(Reuters) August 18, 2010 – Investment fund Advent International could invest some $49 million into Mexico’s Mexicana de Aviacion to keep the airline flying, local media and a union said on Wednesday.
Pilots from Mexicana de Aviacion reached a preliminary deal this week that calls for wage cuts and staff reduction in a desperate bid to keep the 89-year-old airline operating, according to local media.
Mexicana has halted more than a dozen international routes and stopped selling tickets after requesting creditor protection two weeks ago under Mexico’s insolvency law, called concurso mercantil.
The airline has also requested creditor protection in the United States, but has yet to be declared bankrupt in Mexico.
Reforma newspaper said the cash Advent International would invest in Mexicana would depend on government willingness to temporarily supply free fuel and allow a deferral on payments due for using the country’s airspace.
The potential investment is about half of what the airline’s management says is needed to keep it operating.
Lizette Clavel, head of the flight attendants union, told Radio Formula that other financial institutions would be welcomed into the talks, but so far Advent is the only one that has committed cash.
“This is a first step, by showing there are serious investors looking at the airline,” she said. Her union is expected to meet on Wednesday with Advent representatives in Mexico City to evaluate what they can bring to the negotiation table.
Advent and Mexicana declined to comment on the reports.
Goldman Sachs Group Inc (GS.N) and Credit Suisse Group AG (CSGN.VX) were also mentioned earlier this week by media as potential investors.
Mexicana is one of two top airlines in the country and a major carrier bringing tourists to Mexico’s famed beach resorts. It has a debt of around 10 billion pesos ($800 million).
By Cyntia Barrera Diaz
UPDATE – (El Sol de Mexico) August 18, 2010 – Mexico’s pilots union ASPA has accepted a proposal made by Spanish firm Advent to become part of Mexican financially troubled airline Mexicana de Aviacion, making an initial capital contribution of USD 45mn (EUR 34.97mn) towards the business. The union agreed to a pay cut and 200 job cuts. Their wages will drop to MXN 20,000 (EUR 1,233.79 USD 1,587.72) which is four times less than their current wages. © Esmerk