Faced with a net loss of Ps1.23 billion ($65.3 million) for the first nine months of 2018, Aeromexico is cutting several routes, phasing out five aircraft and launching a cost reduction programme.
Aeromexico’s chief executive Andres Conesa called the third quarter «one of the most challenging» for the Mexican aviation industry since 2008. Airline executives cited high fuel prices, overcapacity in the US-Mexico transborder market, depreciation of the Mexican peso and inflation as the factors contributing to the airline’s plight.
The SkyTeam carrier saw its third quarter operating profit fall 82.6% to Ps235 million. Revenue rose 14.4% to Ps18.2 billion but costs grew quicker, rising 26% to Ps14.8 billion in the period. The airline reported a net loss of Ps617 million in the third quarter, reversing from a net profit of Ps344 million in the same period in 2017.
«The operating environment remains complicated,» said Conesa on an earnings call, saying that the airline needed to take significant action in light of high fuel prices and market overcapacity.
It will retire five aircraft – three Embraer 170s and two Boeing 737-800s – from its fleet. The aircraft, which predominantly serve the US transborder market, are all owned by the airline, says Conesa. With the fleet reduction, the airline will end 2018 with 127 aircraft, instead of 132 as previously planned.
On the network front, Aeromexico will suspend service on nine routes in 2019, five of which are US transborder city pairs. The airline will end flights from Mexico City to Boston, Portland (Oregon) and Washington Dulles. It will also suspend service from Monterrey to Las Vegas, and from Guadalajara to San Jose (California). Within Mexico, the airline will suspend service from Monterrey to Tijuana, Merida and Veracruz. It will also end flights from Guadalajara to Cancun.
It is not immediately clear when in 2019 Aeromexico will exit those routes, and its spokespeople did not immediately respond to questions.
The airline’s departure from the three US-bound routes from Mexico City will leave JetBlue Airways as the only carrier flying between Mexico City and Boston after it begins service later this month, FlightGlobal schedules data show. United Airlines will become the sole carrier offering nonstop service between Mexico City and Washington Dulles, while Portland will lose its only nonstop link to Mexico City.
At Monterrey, Interjet will be the only carrier operating to Las Vegas.
The suspension of Aeromexico’s service between Guadalajara and San Jose marks a quick end to the short-lived service, which started up only in mid-2017. Alaska Airlines and Volaris operate to San Jose from Guadalajara.
Aeromexico, however, will continue to serve the San Francisco Bay Area from Guadalajara with flights to San Francisco. It competes against Volaris on this route. Volaris also operates from Guadalajara to Oakland, FlightGlobal schedules data show.
On the domestic routes, other Mexican airlines will continue to serve the markets that Aeromexico is exiting. Both Volaris and Viva Aerobus operate from Monterrey to Merida and Tijuana. Viva Aerobus also serves Veracruz from Monterrey. All three other Mexican airlines – Interjet, Volaris and Viva Aerobus – will continue to fly nonstop between Guadalajara and Cancun…
