Mexicana Relaunch Suspended by Mexican Government
The Mexican government announced that a deal to revive the bankrupt Mexicana, the largest carrier in that country, has fallen apart, saying an investment group could not raise the necessary capital to buy the airline.
Late last month, officials had announced a deal for Mexicana to raise $200 million after a private equity fund called PC Capital acquired a controlling stake in the airline's holding company, according to Bloomberg.
Government officials had expected a deal to be announced, however they said the fund was unable to raise the capital it had promised in the prior agreement.
"While PC Capital has developed a business plan to revive Mexicana, it has not named a single investor who could support the acquisition," the statement read. "It has not done its part to identify solvent investors."
The failure dashed hopes that Mexicana, which had 8,000 employees and flew to 65 destinations worldwide, could get back on its feet. The carrier, a member of the Oneworld Alliance along with American Airlines and British Airways, was one of two major commercial airlines in Mexico and also was a major carrier for American tourists visiting the country.
Lawyers for Mexicana did not have any immediate comment on the deal collapse, but said they would find out where the negotiations stood. Mexican tourism officials were still working on a formal response to the report. Advent International, a U.S. private equity fund that had been involved in talks to restructure the airline, declined comment.
Mexicana filed for bankruptcy protection in August 2010 after being overwhelmed by millions of dollars of debt and suspended its low cost affiliates Link and Click.
The carrier had been hampered by severe cost constraints, including what it called non-competitive labor agreements with its major unions. The airline said it had lost $350 million from 2007 until 2010 and had attempted to restructure its operations, saving about $800 million.
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