Aeromexico signed a letter of intent with Dubai Aerospace Enterprise (DAE) to take delivery of up to 12 new Boeing 737 MAX aircraft. These planes would arrive as early as October 2021 and allow the Mexican carrier to compete more effectively with low-cost airlines Volaris and Viva Aerobus. Let’s investigate further.
Up to 40 new planes for Aeromexico
Despite facing a bankruptcy process in the United States, Aeromexico is receiving new aircraft.
A couple of months ago, Aeromexico and Boeing renegotiated their order for 54 new Boeing 737 MAX units. Instead, the Mexican airline will receive 20 new MAX units, four Boeing 737-800 and four Boeing 787-9 Dreamliners. Some of those have already arrived, including Aeromexico’s first MAX 9.
Nevertheless, “over the last several months, Aeromexico has continued to negotiate with existing lessors and potential lessors of additional aircraft equipment,” said the airline in a filing.
Therefore, Aeromexico and DAE have agreed to enter into a new long-term aircraft lease agreement. Aeromexico will take delivery of up to twelve new Boeing 737 MAX.
The Mexican carrier still has to receive authorization from the Chapter 11 bankruptcy court. If it happens, Aeromexico could get up to 40 new airplanes in the following years while retiring a few older units.
Why taking more aircraft?
Mexico has had one of the fastest recoveries from the COVID-19 pandemic. Low-cost carriers Volaris and Viva Aerobus are already flying over their pre-pandemic levels. They have also restored its 2019 passenger levels (Viva Aerobus has even grown). Volaris returned to profitability during 2021’s second quarter.
Meanwhile, Aeromexico is a bit behind domestically. Internationally, Aeromexico is still a long way from recovering its pre-pandemic numbers due to many travel restrictions.
Nevertheless, there’s so much room to grow following Interjet’s cease of operations, and Aeromexico wants a piece of that pie.
Also, the terms of the DAE leases are even superior to some of Aeromexico’s existing leases, said the airline. Therefore, they could allow Aeromexico to potentially reject other aircraft that are not as attractive in the long-term fleet.
Aeromexico plans to reject the leasing contracts of its five Boeing 737-700 units and some Embraer E190 aircraft. In the future, we could see a few of the old Boeing 737-800 also leave the company. As of July 20, Aeromexico has 33 B737-800 in its fleet, according to ch-aviation.
Where could Aeromexico deploy its new fleet?
Ideally, Aeromexico would love to use its MAX fleet on routes to Mexico and the United States. Unfortunately for the Mexican carrier, while Mexico is in Category 2 with the Federal Aviation Administration, it can’t add new capacity to the US.
Mexico is expected to regain its Category 1 status late this year; in the meantime, the airline is deploying its MAX 9 fleet on routes to popular destinations like Cancun.
Additionally, Aeromexico could use its MAX fleet on flights to Canada, following the Canadian Government’s decision to open its borders in September.
Aeromexico is currently working on its Chapter 11 exit plan. It intends to file it by mid-September and successfully exit the bankruptcy process later this year. Earlier this month, Delta Air Lines announced it will purchase a fraction of Aeromexico’s debt.
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