In the past several weeks we’ve seen both Avianca and LATAM file for Chapter 11 bankruptcy. Now you can add Aeromexico to that list as well, making it the third major Latin American airline to file for Chapter 11 as a result of the current pandemic.
Continue reading: Aeromexico Files For Chapter 11 Bankruptcy
Share your questions, experiences, and thoughts below.
I am curious about the Chapter 11 bankruptcy process for foreign carriers. I know that the bankruptcy laws in other countries are less forgiving for reorganizing debts than Chapter 11 in the US. Can any airline in the world incorporate a shell company in the US in order to take advantage of Chapter 11 bankruptcy for the entire airline?
It's great news to realize that Delta Airlines just got kicked in the teeth again.
Virgin Atlantic must be in big trouble. The bulk of their revenue comes from their transatlantic operations working in conjunction with Delta, and with Americans barred from entering the EU (and probably the UK)... it could push the company to bankruptcy. Yes, we could see them being bought by some fund or whatever, but it feels like a matter of “when”, not “if” now
Ben I couldn't agree more about how badly DL has chosen partners. AA obviously wouldn't "give" LATAM money, so they ran to DL. AA is going to win out in this deal since they are strong in SA to begin with and GOL will like grow post COVID-19 and join One World at some point. IAG, JAL, QATAR, Qantas are going to live on, grow (and protect) their hubs and with AA having solid JV with all (or most) of them, OneWorld starts to look like the stronger network financially. DL is going to have to re-think their partners, their fleet and their domestic operations. I once that UA was the biggest mess, but I think DL might be worst off and become the number 4 US airline.
2/3 airlines in Latin America that have filled for Chapter 11 are affiliated with Delta. Now, I’m no math or financial guy, but that can’t be good.
I bet Doug Parker is laughing now.
I don't think you should compare Delta to Doug Parker or Etihad.
Many of Etihad investment collapsed even in good market conditions. Many doesn't even provide much network effect for Etihad.
Doug Parker, rather then invested on other airlines, he invested (buybacks) in his own failing airline.
Now I can't say how LATAM would have been with no COVID. I'm sure Delta's investment in AM and VS already paid off from revenue generated, even if it's worth nothing now. They bought both of them quite cheap.
Delta will simply take more market share from Aeromexico and raise their fares even more on the monopolistic routes, like ATL-MEX which are outrageous. This could actually be good for Delta long-term, as Mexico air traffic is growing exponentially.
Similar question to @sam
I am confused how a foreign company can file for bankruptcy protection in the US. Shouldn’t they have to deal with this under Mexican laws?
I think the bankruptcy of most of its partners means that DL will not be able to really plan out its international network anytime in the near future, like what we have seen recently with AA (and to some extent UA). DL is the carrier that relies most on its partners' hubs. Bulk of the more O/D & relevant/important international routes are operated by their partners, with DL's routes being primarily from their fortress hubs, most of which are not even major cities or business centers like UA's or AA's. Plus their 'focus city model' to partly alleviate this problem has blown up on their face. Unless they want to solely rely on a connecting model, they will seriously need to rethink their international network to stay relevant to the business customer based on what remains of their partners' networks.