Aeromexico seeks to save costs by paying by the hour the use of the fleet

Ask the US to change monthly rental contracts

RR I Mexico City | September 17, 2020


RELATED TOPICS: Aeromexico, Lease, Fleet, Payment

Aeroméxico needs to save costs and cover its back in its reorganization process through Chapter 11 and for this it has requested this Tuesday the Southern District Court of New York authorization to modify the lease contracts of 72 aircraft in its fleet.

Your goal is to go from a monthly equipment rental to a rental payment calculated for the use of aircraft, that is, pay per hour (or PBH, for its acronym in English). This modality is used mostly by low-cost airlines, but also by traditional ones, since it allows managing costs in a more effective way, according to the specialized company AJW, El Economista collects.

“The general stipulations indicate that, if the equipment is not used or operated, the Debtors (Grupo Aeroméxico) will not pay the rent but, among other things, they will maintain and store the equipment, insure the equipment and give the necessary inspections to the equipment” , the company has explained in a document presented before the Court of the Southern District of New York, within the framework of its financial reorganization under Chapter 11 of the United States Bankruptcy Law.

“If the equipment is used or operated, the Debtors must, among other things, pay for the use of the equipment on a ‘pay per hour’ basis,” he remarked. Likewise, it has stressed that it has already rejected the lease contracts of 19 aircraft in the past and dropped that “it will probably have to replicate this action later in the future.”

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Grupo Aeroméxico plans to modify the contracts of 22 Boeing 737-800 aircraft (it currently has 34 aircraft of this model); three Boeing 737 MAX 8s (out of six owned and grounded since March 2019); seven Boeing 787-8 Dreamliners (out of nine); eight Boeing 787-9 Dreamliner (of ten) and 32 Embraer E190 (of 47 it owns). These 72 aircraft are leased with 19 leasing companies, including GECAS, Avolon, Wells Fargo, Aercap, among others.

Aeroméxico has been in the process of restructuring through Chapter 11 of the US Quibras Law since last June. At the beginning of this month of September, the US Court authorized the initial disbursement of US $ 100 million dollars, which will provide liquidity to the company to meet its obligations in the ordinary course of business in a timely and orderly manner, as anticipated (Aeroméxico: US authorizes first disbursement of 100 million).

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