at the end of the coronavirus crisis than it was at the start. He suggested that the government’s airport project at the Santa Lucía Air Force Base north of Mexico City should be put on hold because demand for air travel will remain low for months and the industry won’t fully recover for years.

“We’re going to talk about it [with the government],” Cerdá said.

For its part, the government has said that the airport project, and its other large infrastructure projects, will help to create 2 million jobs by the end of the year and thus contribute to reactivating the coronavirus-battered economy.

Source: El Universal (sp), El Financiero (sp) 

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