Interjet Eyes Comeback After $1.25 Billion Mexico Restructuring
Interjet Eyes Comeback After $1.25 Billion Mexico Restructuring
(Bloomberg) -- A business plan that aims to put Mexico’s troubled Interjet back in the skies in 2022 is ready, according to the firm the airline hired to advise on restructuring $1.25 billion in debt.
Argoss Partners submitted the plan to Interjet management at the end of July. It calls for debt forgiveness of over 90%, partial payment to workers, preliminary agreements for new aircraft leases and a management team revamp.
Partner Igor Marzo said its firm reached memoranda of understanding with several airplane lessors, many of which are based in Europe and had previously worked with Interjet. Contracts with them could be signed as early as next month but would need the final approval from the judge in charge of overseeing the bankruptcy proceeding in Mexico. At least 10 U.S. investors have shown interest in injecting fresh funds into Interjet with likely initial commitments in the neighborhood of $250 million, Marzo said.
The airline didn’t directly comment on the plan laid out by Argoss, which has completed the first phase of restructuring with Interjet and is seeking to continue working with the company.
“There are very serious conversations with investment funds that will soon take shape, as well as a constant dialogue with the different suppliers and the workers themselves,” Interjet said in a statement. “We will fly again very soon.”
Uncertain Future
The future remains uncertain for Interjet, with pending labor issues and local rivals like Viva Aerobus, Aeromexico and Volaris scaling up and adding capacity as the market rebounds from the worst months of the pandemic. Former lessors may be tempted to work with the Mexican airline again since they have excess aircraft they need to put to use, but the company’s rocky history could give them pause.
“It’s going to be hard. Interjet has lost critical time,” said George Ferguson, senior aerospace, defense and airline analyst for Bloomberg Intelligence. “The Interjet story has been going on for a while. I think there is very little value in the name.”
Interjet shareholders approved a filing for bankruptcy protection in April. The company is aware of two other bankruptcy proceedings initiated by different parties but all the claims have been integrated into a single case.
Part of Interjet’s surviving fleet has undergone maintenance work at Interjet facilities in Toluca, in the state of Mexico, for the past two months, said Argoss partner Carlos Ortiz-Canavate. Bloomberg reported in April 2020 that lessors had repossessed at least 27 Airbus SE planes from Interjet, based on data from a company that tracks leased aircraft. The airline denied this.
Full Stop
Interjet, founded in 2005 by the heirs of a Mexican president, debuted as a low-cost carrier in a market dominated by larger airlines. But the 2013 acquisition of a fleet of Russian aircraft marked the start of multiple operational and financial problems that brought the company to a full stop in December.
Businessman Alejandro del Valle took a 90% stake in Interjet in 2020. He and other investors said they were capitalizing the airline with $150 million.
Tax remediation remains a key concern for Interjet as different interpretations of what is owed to Mexican tax agency SAT and what the airline can actually pay have prevented both sides from reaching a deal, Ortiz-Canavate said. Interjet inherited its $1.25 billion in debt from previous owners, including the Aleman family.
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