Aeroméxico completed its financial reorganization under Chapter 11 last week, after almost 20 months of negotiations with its workers, suppliers and other organizations, which mark a before and after in the company’s history. Being on the verge of bankruptcy generated several substantial changes both in its shareholding structure and in the assets and liabilities it has compared to its situation prior to the pandemic.
On June 30, 2020, the airline announced a voluntary restructuring under Chapter 11 of the US bankruptcy code, in a process that allowed the negotiation of contracts such as aircraft leasing and work collectives, which gave it a breathing space to maintain its operations while negotiating the entry of more resources, from the hand of new shareholders.
But what are the biggest changes that the company went through in this process? Below we list some of its major adjustments.
New owners and new shares
One of the main changes left by Chapter 11 for Aeroméxico was in its shareholding structure.
Before the pandemic, the US airline Delta Air Lines was the company’s largest shareholder, with 49% of the company’s share capital. Meanwhile, the rest was distributed among other shareholders, investors and directors, including businessmen such as Eduardo Tricio Haro, Valentín Diez Morodo and Antonio Cosío Pando, among others.
After the negotiations for the entry of new capital for 4,266 million dollars (mdd), the firm Apollo Global Management became the largest shareholder of the airline with 22.38% of the shares, followed by Delta, which reduced its participation to 20%. .
In addition, a group of Mexican businessmen made up of existing shareholders –Eduardo Tricio Haro, Valentín Diez Morodo, Antonio Cosío Pando and Jorge Esteve Recolons– has a 4.10% stake, while the rest is made up of new investors and creditors, including There are also the firms The Baupost Group, Silver Point Capital, Oaktree Capital Management and other funds that were part of the ad-hoc group of creditors.
With the entry of more shareholders and new capital, the more than 682 million shares of the airline that were in circulation were diluted to represent less than 0.1% of the new capital of the airline, made up of more than 682 billion shares.
To understand how this change in the share price was reflected, it is important to consider that Aeroméxico’s current shares are not the same as they were before its restructuring.
Before completing its restructuring, the airline’s shares had oscillated at the threshold of 15 pesos per share, which fell to a range of 5 to 7 pesos with the outbreak of the health contingency, and were even traded at less than 1 peso in the months prior to the entry of the new capital.
With the closing of its restructuring and the effects of the entry of the new capital being executed, the new shares entered circulation at a price of just over 389 pesos per share. However, the airline’s old shares were diluted, and did not recover their value.
Changes in the board of directors
Aeroméxico’s restructuring also brought changes to the company’s board of directors, with some names being retained, as well as new appointments.
While directors such as Javier Arrigunaga, Andrés Conesa and Antonio Cosío Pando remained on the new board, others such as Glen Hauenstein, Lee Moak, Andrés Borrego yMarron, Bogdan Ignashchenko, Antoine George Munfakh were added to the board of directors.
This occurred as a consequence of the new appointments to which the new shareholders were entitled, with which four directors were appointed by the Mexican investors, two by Delta Air Lines, one by Banamex –which, as trustee of the irrevocable trust, exercised a voluntary capital conversion election – two by the Apollo fund, and two by the group of creditors known as BSPO Investors and bondholders.
Post Chapter 11 Financial Position
To assess the effects of the pandemic and the subsequent restructuring of Aeroméxico, it is enough to take a look at the company’s assets and liabilities.
At the end of 2019, the airline registered total assets of 100,988 million pesos (mp), and total liabilities of 95,211 million pesos, of which 41,680 million pesos were short-term liabilities and 53,531 million pesos were long-term.
With the entry of new capital and the commitments assumed during its restructuring, Aeroméxico closed 2021 with total assets of 86,848 million pesos (14% less than 2019) and liabilities of 141,354 million pesos, 48% more than in 2019.
Of the liabilities that the airline had at the closing of its last financial statements, 99,381 million pesos were short-term liabilities and 41,973 million pesos were long-term.