The former Mexican airline Interjet has been formally accepted into a domestic bankruptcy process by a district judge. Interjet will now be able to negotiate up to 40 billion pesos in debt (nearly US$2 billion) with its creditors.

Bankruptcy process

On Tuesday, a Mexican judge approved the airline Interjet formally entering a bankruptcy process. Interjet ceased operations in December 2020, after a years-long crisis fueled by the COVID-19 pandemic. Before that, Interjet was the third-largest airline in Mexico, had a fleet composed of 88 aircraft, including 22 Sukhoi Superjet units, and operated under a hybrid business model with both low-cost and legacy-like services.

The management of the ill-fated airline celebrated the judge's decision, saying it was great news for the company. The airline will now be able to restructure financially, eyeing a return to the skies in the future, said Carlos del Valle, deputy director of Interjet.

The airline will employ the benefits available in the Mexican bankruptcy process to strengthen its financial position, protect and preserve its assets, and organize the company's liabilities, safeguarding the creditors and employees, said Interjet in a statement. Former Interjet employees launched a strike in January 2021 and seized most of the company's assets across the country, including its airport counters at Mexico City Benito Juárez International (MEX).

Interjet and Aeromexico planes prepare to take off at the Benito Juarez International airport, in Mexico City, on March 20, 2020.
Interjet has been formally accepted into a Mexican bankruptcy process. Photo: Getty Images.

Will we ever see Interjet back in the sky?

Despite the claims of Mr. Del Valle, Interjet has a long way to go before it can even attempt a comeback. The Mexican bankruptcy process is not the same as Chapter 11 in the United States, which allows the company to keep operating while it financially reorganizes its debt, gets new funding, and renegotiates every aspect of the daily operation. Instead, the Mexican process, more often than not, ends in liquidation. Moreover, the previous attempts to rescue an airline through this bankruptcy process have not been successful. The last one to enter, Mexicana de Aviación on August 2010, is still, twelve years later, pending a final resolution.

Interjet's bankruptcy process is likely to drag on for years. Even if the airline manages to reorganize its debt, it will find itself in a very different position than in 2019, before the pandemic. At one point, there were rumors of a possible Interjet 2.0 operating with Airbus and Let L-410 Turbolet aircraft.

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View of the Interjet airlines hall at the Benito Juarez International airport, in Mexico City, on May 20, 2020, amid the Covid-19 coronavirus pandemic.
Interjet ceased operations in December 2020. Photo: Getty Images.

Interjet's demise

Interjet was an airline anchored at MEX. With a fleet of Airbus A320-family and Sukhoi aircraft, it carried around 15 million passengers in 2019, before the pandemic. It flew over 80 routes, many to the United States and Central and South America. Nonetheless, despite the reach of its commercial services, financially, the airline struggled for many years, posting net loss after net loss since 2017.

Interjet overreached. The airline acquired a Russian-made aircraft in a commercial bet that was highly unsuccessful and later tried to compete with Aeromexico (a legacy carrier) and Volaris and Viva Aerobus (two low-cost airlines). This mixed model didn't work financially, although many passengers have fond memories of the airline.

Following the cessation of operations of Interjet on December 11, 2019, the gap it left in the Mexican commercial market was quickly taken by low-cost rivals Volaris and Viva Aerobus. These two airlines have quickly rebounded from the COVID-19 pandemic, posting record traffic numbers in 2021, and both are doing the same in 2022.