Aeromexico’s First Quarter Loss Exceeds $100 Million

During the first quarter of this year, Aeromexico posted a loss of US$102 million (over 2.5 billion pesos) due to the coronavirus pandemic. The Mexican airline also recorded a 17.6% loss in passenger volume and reduced its fleet as a result.

Aeroméxico B787 Dreamliner
Aeromexico lost more than US$100 million due to the coronavirus crisis. Photo: Daniel Martínez Garbuno/Simple Flying.

How much did Aeromexico lose?

The Mexican carrier had earnings of over US$572 million during the first quarter. Unfortunately for Aeromexico, this meant a 14% drop compared to what it earned during the first quarter of 2019. 

Its EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) also fell 46.4%. These numbers led to a net loss of US$102 million. Its partner, Delta Air Lines, posted a loss of over half a billion dollars in this same period. 

One interesting fact is that since 2018, Aeromexico has had a net loss for seven of the nine quarters. In 2019’s third quarter, the airline had net earnings of US$2,643,680, and in the second quarter of 2018, it had net earnings of US$4,555,264. Between the other seven quarters, Aeromexico has had over US$282 million in losses. 

Aeroméxico B787 Dreamliner 2
Aeromexico is using 16% of its Dreamliner fleet on cargo operations. Photo: Daniel Martínez Garbuno/Simple Flying.

Aeromexico’s biggest hit is yet to come

During January and February 2020, Aeromexico experienced somewhat ‘normal’ operations. While it continued to show a decrease in its passenger numbers, nothing was out of the ordinary. This was because the coronavirus pandemic had yet to arrive in the Latin American region. 

However, in March, the pandemic escalated quickly in the region. Aeromexico points to this fact and the closure of borders around the world to explain the fall in demand in the last two weeks of March. 

So, with this in mind, we can only expect that the hardest hit to the airline is yet to come. In April, Aeromexico slashed its domestic available seats per kilometer by 79% year-on-year, while also leaving a few international routes. 

Aeroméxico B737 NG y Aeroméxico Connect Embraer
Aeromexico returned six Boeing 737 NG in the first quarter of 2020. Photo: Daniel Martínez Garbuno/Simple Flying

What is Aeromexico doing to survive?

Currently, Aeromexico has approximately US$563 million in cash, the airline said in a statement. This amount is the equivalent of 19.9% of the airline earnings of the last 12 months, it added. 

The airline managed to increase its cash position, in comparison with the final quarter of 2019. Aeromexico ended last year, with over 368 million USD in cash. 

It has also launched a few initiatives to preserve cash during these harsh times. For example, all the employees of Aeromexico are donating up to 50% of their wages. The airline has also parked more than 80 aircraft and has suspended new investments. Aeromexico also has launched up to nine cargo trips in the last few days. Approximately 16% of its Dreamliner fleet is now operating this type of flight

Finally, it seems that the airline is reducing its Boeing 737 NG fleet. Likely, it won’t be the only Latin American airline to reduce its fleet as we expect the carriers in the region to look very different once the pandemic is over

Aeromexico stated,

“During the quarter, Aeromexico returned four Boeing 737-800s and two Boeing 737-700s. The fleet of Aeromexico, without taking into account the six Boeing 737 MAX that are currently parked, ended with 119 planes at the end of the first quarter of 2020.”

This fact is fascinating, as last year Aeromexico brought back three 737-800s during 2019 to cope with the lack of its new MAX fleet. It started with 36 737-800s in its fleet and ended 2019 with 39. But now, it has reduced it back to 35, and we can expect further reductions in the second quarter of this year. 

What do you think of Aeromexico’s results? Let us know in the comments.