Lessors have taken back at least 27 planes from Mexico’s Interjet, according to a company that tracks leased aircraft, making the airline one of the first to lose a big chunk of its fleet as the coronavirus pandemic torpedoes travel demand.
The repossessed Airbus SE jets have been flown mainly to Arizona and California, said U.K.-based aviation consultant IBA Group Ltd. Interjet, which stopped flying internationally last week, was already contending with a collapse in flying that has buffeted airlines around the world.
The blow to Interjet’s fleet points to the next stage in the virus crisis as financially weaker carriers struggle to stay afloat while customers largely stop flying. The carrier was contending with financial challenges long before the outbreak’s spread. And with no government bailout on the horizon in Mexico, Interjet’s future is becoming grimmer, said Bloomberg Intelligence analyst George Ferguson.
“It looks like lessors want to get their planes out before they go into default,” Ferguson said. “Interjet is probably not a long-term survivor.”
Interjet denied that its planes had been repossessed.
“It’s absolutely false,” the company said in a statement. “Interjet has had to temporarily suspend routes and therefore has had to look for spaces to park jets at competitive prices, like the rest of the airlines are doing.”
The airline is owned by the Aleman family, descendants of a president of Mexico who held office in the late 1940s and early 1950s.
At the global level, airlines could lose a quarter of a trillion dollars in revenue this year, according to the International Air Transport Association, with most carriers going bankrupt by the end of May if they can’t find support, CAPA Centre for Aviation said.
In Mexico, Interjet’s rivals are also struggling. Grupo Aeromexico SAB was downgraded by Moody’s Investors Service, while the airline’s shares have tumbled by about half this year through Thursday. Aeromexico has cut capacity, parked 40 jets and set up a voluntary, unpaid leave program for its workforce.
Low-cost carrier Volaris slashed capacity by 80% while vowing to pare costs and maintain liquidity. Its shares have dropped about 60% this year.
Before the crisis, Interjet’s Airbus fleet was comprised of 66 narrow-body jets, of which only 19 are currently flying. The rest, along with 22 Sukhoi Superjet 100 planes that Interjet grounded last year, were parked across airports in Mexico, the U.S., and Costa Rica, according to flight trackers.
Airlines’ first leasing contracts are usually for 12 years, and 20 of the repossessed planes had leases under 11 and a half years, indicating the lease wasn’t up yet, Ferguson said.
Before the virus battered North America, Interjet grounded four Airbus planes in February, stoking anxiety among the airline’s lessors and spurring speculation that Mexico’s third-largest carrier was harvesting parts from the aircraft to keep other jets in service.
The company stopped filing financial reports last year, saying it had repaid a loan that required the public disclosures. Back then, Interjet’s net debt was around 11.5 times earnings.
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