Grupo Mexicana to Suspend Operations
According to Mexican Authorities, Grupo Mexicana, one of the largest airline groups in the country, will suspend all its operations because the investors failed to accomplish a cost-cutting agreement to the unions.
According to the company, the investor who pledged to help the failing carrier did not succeed to accomplish a cost-cutting agreement to the unions. According to Juan Molinar Horcasitas, transport and communications minister of Mexico, the suspension of all the operations will take effect at midnight. The suspension will affect the extensive domestic routes of the carrier and the 15 routes that are serving the United States. It includes Los Angeles and New York.
According to the statement of Molinar in a news conference, the government will not bail out the airline because it did not help the airlines in the past when it had faced a financial crisis. He said that the company will have its restructuring with the help of its shareholders, new shareholders, creditors, unions, and other parties having a legal interest in the process.
The company required bankruptcy protection in the American and Mexican courts earlier this month when the two planes of the company were seized in Canada because of leasing payment issues. According to the company, it is trying to make an agreement with its unions. The unions offered flexibility on work rules but it has declined to help on salary cuts and jobs.
A group of Mexican investors purchased the airline for a symbolic price and began to negotiate with the unions last week. Based on the plan of the Mexican investors, the new owners need to fire all the flight attendants and they will rehire a quarter of them. The plan of the new owners was blocked by the government because it may increase unemployment rate.
