Aeromexico will save 685 million with layoffs and new contracts.
Aeromexico said it will save a total of 685 million dollars over four years after renegotiating its collective bargaining agreements and laying off close to 2,500 workers.
The airline disclosed these savings in documents filed with the Southern District Court of New York, where the company filed for Chapter 11 of the U.S. Bankruptcy Code, which are available this Friday dated April 6.
See also: Mexico’s Interjet will file for insolvency proceedings.
“The collective savings represented in the new collective bargaining agreements of approximately $685 million over the next four years should provide the company with the ability to compete successfully in a highly competitive post-emergency market,” it said.
The documents are revealed after Aeromexico announced in January an agreement with the Mexican Aviation Flight Attendants Union Association (ASSA) and the Mexican Airline Pilots Union Association (ASPA) to modify their collective bargaining agreements in light of its financial restructuring, reported EFE.
See also: Volaris and Viva Aerobus request authorization fly to Colombia.
At the time, the company did not detail the negotiation, but ASPA revealed in a separate statement that the pilots accepted reductions totaling $350 million dollars in collective bargaining agreements for the next four years.
Now, the company specified that the negotiations covered 9,410 active and unionized employees in Mexico with conditions that will impact their salaries, benefits and working conditions for a period of four years.
In addition, ASSA and ASPA include the Sindicato de Trabajadores de la Industria Aeronáutica, Comunicaciones Similares y Conexos de la República Mexicana (STIA), and the Sindicato Nacional de Trabajadores al Servicio de las Líneas Aéreas, Transportes, Servicios, Similares y Conexos (Independencia).
With the negotiation, the company avoided a strike and met the conditions to access a final tranche of US$625 million out of a total of US$1 billion of the financing known as DIP Financing.
“These agreements have the support of the company’s pilots, flight attendants and ground personnel who approved them with their personal and direct vote, which means that a strike and massive disruptions are highly unlikely during the new collective bargaining agreements,” the company said.
Mexico’s leading airline had a 54.2% drop in passenger traffic in 2020 and filed for Chapter 11 of the U.S. Bankruptcy Code in a New York court last June to obtain a financial restructuring.
It is estimated that the company has laid off close to 2,500 workers, including pilots, flight attendants and ground employees.
Aeromexico is confident that the refinancing will allow it to overcome the Covid-19 crisis.
“The new collective bargaining agreements represent a key step in the company’s financial restructuring: they unlock needed financial liquidity, provide a competitive cost structure going forward, and resolve uncertain and costly litigation,” concluded the document filed with the Southern New York Court.
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Plataforma Informativa de Aviación Comercial líder en América Latina.