Mexicana – How Mexico’s Oldest Airline Ceased Operations

This year marks the tenth anniversary of the end of operations of Mexicana de Aviación. The Mexican carrier was the second oldest in Latin America behind Avianca and one of the most highly regarded worldwide. How did it fail? Let’s take a look.

Mexicana
Mexicana de Aviación, oldest Mexican carrier, ceased operations in 2010. Photo: Eddie Maloney via Flickr

From national carrier to tragedy

Mexicana de Aviación ceased operations on 28 August 2010. At that moment, the fleet consisted of 69 aircraft, with an average age of 10.8 years. The carrier was a member of oneworld. It also had an extensive network of domestic and international destinations, including some long-haul routes to Europe.

During the first decade of this century, the common thought was that Aeromexico was nearer to bankruptcy than Mexicana. But history proved otherwise.

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It all started in 1982 when the Mexican Government bought 54% of the carrier. To be fair, by this year, Mexicana de Aviación had previously been saved a couple of times. At one point even Charles Lindbergh was a pilot of the airline, just so you know. 

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In the nineties, Aeromexico bought Mexicana and both worked as separate airlines. But in 1995, the country fell into a major economic crisis that saw the massive devaluation of the Mexican peso. We know it as the Tequila Crisis. 

For the two carriers, this meant a big blow to their services. Eventually, the Government bought both Aeromexico and Mexicana with the intent to operate, save and sell them.

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Mexicana
The Mexican government saved Mexicana from bankruptcy. Photo: planephotoman via Flickr.

Then Grupo Posadas arrived

Grupo Posadas bought the carrier in 2005. This was the nail in the coffin. As Mexican media outlet A21 said: 

“The downfall of Mexicana is traced to the decision of Vicente Fox Quesada, former Mexican president. He sold the national airline to Grupo Posadas and Gastón Azcárraga in 2005. They paid $165.5m USD when the real value of the carrier was over $400m USD”. 

Nowadays, Mexican law enforcement is looking for Gastón Azcárraga who, by all accounts, may live in New York. What did he do? He lied to the shareholders and mishandled the activities of the airline leaving it in tatters. The bankruptcy left more than 8,000 employees without a job. 

Vicente Fox
Vicente Fox sold Mexicana de Aviación in 2005. Photo: EneasMX via Wikimedia

What could’ve been

At one point, the Government planned to unify Aeromexico and Mexicana under one brand. This would have created an airline with a value of over one billion dollars. Can you imagine it? Maybe it would be as important as Avianca or LATAM in the South American market. 

Nevertheless, a regulatory commission deemed the unification as monopolistic, stopping it. So a group of investors bought Aeromexico for $249m USD and Grupo Posadas got Mexicana de Aviacion. “By selling them apart, the Government bargained away the value of the airlines,” said local analyst Rosario Avilés in an interview last year. 

On one side, this hit the international connectivity of Mexico. But also, the disappearance of Mexicana may have been the push needed by low-cost carriers to emerge. During the last decade, Viva Aerobus, Interjet and Volaris consolidated as domestic carriers in the country. 

There are rumors that the current Government may bring back the old and lustrous carrier. But, would that be worth it? Mexicana’s brand is very much alive among aviation enthusiasts as Eastern Airlines or PanAm. But one thing is to live off the old glories and another is to survive in today’s aviation panorama. We don’t think Mexicana should fly again; it would be a bad idea with a worse outcome. 

What do you think? Let us know in the comments.

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Björn Sandberg

For the sake of good order, MX was not one world by Star Alliance. Another big reason for the bankruptcy was the expansion to Europe (MAD and LGW), the latter with limited feed from other European cities.

Joselyn

I think it would be a good idea, it may be a nostalgic airline for many but it coming back would see a change in the Mexican Aviation industry. There is only one major non low cost airline and that is Aeromexico. It would be nice to see another one thrive in Mexico.