Mexicana Profile Assignment
Essay by angierubi • March 5, 2017 • Research Paper • 466 Words (2 Pages) • 780 Views
Re: Mexicana Profile Assignment
Founded in 1921, Mexicana was Mexico's oldest, biggest and flagship airline before ceasing operations on August 28th, 2010. Headquartered in Mexico City, Mexicana operated domestic routes and various international destinations in North, Central and South America, the Caribbean and Europe. Its primary hub was Mexico City's Benito Juarez International Airport and it was characterized as the 4th oldest airline in the world. Mexicana main competitors were Aeroméxico and low-cost carriers such as Volaris and Interjet.
Mexicana joined Star Alliance in 2000 and left it in 2004 before joining Oneworld on November 2009. Emilio Romano, Mexicana´s CEO, stated that “the airline left the alliance to pursue more effective code-sharing relationships with other airlines.”[1]
But why did it go bankrupt? Mexicana broke as a result of bad management operations from the last 30 years. In 2005, Grupo Posadas - a hotel chain - acquired Mexicana for US $165.5 million[2] in an attempt of revitalizing the company but things just went from bad to worse since then. Posadas executives increased Mexican´s debt and when the airline stopped operating its assets account for US $786 million while its liabilities for US $864 million[3].
Several labour unions sued Grupo Posadas when they realized all the frauds they had committed, but Posadas argued that the possibility for bankruptcy was the result of high labour costs.
In a second attempt to rescue the company, pilots and flight attendants proposed to decrease the workforce and salaries, but these options were rejected by Posadas executives.
Furthermore, in 2005 several low cost carriers were established in Mexico, so Mexicana rebranded its regional subsidiary, Aerocaribe, as "Click Mexicana" and promoted it as a low cost carrier. This was part of the company's plan to remain competitive in the changing aviation industry. This plan helped the company to increase its market share, but by that time, Mexicana´s financial records were highly negative.
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