The tail of a Mexicana de Aviación airbus.
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Mexicana de Aviación Cancels Flights As Its Finances Deteriorate

August 10, 2010 By Staff
The tail of a Mexicana de Aviación airbus.

The tail of a Mexicana de Aviación airbus.

Today in Latin America

Top Story — Mexicana de Aviación, one of Mexico’s most important airlines, cancelled several international flights on Monday, in an effort to cut costs due to an increasingly bleak financial picture.

Flights to destinations including Madrid, London, Chicago, Bogotá and São Paulo have been suspended in order to cope with debts estimated at $800 million.

Following unsuccessful talks with trade unions aimed at reducing costs, the airline filed for bankruptcy protection last week, according to Business Week. The company’s proposal included pay cuts for employees and a 40 percent reduction of the workforce, The BBC reports.

Mexicana de Aviación’s precipitous decline owes to two principle causes, according to news reports. The Lost Angeles Times notes that the company has faced increasing competition from smaller, no-frills airlines. The BBC cites the devastating impact of Mexico’s 2009 recession, coupled with the losses suffered by the tourism industry from the swine flu epidemic last year.

The troubled airline is using its Twitter account (@mexicana_com) to announce updates to its customers.

Mexicana de Aviación, Mexico’s first airline, is one of the oldest in the world, according to The Los Angeles Times. Its decline could spell disaster for Mexico’s airline industry, as U.S. companies move to plug the opening in the market. The company’s downturn could also potentially reduce consumer choice for Mexican airline customers.

Just Published at the Latin America News Dispatch

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