Mexico Pays 816 Million Pesos for Brand Name, Outdated Air Equipment

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In an effort to help consolidate its plan to establish a state-run airline using outdated and unmaintained airplanes from previous administrations, the government of Mexican President Andrés Manuel López Obrador (AMLO) on Friday, Jan. 6, announced that it had purchased the brand license and “other assets” from the country’s defunct Mexicana de Aviación airlines for the sum of  816.8 million pesos.

The newly acquired Mexicana de Aviación trademark title will be used by AMLO’s proposed commercial airlines that will be run by the military.

The money that the Mexicana de Aviación trade union will obtain from the purchase will be used to pay between 10 and 12 percent of the outstanding severance to unionized workers.

Mexicana de Aviación ceased operations in 2010 after having declared bankruptcy, and disgruntled unpaid workers — including pilots, flight attendants and ground personnel — have continued to protest in and around the Mexico City International Airport (AICM) ever since.

According to a recent document issued by the Mexican Institute of Administration and Appraisals of National Assets (Indaabin), the “other assets” stipulated in the purchase agreement include equipment and property valued at 733 million pesos.

With the addition of two flight simulators not previously included in the Mexicana assets appraisal, Indaabin on Friday raised the value of the now-outdated equipment package by 83.3 million pesos to a total of 816.3 million pesos.

As a result of the modified appraisal, the AMLO administration agreed to pay 816.8 million pesos for the equipment and brand license.

In a statement, the government said that it had calculated that the brand name of the bankrupt airlines — which has not invested in advertising in more than a decade — is currently worth 407 million pesos.

It is expected that the entire process to complete the sale, release the assets and make the payment will be completed by the end of this month, the government said.

Eduardo Barrera, president of the Mexicana de Aviación delegation at the Aviation Pilots Union Association of Mexico (ASPA), later stated that the agreement consists of the sale of the brand name, the training center, two real estate properties — one in Mexico City and another in Guadalajara — and the two flight simulators.

The agreement was signed by ASPA, the Aviation Flight Attendants Union Association of Mexico (ASSA), the Transport Workers Union (SNTTTASS) and the Coalition of Trusted Employees.

The Mexicana Maintenance Center (MRO) was not part of the agreement, since it was left out of the mass bankruptcy pact when the airline went bankrupt in 2010 in order to maintain its operation.

A Mexicana union representative said that an additional meeting will be held to determine how the resources will be dispersed and in what time, as well as the number of workers that will receive a percentage of the sale based on worker salaries and seniority.

“The purchase made by the government does not constitute a rescue of Mexicana de Aviación,” he added. “What the government did is buy the brand name to put the Mexicana label on the airline that it intends to launch.”

Since the opening of his Felipe Ángeles International Airport (AIFA) in March 2022, AMLO has tried desperately to force both national and international airlines to use it instead of the much more accessible and functional AICM for flights in and out of Mexico City, including by limiting the number of flights the AICM can receive each day, imposing added taxes on AICM access and offering discounts to carriers that agree to use the AIFA.

Notwithstanding, safety concerns, dysfunctionality and a roster of other issues such as inoperable luggage carrousels and already-deteriorating runways have resulted in the AIFA remaining an unattractive hub for most airlines.

As a result, late last year López Obrador announced that he will use a fleet of government planes that have not received significant maintenance for more than four years to create a federal commercial airlines to be run by the military, which is in charge of the AIFA’s operations and maintenance.

On Thursday, Jan. 5, AMLO announced that the new airlines will be piloted by retired military personnel. (As a point of reference, in the United States commercial pilots currently must retire at age 60, the minimum age for full military retirement in Mexico).

And while it is expected that all of the government’s new airline’s planes will fly out of the AIFA, the fact that Mexico has maintained a Category 2 rating with the U.S. Federal Aviation Agency (FAA) for more than a year now bodes poorly for the new Mexicana de Aviación brand since, unless the government can regain its Category 1 status with the FAA (an unlikely proposal given safety concerns following an armed attack on a commercial flight in Sinaloa last week), none of the government-run carrier’s planes will be able to establish international routes through the United States and Canada.

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