Friday, July 12, 2024

Mexicana airline faces US $840M lawsuit from Texas company

Just three months after it completed its first flight, the new state-owned commercial Mexicana airline faces a US $840 million lawsuit in the United States.

A Texas-based company hired by the Mexican government to provide a range of services to Mexicana de Aviación, including obtaining aircraft, sued the airline on Wednesday, accusing it of various breaches of contract.

Mexicana airplane in the sky
The state-operated airline launched in December with flights today to 17 cities nationwide. (Cuartoscuro)

SAT Aero Holdings, which was also tasked with obtaining insurance for Mexicana, organizing maintenance of aircraft and recruiting and training pilots and cabin crew, filed its lawsuit in a U.S. federal court in New York.

The San Antonio-based company is seeking $838.5 million in damages — the total value of its contract — plus “out of pocket” costs that currently exceed $2.4 million.

SAT alleged that Mexicana failed to fulfill its contractual duties starting in the early days of their commercial relationship.

According to a Reuters report, among the company’s claims are that Mexicana failed to pay $5.5 million of aircraft lease deposits, refused to sign documents, poached its pilots and crews, and failed to obtain licenses needed to import planes to Mexico and operate them.

SAT said that it “has endeavored to work with the Mexican Ministry of Defense [Sedena] to resolve these issues” but “instead of remedying these several breaches, Mexicana Airlines has … instead sought to impose financial penalties on SAT and hold it responsible for the failure to deliver any of the aircraft identified” in its agreement.

The company said it had “no choice” but to sue Mexicana due to the the airline’s “material breaches and its unwillingness to work with SAT on solving the problems caused.”

SAT said that it had an agreement with Mexicana that contract disputes could be heard in New York courts in accordance with that state’s laws.

Sedena, which operates Mexicana and entered into the agreement with SAT, told Reuters that it didn’t have any information about the case.

General Leobardo Ávila Rodríguez at a news conference
General Leobardo Ávila Bojórquez, the deputy director of the airline, talks about its initial weeks of operation at a January press conference. (Cuartoscuro)

Mexicana began operations on Dec. 26, just 14 months after President Andrés Manuel López Obrador confirmed a media report that the government was considering the creation of a state-owned commercial airline to be operated by the army.

In early 2023, the government reached an agreement to buy the brand and some assets of Mexicana, and finalized the deal last August just a month after López Obrador said the government’s attempt to purchase the defunct airline had failed. Mexicana was Mexico’s flagship carrier until it went bankrupt and ceased operations in 2010.

The revived state-owned Mexicana “initially struggled to acquire aircraft,” Reuters reported, noting that it began operations with just three military-owned Boeing planes and two  Embraer aircraft leased from regional Mexican carrier TAR Aerolineas.

López Obrador said earlier this month that Mexicana will purchase 20 planes by October. The president’s successor will take office Oct. 1.

Mexicana operated 160 flights in January, according to government data. It operates routes between the army-built Felipe Ángeles International Airport (AIFA) north of Mexico City and 17 Mexican cities including Acapulco, Mazatlán, Tijuana, Tulum and Monterrey.

The airline is seeking to compete with Mexican budget carriers such as Volaris and Viva Aerobus. It is operated by the the Olmeca-Maya-Mexica company, a military-run state-owned firm that also manages the Maya Train railroad, AIFA and several other airports.

With reports from Reuters and Bloomberg 

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