Legal Challenges In Merging Mexican Airlines

Debate in the Mexican press regarding the proposed merger between two of the largest Mexican airlines, Aeromexico and Mexicana may be heating up, but the fact is, something needs to be done for both airlines and air travelers. While the airlines are faced with high fuel and operating costs, impacting sustainability and profitability, domestic travelers are unhappy with the subsequent higher airfares. Increased prices are prompting them to seek alternative, more cost effective means of transportation. Adding more urgency to the situation, in early June, the secretary of Tourism (Sectur), Gloria Guevara Manzo, addressed the issue of high domestic airfares adversely affecting tourism in Mexico.

For the airlines, the benefits of increased profitability and financial sustainability must be weighed against operational costs and challenges. The principal benefits for the airlines could include cost reductions by combining complementary assets, eliminating duplicate activities, and reducing capacity. Balanced against these potential benefits will be operational costs of integrating workforces, aircraft fleets, and systems. For travelers, although they may see higher airfares in existing markets, a merger of the two airlines could address their increasing demand for more seamless travel to more destinations.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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