Mexico’s Interjet Sees Return to Skies in 2022 With Czech Planes
(Bloomberg) -- The embattled Mexican airline Interjet is planning a return to operations by next year with a new fleet comprised of 10 Airbus SE A320 jets and potentially 10 Czech-made Let L-410 planes.
The plan to fly again depends on the company’s ability to navigate a “distressed investing” strategy that will be separated into three tranches, said insolvency specialist Ivan Romo, who is helping with Interjet’s restructuring. The company is in talks with four firms for close to $750 million in financing, Romo said.
Interjet is seeking as much as $50 million in a first tranche in order to restart operations next year. That would be followed two separate tranches totaling as much as $700 million over five to 10 years.
The company’s current liabilities are 40 billion pesos ($1.8 billion), and the largest creditors are the government and lessors, incoming Chief Executive Officer Luis Federico Bertrand said in an interview. The airline owes close to $700 million in back taxes but expects to reach an agreement with the government to reduce this amount.
Interjet hasn’t flown a plane in nearly a year after the pandemic slammed the travel industry hard. Covid proved too much for the airline, which was already in trouble before the crisis hit. Shareholders approved a filing for bankruptcy protection in April.
The company’s newly minted CEO said Interjet will look to sign new leases for the Airbus jets and is considering the Turbolet aircraft for smaller, regional routes that he says are currently underserved by Mexican carriers. A third branch of the company will focus on cargo flights with two jets.
The Czech-made planes are reminiscent of the company’s 2013 move to buy a fleet of Russian-made Sukhoi Superjets that represented years of maintenance headaches for the airline. Sukhoi didn’t have maintenance facilities in the Americas, and counted Interjet as its sole customer in the region.
The same would be true for the twin-engine, short-range Turbolet aircraft made by Aircraft Industries, better known as Let Kuvonice. However, Bertrand said that the Czech planes wouldn’t be a problem because the engines are made by General Electric Co. and the electronic systems by Honeywell International Inc. Interjet is still evaluating its options and is also considering models made by Cessna and Pilatus, he said.
In April 2020, Bloomberg reported lessors had repossessed at least 27 Airbus jets from Interjet. Bertrand said all but one of its Airbus planes have been returned to lessors and the remaining jet will be returned soon. Of the 22 Sukhoi planes the company had, two had “incidents” while grounded, five remain operational and the rest have been “cannibalized,” Bertrand said, using a term for when a plane’s parts are taken from it and used to keep other jets flying.
At its height, Interjet had 87 planes and about 5,600 workers. Bertrand says the new business plan would only require 600 to 700 workers, which would be pulled from the current labor force and re-certified. The rest of the workers will be offered “fair” severance payments, Bertrand said.
Local rivals such as Controladora Vuela Cia de Aviacion SAB, known as Volaris, Grupo Aeromexico SAB and Grupo Viva Aerobus SA have taken advantage of the hole left by Interjet last year. All have scaled up and added capacity as the market rebounded from the worst months of the pandemic.
Interjet, founded in 2005 by the heirs of a Mexican president, debuted as a low-cost carrier in a market dominated by larger airlines. One of the founders, Miguel Aleman Magnani, fled to France in July as Mexico sought to arrest him in connection to a tax fraud case.
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. Del Valle was detained by authorities in September on fraud charges related to his participation as a co-signer on debt from non-bank lender Credito Real.
“The company is independent from its owner,” said Gonzalo Alarcon, one of Interjet’s lawyers, during the interview. “He remains the company’s largest shareholder but we are independent from him.”
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