/raid1/www/Hosts/bankrupt/TCRLA_Public/220902.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
L A T I N A M E R I C A
Friday, September 2, 2022, Vol. 23, No. 170
Headlines
A R G E N T I N A
AEROPUERTOS ARGENTINA: S&P Affirms 'CCC+' ICR, Outlook Stable
ARGENTINA: Central Bank Set to Hike Rates Again on Price Spike
B E R M U D A
NORTHERN AND WESTERN: Creditors' Proof of Debt Due Sept. 16
B R A Z I L
BRAZIL: Gross Debt Falls in July to Lowest Level Since Pandemic
GENERAL SHOPPING: Moody's Affirms 'Caa3' CFR, Outlook Stable
J A M A I C A
JAMAICA: Airline Passenger Fees Near Pre-Pandemic Levels
JAMAICA: Signs MOU With T&T to Facilitate Trade Relations
NATIONAL COMMERCIAL BANK: Raises US$300M Through Private Placement
M E X I C O
FINANCIERA INDEPENDENCIA: Moody's Assigns First Time 'B1' CFR
INTERJET: Formally Enters Into Mexican Bankruptcy Process
- - - - -
=================
A R G E N T I N A
=================
AEROPUERTOS ARGENTINA: S&P Affirms 'CCC+' ICR, Outlook Stable
-------------------------------------------------------------
On Aug. 31, 2022, S&P Global Ratings revised Argentina-based
airport operator, Aeropuertos Argentina 2000 S.A.'s (AA2000)
stand-alone credit profile (SACP) upward to 'b' from 'ccc+'. S&P
also affirmed the 'CCC+' ratings on the company because they
continue to be capped by its 'CCC+' transfer and convertibility
assessment (T&C) of Argentina.
The stable outlook on AA2000 mirrors that on the sovereign and
incorporates S&P's view of an affordable debt maturity profile in
the upcoming 12 months, enhanced liquidity, and operating margins
converging towards pre-pandemic levels. Absent pandemic-related
travel restrictions, S&P expects AA2000 to comfortably service its
debt in the next 12 months, while accelerating its capex plan.
Airports in Argentina suffered from stiffer pandemic restrictions
than in other countries or regions. However, once they were lifted,
traffic recovery during 2022 has been stronger than we expected.
S&P now conservatively forecast traffic across AA2000's airports in
2022 reaching 70%-75% of 2019 level (up from its previous
projection of 60%-65%), 90% in 2023, and pre-pandemic level in
early 2024, if not sooner. Despite challenging macroeconomic
conditions in Argentina, the stronger-than-expected air traffic in
2022 suggests that absent external restrictions, AA2000 is back to
a business-as-usual mode.
Recovery has gained steam thanks to widespread vaccination,
Argentina's removal of travel restrictions, a dynamic domestic
tourism industry, the resumption of international routes, and a
favorable exchange rate that lures inbound international traffic.
The resurgence of new virus strains, such as omicron, and the
government's restrictions on domestic travelers on freely accessing
the foreign exchange markets didn't affect the traffic recovery.
S&P said, "Our current base-case scenario assumes debt to EBITDA
plummeting from about 10x in 2021 to around 3x in 2022 and to about
2x in 2023-2024. We also forecast EBITDA of $220 million - $240
million in 2022 (supported by the rebound in air traffic and tariff
reviews across all key segments) and $230 million - $250 million in
2023, with margins of about or above 40%. Similarly, while EBITDA
to interest coverage was around 1x during the pandemic, we expect
it to return to 5x or higher. These metrics are more in line with
pre-pandemic levels."
AA2000 implemented the exchange of its international bonds,
together with other liability management initiatives in 2022 such
as the prepayment of the syndicated facility, and issuance of new
series of dollar-linked notes in the domestic market and securing
of new bank facilities for an aggregate amount of about $270
million. These initiatives involved AA2000's two largest debt
instruments, and along with higher cash flows, slashed principal
amortizations in 2022 and 2023. Therefore, S&P believes AA2000
should comfortably meet its financial obligations in the next 12
months, while it accelerates capex, including the redemption of its
preferred shares.
ARGENTINA: Central Bank Set to Hike Rates Again on Price Spike
--------------------------------------------------------------
Ignacio Olivera Doll at Bloomberg News reports that Argentina’s
Central Bank is preparing to increase its benchmark Leliq rate
again next month as annual inflation rises above 70 percent,
according to people with direct knowledge of the matter.
The Central Bank’s board has already decided to tighten borrowing
costs further in September, with a hike likely to be as much as 500
basis points, the people said, asking not to be named discussing
private conversations, according to Bloomberg News. That would
make it a smaller increase than the two most recent ones, of 950
basis points and 800 basis points, respectively, Bloomberg News
notes.
Argentina will release inflation data for August on September 14,
and the Central Bank estimates that it will be lower than July
monthly level of 7.4 percent, the people said, Bloomberg News
relays. The final print will likely determine the size of the rate
increase, Bloomberg News says. The Central Bank's board typically
meets Thursdays.
The monetary entity sees limited space to keep raising rates, as an
aggressive move could slow down economic activity ahead of an
election year, the people said, Bloomberg News discloses. It would
also impact the interest payments the Central Bank has to make on
its debt, generating an expansive monetary effect, they added,
Bloomberg News says.
A Central Bank spokesman declined to comment.
Raising rates closer to annual inflation levels is part of the
government's effort to encourage savers to stick with pesos as
reserves run near lows, Bloomberg News notes. It's also a key
pillar of Argentina's US$44-billion agreement with the
International Monetary Fund, which calls for so-called positive
rates, Bloomberg News adds.
About Argentina
Argentina is a country located mostly in the southern half of
South America. Its capital is Buenos Aires. Alberto Angel
Fernandez is the current president of Argentina after winning
the October 2019 general election. He succeeded Mauricio
Macri in the position.
Argentina has the third largest economy in Latin America. The
country's economy is an upper middle-income economy for fiscal
year 2019, according to the World Bank. Historically, however,
its economic performance has been very uneven, with high economic
growth alternating with severe recessions, income maldistribution
and in the recent decades, increasing poverty.
Last March 25, 2022, Argentina finalized agreement with the IMF
for a new USD44 billion Extended Funding Facility (EFF) intended
to fund USD40 billion in looming repayments of the defunct
Stand-By Arrangement (SBA), with an extra USD4 billion in up-front
net financing. This has averted the risk of a default to the IMF
and is facilitating a parallel rescheduling of Paris Club debt.
As reported by The Troubled Company Reporter - Latin America on
Aug. 12, 2022, S&P Global Ratings affirmed its foreign and
local-currency sovereign credit ratings of 'CCC+/C' on the
Republic of Argentina. The outlook remains stable. S&P also
affirmed its national scale 'raBBB-' rating and its 'CCC+' transfer
and convertibility assessment. S&P said the stable outlook reflects
the challenges in managing pronounced economic imbalances ahead of
the 2023 national elections given disagreement on policy within the
government coalition and financing pressures in the local market.
Last April 14, 2022, Fitch Ratings affirmed Argentina's Long-Term
Foreign and Local Currency Issuer Default Ratings (IDR) at 'CCC'.
Fitch said Argentina's 'CCC' ratings reflect weak external
liquidity and pronounced macroeconomic imbalances that undermine
debt repayment capacity, and uncertainty regarding how much
progress can be made on these issues under a new IMF program.
On July 19, 2022, Fitch Ratings placed Argentina's Long-Term
Foreign Currency Issuer Default Rating (IDR) and Long-Term Local
Currency IDR Under Criteria Observation (UCO) following the
conversion of the agency's Exposure Draft: Sovereign Rating
Criteria to final criteria. The UCO assignment indicates that
ratings may change as a direct result of the final criteria. It
does not indicate a change in the underlying credit profile, nor
does it affect existing Rating Outlooks.
Moody's credit rating for Argentina was last set at Ca on
Sept. 28, 2020.
DBRS has also confirmed Argentina's Long-Term Foreign Currency
Issuer Rating at CCC and Long-Term Local Currency Issuer Rating at
CCC (high) on July 21, 2022.
=============
B E R M U D A
=============
NORTHERN AND WESTERN: Creditors' Proof of Debt Due Sept. 16
-----------------------------------------------------------
The creditors of Northern and Western Insurance Company Limited are
required to file their proofs of debt by Sept. 16, 2022, to be
included in the company's dividend distribution.
The company commenced wind-up proceedings.
The company's liquidator is:
Tim Karweti
EY Bermuda Ltd, Bermudian Road, Hamilton
Bermuda, HM08
nwic.creditors@vg.ey.com
===========
B R A Z I L
===========
BRAZIL: Gross Debt Falls in July to Lowest Level Since Pandemic
---------------------------------------------------------------
Reuters reports that Brazil's government debt fell to its lowest
level since the start of the coronavirus pandemic amid favorable
fiscal data, central bank data showed.
The country's debt as a share of gross domestic product dropped to
77.6% in July, from 78% in June, the lowest figure since March
2020, when it reached 77.03%, according to globalinsolvency.com.
At the peak of the spending spree to fight the pandemic, the
indicator reached 89% of GDP, the report notes.
According to the central bank, the Brazilian public sector recorded
a primary surplus of BRL20.44 billion ($3.95 billion) in July,
reversing a BRL10.283 billion deficit from the same month last
year, the report relays.
The central government surplus reached BRL19.961 billion in July,
while states and municipalities recorded a BRL1.76 billion surplus,
the report notes. State-owned companies, on the other hand, had a
primary deficit of BRL1.28 billion, the report adds.
About Brazil
Brazil is the fifth largest country in the world and third largest
in the Americas. Jair Bolsonaro is the current president, having
been sworn in on Jan. 1, 2019.
As reported in the Troubled Company Reporter-Latin America on
July 18, 2022, Fitch Ratings has affirmed Brazil's Long-Term
Foreign Currency Issuer Default Rating at 'BB-' and revised the
Rating Outlook to Stable from Negative.
On June 17, 2022, S&P Global Ratings affirmed its 'BB-/B' long-
and short-term foreign and local currency sovereign credit
ratings on Brazil.
Moody's Investors Service also affirmed on April 15, 2022,
Brazil's long-term Ba2 issuer ratings and senior unsecured bond
ratings, (P)Ba2 senior unsecured shelf ratings, and maintained the
stable outlook.
DBRS Inc. confirmed Brazil's Long-Term Foreign and Local Currency
Issuer Ratings at BB (low) on Aug 12, 2022. At the same time,
DBRS Morningstar confirmed the Federative Republic of Brazil's
Short-term Foreign and Local Currency Issuer Ratings at R-4.
The trend on all ratings is Stable.
GENERAL SHOPPING: Moody's Affirms 'Caa3' CFR, Outlook Stable
------------------------------------------------------------
Moody's Investors Service has affirmed General Shopping e Outlets
do Brasil S.A.'s ('General Shopping', 'GSB' or 'the company')
corporate family rating at Caa3. Concurrently, Moody's also
affirmed General Shopping Finance Limited's Caa3 unsecured debt
rating as well as General Shopping Investments Limited subordinated
debt rating of Ca.
Although General Shopping's capital structure remains untenable in
the long-term, the stable outlook considers the company has a
sufficient cash position with improving cash flows from operations
to continue to meet the debt service payments on the senior
unsecured perpetual notes and to fund operations over the medium
term.
The following ratings were affirmed:
Issuer: General Shopping e Outlets do Brasil S.A.
Corporate Family rating affirmed at Caa3
Issuer: General Shopping Finance Limited
Backed senior unsecured debt rating affirmed at Caa3
Issuer: General Shopping Investments Limited
Backed subordinated debt rating affirmed at Ca
Outlook Action:
Issuer: General Shopping e Outlets do Brasil S.A.
Outlook remains Stable
Issuer: General Shopping Finance Limited
Outlook remains Stable
Issuer: General Shopping Investments Limited
Outlook remains Stable
RATINGS RATIONALE
Although relatively small in scale, in terms of revenue, compared
to other rated business service companies, GSB's operating
performance has improved on a quarter or over quarter basis as a
result of a combination of factors, including: 1) higher
vaccination rates; 2) the loosening and eventual removal of all
government-mandated restrictions on mall operations and occupancy
limits leading to an increase in mall foot traffic; and 3) a boost
in domestic consumption due to the decrease in international travel
and the devaluation of the local currency against US dollar since
the outbreak of COVID-19 global health crisis.
However, the company's Caa3 CFR reflects the continued credit
constraints that it faces as a result of a significantly smaller
owned-mall portfolio, and the heavily debt burdened balance sheet
with high and weak leverage metrics, reflected in the company's
financial policy. In addressing these challenges, managment's
evolving corporate restructure has resulted in a strategic
transition toward an "asset-lite" business model with a focus on
property and service management. GSB primarily manages the
properties it had previously owned prior to an asset transfer that
had started at the end of 2018 to a local Brazilian real estate
investment fund. As of June 30, 2022, the company's managed
portfolio comprised 15 malls, totaling approximately 292,000 square
meters (SQM) of gross leasable area (GLA). Of the total owned mall
portfolio, GSB holds equity stakes in 14 malls, ranging between 1%
and 100% of ownership, with an average share of 31%, representing
approximately 85,000 SQM of GLA. Predominantly concentrated in the
state of Sao Paulo, the portfolio focuses on serving the Class B
and C consumers.
For the 12-month period ended on June 30, 2022, GSB's revenues and
EBITA margin (Moody's adjusted) rose 18% and 19%, respectively,
since year-end 2021. This is largely attributed to a combination
of: 1) higher servicing revenues (parking, energy, water and
property management), which represent close to 60% of total
revenues generated); 2) higher minimum rents from the malls; and 3)
higher rent collections and less tenant discounts needed to be
offered. Compared to the second half of 2021, the company posted a
consolidated net operating income and adjusted EBITDA growth
multiple of approximately 1.46x and approximately 2.2x,
respectively, reaching BRL 57.1 million and BRL 35.6 million in the
first half of 2022.
However, the improvement in operating performance is
counterbalanced by the firm's heavy debt load. On a Moody's
adjusted basis for the trailing 12-month period ended on June 30,
2022, GSB's debt to EBITDA and EBITA to interest coverage ratio
were still elevated and weak at approximately 18.8x and 0.8x,
although improved from 29.4x and 0.5x for full year 2021. As part
of its liability management efforts, the company concluded another
partial tender offer in February 2022 of approximately US $18.4
million on its 10% senior unsecured perpetual notes after
originally seeking up to US $40 million. Moody's considers the
partial tender offer as a distressed exchange - a technical default
per its methodology. While the company's cash flows are expected to
continue to recover, Moody's do not anticipate the overall leverage
profile to materially improve due to: 1) its US dollar debt load on
the balance sheet, including the subordinated perpetual notes for
which the company continues to defer interest payments as permitted
under the indenture; 2) strong appreciation of the US dollar's
against the Brazilian currency; and 3) an extremely low probability
of an additional equity capital infusion from the major
shareholders, who are the company's founding members and already
own an approximate 70% stake in the firm.
Moody's considers General Shopping to have sufficient liquidity to
meet its debt service payments, supported by a cash balance of BRL
195 million, despite expectations of low retained cash flow over
the next 12 months. Moody's anticipates the company will rely on a
mix of cash on hand, cash flows from operations, local debt
issuances and potential sales of ownership stakes in its remaining
mall pool to finance its operations and growth over the next 12 to
18 months. Positively, the company has less than 2% of its total
debt amortizing annually between the remainder of 2022 through
2025, before approximately US$47 million of bonds come due in
2026.
While General Shopping's capital structure remains untenable in the
long-term, the stable outlook considers the company has a
sufficient cash position and recovering cash flows to meet its
scheduled debt amortization payments over the next 24 months. The
outlook also includes the expectation that earnings will gradually
improve as mall operations continue to normalize.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
Upward rating movement is unlikely in the near term and would
require General Shopping to improve its capital structure and
scale, such that the following criteria are met on a recurring
basis: 1) total revenues exceeded $600 million; 2) Debt to EBITDA
were to decline to below 12.0x; and 3) EBITA to Interest coverage
ratio were to rise to over 1.25x.
The ratings would be downgraded if the company were to: 1) miss a
debt service payment on its senior perpetual bond; 2) any
additional debt restructuring that would entail significant losses
to bondholders and 3) a deterioration in liquidity.
Headquartered in Sao Paulo, Brazil, General Shopping e Outlets do
Brasil S.A. [B3: GSHP3] is primarily a property management
company, managing 15 malls and outlet centers, totaling
approximately 292,000 SQM of GLA, and with an ownership interests
in 14 of those properties with approximately 85,000 SQM of GLA. The
company is a pioneer in the retail outlet format in Brazil.
The principal methodology used in these ratings was Business and
Consumer Services published in November 2021.
=============
J A M A I C A
=============
JAMAICA: Airline Passenger Fees Near Pre-Pandemic Levels
--------------------------------------------------------
RJR News reports that the Jamaican Government collected $2.4
billion in airline passenger fees for the first half of this year.
The Tourism Enhancement Fund (TEF), in its analysis of the figure,
said this shows signs of steady recovery, inching closer to
pre-pandemic earnings, according to RJR News.
During the corresponding period in 2019, the TEF collected $2.6
billion in passenger fees, the report notes.
The tourism ministry has announced that inflows from fees and
overall tourism revenue reflect a 90 per cent recovery from
COVID-19 pandemic lows, the report relays.
As reported in the Troubled Company Reporter-Latin America in March
2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
JAMAICA: Signs MOU With T&T to Facilitate Trade Relations
---------------------------------------------------------
RJR News reports that Jamaica and Trinidad and Tobago have signed a
Memorandum of Understanding to establish a trade complaints
mechanism between both countries in an effort to foster better
relations.
Foreign Minister for the twin island republic, Dr Amery Browne, and
Jamaica's Foreign Minister Kamina Johnson Smith signed on behalf of
their countries, according to RJR News.
A statement from Trinidad and Tobago's Trade Ministry said the
signing took place during a bilateral meeting with Jamaica, the
report notes.
As reported in the Troubled Company Reporter-Latin America in March
2022, Fitch Ratings has affirmed Jamaica's Long-Term Foreign
Currency Issuer Default Rating (IDR) at 'B+'. The Rating Outlook is
Stable.
NATIONAL COMMERCIAL BANK: Raises US$300M Through Private Placement
------------------------------------------------------------------
RJR News reports that National Commercial Bank Jamaica says it's
successfully raised financing of USD300 million through the
securitization of its credit card merchant voucher receivables.
The transaction was rated by Fitch Ratings and achieved a rating of
"BBB-", Outlook Stable, notes the report.
The transaction was placed in the international private placement
market and closed Aug. 30, RJR News says.
As reported in the Troubled Company Reporter - Latin America on
Dec. 27, 2021, S&P Global Ratings has affirmed its issuer credit
ratings on National Commercial Bank Jamaica Ltd. (NCBJ). The
affirmation follow a revision to its criteria for rating banks and
nonbank financial institutions and for determining a Banking
Industry Country Risk Assessment (BICRA). S&P affirmed the 'B+'
long-term and 'B' short-term issuer credit ratings on NCBJ. The
outlook on the long-term rating remain unchanged.
===========
M E X I C O
===========
FINANCIERA INDEPENDENCIA: Moody's Assigns First Time 'B1' CFR
-------------------------------------------------------------
Moody's Investors Service has assigned first time ratings to
Financiera Independencia, S.A.B. de C.V. (Findep), including global
scale long- and short-term local and foreign currency issuer
ratings of B1/Not Prime, as well as long term corporate family
rating of B1. The issuer level outlook for Findep is stable.
The following ratings were assigned:
Issuer: Financiera Independencia, S.A.B. de C.V.
Corporate Family Rating, assigned B1
Long-term global local and foreign currency issuer rating,
assigned B1
Short-term global local and foreign currency issuer rating,
assigned Not Prime
Issuer: Financiera Independencia, S.A.B. de C.V.
Outlook, Assigned Stable
RATINGS RATIONALE
Findep's B1 issuer rating acknowledges the company's adequate
liquidity profile supported by diversified portfolio of lines from
banks that has improved the company's asset and liability
management over the past two years. The rating also incorporates
the company's strong capitalization, high profitability and its
track record of adequate asset quality, consistent with Findep's
high risk unsecured lending focus, that benefits from disciplined
underwriting practices, ample reserve coverage and high portfolio
granularity, all helping to reduce net-charge offs through the
cycles.
The company's liquidity profile is supported by strong cash flow
generation provided by the high turnover rates of its credit
portfolio over time, with collections accounting for approximately
30% of its loans on quarterly basis. This portfolio dynamic has
allowed Findep to increase debt coverage ratio to 62% in June 2022,
from 17% in 2019, which was supported by the moderation in the
origination of new loans in the first six months of 2022. In
addition, Findep has been able to maintain good access to local and
foreign banking facilities that also helped to enhance its
liquidity position to date. The company has lower-than-peers
reliance on secured debt, that accounted for 18% of average managed
assets in June 2022 and there is no maturities concentration in
2022 and 2023.
The B1 issuer rating also incorporates Findep's high
capitalization, a positive rating driver, with tangible common
equity to tangible assets reaching 35% in June 2022. The company's
historically high capital buffers result from its conservative
retention policy and recurring revenue generation.
Profitability improved in 2022 supported by its ability to rapidly
reprice loans at higher rates, which offset the increase in
operating expenses related to the expansion of its franchise in the
US, and the buildup of loan loss provisions, resulting from the
inflationary pressures and the weakened economic activity in
Mexico. In the first half of 2022, net income increased 24%,
resulting in net income to average manage assets of 5.5%, which was
driven by a strong 22.1% increase of net interest income in the
period.
While the level of nonperforming loans, measured as stage 3 loans,
and net charge offs is high, together totaling 19.5% of gross loans
in June 2022, the company's asset risk metrics have improved over
the last two years, benefiting from its expansion in the US market,
its divestment from microlending operations in Mexico and Brazil,
and its payroll-linked lending platform in Mexico, and have been
historically commensurate with the high profitability of the
portfolio. Aligned to this expansion path, reserves for loan losses
also grew and covered 215% of nonperforming loans as of June 2022.
Findep's exposure to environmental and social risks is moderate and
low, respectively, consistent with Moody's general assessment for
the global finance companies' sector. Governance risks are largely
internal rather than externally driven for Findep, for which
Moody's does not have any particular concerns. Findep benefits from
a good risk management framework and adequate corporate governance
practices, despite it remains as an unregulated company under the
Mexican laws. As such, corporate governance remains a key credit
consideration and requires ongoing monitoring.
The stable outlook on Findep's ratings reflects the view that the
B1 will continue to be supported by the company's good financial
fundamentals and vigilant liquidity position that will withstand
current challenges in the absence of debt maturity concentrations
over the outlook horizon.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
There is limited upward pressure on Findep's ratings at the moment
given industry headwinds. However, positive pressures on Findep's
ratings could result from progress in the lender's funding strategy
ahead of its international bond maturity in 2024, evidenced by its
ability to effectively refinance and renew its credit lines with
banks. Upward rating movements would also be supported by a
sustained improvement in core earnings generation and a
stabilization of its asset quality metrics at current levels, while
capital remains strong.
Downward pressure on Findep's ratings could arise as refinancing
risks increase in the short-term, evidenced by the company's
inability to renew its banking credit lines. This scenario would
raise significant concerns around the refinancing capacity related
to its international debt maturity in 2024. The ratings could be
lowered if the company's short-term maturities coverage by liquid
assets falls below 40%. At the same time, a material deterioration
of the lessor's asset risks leading to a decline in collections
would hurt its short-term liquidity position adding further
pressure to the B1 ratings.
The principal methodology used in these ratings was Finance
Companies Methodology published in November 2019.
INTERJET: Formally Enters Into Mexican Bankruptcy Process
---------------------------------------------------------
Daniel Martinez Garbuno at simpleflying.com reports that the former
Mexican airline Interjet has been formally accepted into a domestic
bankruptcy process by a district judge. Interjet will now be able
to negotiate up to 40 billion pesos in debt (nearly US$2 billion)
with its creditors.
Bankruptcy Process
A Mexican judge approved the airline Interjet formally entering a
bankruptcy process, according to simpleflying.com. Interjet ceased
operations in December 2020, after a years-long crisis fueled by
the COVID-19 pandemic, the report notes. Before that, Interjet was
the third-largest airline in Mexico, had a fleet composed of 88
aircraft, including 22 Sukhoi Superjet units, and operated under a
hybrid business model with both low-cost and legacy-like services,
the report notes.
The management of the ill-fated airline celebrated the judge's
decision, saying it was great news for the company, the report
relays. The airline will now be able to restructure financially,
eyeing a return to the skies in the future, said Carlos del Valle,
deputy director of Interjet, the report notes.
The airline will employ the benefits available in the Mexican
bankruptcy process to strengthen its financial position, protect
and preserve its assets, and organize the company's liabilities,
safeguarding the creditors and employees, said Interjet in a
statement, the report says. Former Interjet employees launched a
strike in January 2021 and seized most of the company's assets
across the country, including its airport counters at Mexico City
Benito Juarez International (MEX), the report notes.
Will We Ever See Interjet Back in The Sky?
Despite the claims of Mr. Del Valle, Interjet has a long way to go
before it can even attempt a comeback, the report notes. The
Mexican bankruptcy process is not the same as Chapter 11 in the
United States, which allows the company to keep operating while it
financially reorganizes its debt, gets new funding, and
renegotiates every aspect of the daily operation, the report
discloses. Instead, the Mexican process, more often than not, ends
in liquidation, the report relays. Moreover, the previous attempts
to rescue an airline through this bankruptcy process have not been
successful, the report notes. The last one to enter, Mexicana de
Aviacion on August 2010, is still, twelve years later, pending a
final resolution, the report says.
Interjet's bankruptcy process is likely to drag on for years, the
report relays. Even if the airline manages to reorganize its debt,
it will find itself in a very different position than in 2019,
before the pandemic, the report notes. At one point, there were
rumors of a possible Interjet 2.0 operating with Airbus and Let
L-410 Turbolet aircraft, the report adds.
Interjet's Demise
Interjet was an airline anchored at MEX. With a fleet of Airbus
A320-family and Sukhoi aircraft, it carried around 15 million
passengers in 2019, before the pandemic, the report notes. It flew
over 80 routes, many to the United States and Central and South
America, the report relays. Nonetheless, despite the reach of its
commercial services, financially, the airline struggled for many
years, posting net loss after net loss since 2017, the report
notes.
Interjet overreached, says simpleflying.com. The airline acquired
a Russian-made aircraft in a commercial bet that was highly
unsuccessful and later tried to compete with Aeromexico (a legacy
carrier) and Volaris and Viva Aerobus (two low-cost airlines), the
report relays. This mixed model didn't work financially, although
many passengers have fond memories of the airline, the report
discloses.
Following the cessation of operations of Interjet on December 11,
2019, the gap it left in the Mexican commercial market was quickly
taken by low-cost rivals Volaris and Viva Aerobus, the report
relays. These two airlines have quickly rebounded from the
COVID-19 pandemic, posting record traffic numbers in 2021, and both
are doing the same in 2022, the report notes.
About Interjet
Interjet is an international airline based in Mexico City carrying
almost 14 million passengers annually within Mexico and between
Mexico, the United States, Canada, Central, and South America. In
all, it provides air service to 54 destinations in 10 countries
offering its passengers greater connections and travel options
through agreements with major airlines such as Alitalia, All
Nippon
Airways (ANA), American Airlines, British Airways, Emirates, Air
Canada, LATAM Group, EVA Air, Iberia, Lufthansa, Hainan
Airlines,Hahn Air, Qatar Airlines and Japan Airlines.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter-Latin America is a daily newsletter
co-published by Bankruptcy Creditors' Service, Inc., Fairless
Hills, Pennsylvania, USA, and Beard Group, Inc., Washington, D.C.,
USA, Marites O. Claro, Joy A. Agravante, Rousel Elaine T.
Fernandez, Julie Anne L. Toledo, Ivy B. Magdadaro, and Peter A.
Chapman, Editors.
Copyright 2022. All rights reserved. ISSN 1529-2746.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without prior
written permission of the publishers.
Information contained herein is obtained from sources believed to
be reliable, but is not guaranteed.
The TCR Latin America subscription rate is US$775 per half-year,
delivered via e-mail. Additional e-mail subscriptions for members
of the same firm for the term of the initial subscription or
balance thereof are US$25 each. For subscription information,
contact Peter A. Chapman at 215-945-7000.
.
* * * End of Transmission * * *