Debt-ridden Mexicana de Aviacion, Mexico's largest airline, announced Tuesday it filed for bankruptcy protection in Mexico and the U.S. after pilots and flight attendants rejected a deal to cut pay and staffing.
Mexicana said it filed Monday in a Mexico City court "to restructure its cost and insure the viability of the company." Mexico's insolvency law will allow Mexicana to keep operating while it tries to solve its financial problems, the company said.
The airline also filed for Chapter 15 bankruptcy in a New York court saying it needs protection from creditors who may want to seize its U.S. assets.
"Action against Mexicana's aircraft or airport terminal operations and equipment would seriously disrupt Mexican's efforts to restructure its affairs," Maru E. Johansen, Mexicana's U.S. vice president for legal affairs and corporate affairs, said in court papers.
Creditors in the U.S. and Canada worried about Mexicana's financial situation had three of the airline's aircraft grounded last week.
Johansen said the company was badly hit by the swine flu outbreak last year. Mexicana "suffered losses as a result of a flu epidemic that had a severe, immediate and unexpected impact upon Mexican tourism and business-related trips and travel," he wrote.
The airline owes Mexican banks at least 2.5 billion pesos (US$199 million), Chief Executive Officer Manuel Borja said at a news conference Monday. Borja didn't say what the company's total debt is.
