Mexicana Airlines presents unions with reorganisation plan

Mexicana held (02-Aug-2010) an extraordinary meeting to review the carrier's "difficult" financial circumstances and present two options to its unions. After informing the media and general public that the company's financial and labour situation is no longer sustainable, Mexicana pilots' and flight attendants' unions were presented with two alternatives:

1. To enter into a new collective contract to secure Mexicana's long-term financial viability with cuts of 41% and 39% in wages and fringe benefits for pilots and flight attendants, respectively. This alternative also calls for additional cost-cutting measures, including downsizing 40% of the airline's pilots and flight attendants;
2. Stockholders have offered to sell the carrier to its unions for the token sum of MXN1. The carrier's management have stated that it would be willing to transfer control of the airline to its unions providing the unions assumed liabilities of USD120 million in bank credit lines. The unions would also be given a six-month permit for the use of the Mexicana Airlines brand name, among other measures designed to allow for a smooth transition. [more]

Meanwhile, the carrier also announced plans to suspend a number of California-Mexico services in Aug-2010 including Los Angeles-Puerto Vallarta, Los Angeles-Guadalajara and Sacramento-Guadalajara following reports of the carrier's financial troubles (Los Angeles Times/Sacramento Business Journal, 03-Aug-2010).