Mexico City, Mexico — New management of Mexican airline Interjet has hired a restructuring company to help reorganize its inherited debt of $1.25 billion peso as the company seeks to restart operations.
Interjet, now controlled by businessman Alejandro del Valle, hired Mexico City-based Argoss Partners to help resolve problems with creditors through a pre-arranged bankruptcy and obtain financing. In the coming weeks, Interjet plans to submit a restructuring plan to Mexico’s bankruptcy regulator for review.
The airline, which suspended activities in December, has faced numerous obstacles to restarting operations from unpaid taxes and back wages to a lack of planes. Lessors have taken back most of the company’s aircraft with the exception of a handful of Russian Sukhois that have been used to obtain spare parts.
“We want a pre-agreed process and work on the main points with creditors,” said Carlos Ortiz-Cañavate, a partner at Argoss. Another partner, Igor Marzo said the new Interjet could be much smaller in size and range than before when operating flights in the US and Mexico.
An important part of Interjet’s debt, which is currently being analyzed by the new administration, comes from unpaid taxes to the Mexican government prior to the change of ownership. Ortiz-Cañavate said that while Del Valle was aware that money was owed at the time of purchasing the company, he was not fully informed about the true fiscal “mess” that is dragging the airline.
He noted that at least three fiscal remediation proposals have been submitted to the Mexican tax authority (SAT), but all have been rejected. The company will continue to find a solution.
Last year, Del Valle acquired a 90 percent stake in Interjet. Last week, shareholders of the company, including the founders Miguel Alemán Velasco and his son Miguel Alemán Magnani who now have less than 10 percent, unanimously approved that the airline enter commercial bankruptcy.
Ten years ago, Interjet was the second largest airline in Mexico. However, its business model, which operated low-cost and full-service models combined with its high levels of debt, caused it to lag behind competitors.
The company, which scrapped plans for a last-minute public offering in 2011 and said it had been in talks to sell a stake to a US airline in 2016, had no deal materialize.