Aeromexico Agrees $550 Million in Crew Pay Cuts

Grupo Aeromexico inked a restructure of the Collective Bargain Agreements with two of its Unions. The new deals allow the airline to meet specific commitments and objectives required by the DIP lenders under Aeromexico’s Chapter 11 bankruptcy. Additionally, the airline saves up to US$550 million of labor costs in the next four years.

The Mexican airline had missed two deadlines to reach satisfactory agreements with its four syndicates. As part of its Chapter 11 reorganization, Aeromexico had to reduce costs and restructure the Collective Bargaining Agreements with its pilots (represented by ASPA), cabin crew members (represented by ASSA and STIA), and ground workers (represented by Independencia).

The airline’s future was on the line, literally. If Aeromexico didn’t come to an agreement with its Unions, it could have lost the remaining Debtor in Possession Credit Facility (DIP Financing), worth US$625 million.

Aeromexico’s financing is worth US$1 billion. It has already withdrawn US$375 million, composed of US$200 million of Tranche A and $175 million of Tranche B.

The airline is using this money to cope with the current COVID-19 crisis. In 2020, Aeromexico lost 54.2% of its passenger traffic while posting a US$1.6 billion net loss up to 2020’s third quarter. We still have to see the financial results of the final quarter.

Source: Simple Flying