Aeroméxico is ‘about to take off’ from the bankruptcy zone – El Financiero

Aeromexico Group won court approval to write off $1.1 billion in debt by giving a stake in the company to Apollo Global Management, the investment firm that helped keep the airline afloat after it filed for bankruptcy as a result of the COVID-19.

The Court of the Southern District of New York approved exit plan Aeromexico of Chapter 11, with which the airline will be able to emerge from the protection that the Bankruptcy Law in the United States provided for almost 20 months in which the airline was able to restructure its liabilities by negotiating with its creditors.

sources confirmed to The financial that on Friday afternoon, the judge Shelley C Chapman approved the plan Aeromexico, after overcoming a couple of objections raised by creditors who disagreed with the airline’s restructuring plan.

“The employees of Aeromexico can rest easy, and the people in Mexico too, now that its flagship airline has moved past Chapter 11,” Chapman said Friday. “We’re going to keep our fingers crossed that COVID doesn’t throw us any more curveballs.”

The ruling by the US bankruptcy judge, Shelley Chapman, came after the company reached a last-minute agreement with some creditors, including Invictus Global Management Y Corvid Peak Capital Management, who objected to the reorganization proposal that would deliver shares to debt holders senior apollo Y Delta Airlines.

With this, the airline will prepare to officially leave, in the following weeks, the Chapter 11, the law that protected the airline after a strong impact due to the crisis due to the pandemic, which forced the airline of the ‘Eagle Knight’ to optimize its fleet and its workforce, at the same time that it cleaned up its cash with a loan from Apollo, a fund that injected one billion dollars.

The final hurdles the company had to go through were: an objection filed by Google for a debt of more than half a million dollars, which was withdrawn on Thursday after an agreement with the airline; and a claim of Undefeated, a firm that claimed preferential treatment for Delta and Apollo, but that in the end, accepted one million one hundred thousand dollars to withdraw its opposition, while other minor creditors agreed to receive 800 thousand dollars to cover their representation expenses and thus eliminate all pending obstacles.

The airline will have, with the exit plan approved by the Court, a new shareholding configuration: the Mexican shareholders they will have only 4.1 percent of the company, Apollo will have 22.3 percent, while Delta will bring together 20 percent of the shareholders.

The rest will be distributed among all the new investors and creditors who capitalize their recognized credits.

Aeromexico is the second airline with the highest volume of passengers mobilized at the end of 2021, the year in which it managed to transport 16.5 million travelers, only behind Volaris. Despite this, the company closed 20 percent below the levels prepandemic.

According to him Reorganization Plan presented in October, in the Court of the Southern District of New York, the projections of the ‘Eagle Knight’ estimate that, by the end of 2025, the mobilized passengers exceeded 32 million, that is, almost double those that mobilized at the end from last year.

The Aeroméxico’s financial restructuring plan It also contemplates an addition of 36 aircraft between 2022 and 2024, with which the airline plans to be able to meet the demand of national and international travelers who, according to the International Air Transport Association (IATA, for its acronym in English), will recover pre-pandemic levels in a couple of more years.

The second largest airline in Mexico filed for bankruptcy in U.S in 2020 after the pandemic severely impacted travel.

Aeroméxico saw how the number of passengers it carried increased plummeted more than 90 percent as governments suspended flights and travelers stayed home. The airline, unlike its counterparts in the United States and Europe, received little or no government support.

capital increase

Earlier this month, shareholders approved a capital increase for 4 thousand 270 million dollars. The airline will issue 682.1 billion new shares to be paid for by capitalizing $3.4 billion in liabilities and injecting $828 million.

Andres Conesa, chief executive officer, Ricardo Sánchez Baker, chief financial officer, and Javier Arrigunaga, president, will remain in their current roles, according to the plan.

The Aeromexico shareholders they had also previously confirmed Arrigunaga, Conesa, Valentín Díez Morodo, Antonio Cosío Pando, Jorge Esteve Recolons, Eduardo Tricio Haro and Guillermo Pascua III as members of the board. The new board members are Antoine Munfakh and Bogdan Ignaschenko of Apollo, as well as Glen Hauenstein of Delta and Andrés Borrego of Credit Suisse. Two additional seats on the board will be filled at a later date.

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