Mexicana Airlines Files for Bankruptcy

Financially struggling Mexicana, Mexico's largest carrier, has filed for bankruptcy protection in Mexico and the U.S.

Mexicana says it filed "to restructure its cost and insure the viability of the company." The move comes after pilots and flight attendants rejected a pay cut.

The company says it will continue operating while it solves its financial issues. The filings were in Mexico City and New York, where the carrier says it needs protection from creditors so its assets won't be seized.

The company was adversely affected by the swine flu outbreak last year and "suffered losses as a result of a flu epidemic that had a severe, immediate and unexpected impact upon Mexican tourism and business-related trips and travel," Maru E. Johansen, Mexicana's U.S. vice president for legal affairs and corporate affairs, says in court papers.

The carrier says it owes Mexican banks more than $199 million, though did not disclose its total debt.

Earlier this week the Federal Aviation Administration (FAA) downgraded its aviation safety rating for Mexico, barring the expansion of service by carriers including Mexicana and AeroMexico. The FAA action also means the Mexican carriers cannot carry passengers to or from U.S. airports as part of code share arrangements.

Mexicana has a code share agreement with American Airlines.

Photo, abdallah, flickr

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