By KELIN DILLON

According to a new report published by Bloomberg on Wednesday, March 27, Mexico’s state-owned airline Mexicana de Aviación is being sued for upwards of $800 million by one of its former vendors, SAT Aero Holdings, in U.S. federal court.

SAT Aero Holdings was previously tapped by the Mexican Secretariat of Defense (Sedena) to manage the purchase of Mexicana’s plane fleet and the hiring of its crew.

Likewise, the company was delegated to operate Mexicana’s pilot and staff training, plane insurance and maintenance by the Sedena.

However, the new suit claims that the Mexican airline’s failure to cooperate with the vendor put the entirety of SAT Aero Holdings in danger, with the federal government failing to assume the cost of the company’s exclusive acquisition of its plane fleet as agreed upon – including refusing to pay the $5.5 million deposit for the first two aircraft acquired by the SAT.

“Unfortunately, after the SAT spent months negotiating the relevant financing and lease documents with the bank and the potential landlords, the airline refused to sign the documents with these institutions,” reported Bloomberg.

“SAT has made an effort to work with the Secretariat of National Defense to solve these problems. However, instead of correcting these breaches, Mexicana de Aviación has tried to impose economic sanctions on the SAT and hold it responsible for the non-delivery of any of the identified aircraft,” continued the report.

As a result, SAT Aero Holdings is the total sum of its contract with the airline – approximately $838.5 million – in damages from Mexicana, as well as an additional $2.4 million in legal costs.