Mexico's two largest airlines hit hard times

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Mexico's two largest airlines hit hard times By Hiram Soto September 26, 2001

Mexico's two largest airlines, Aeroméxico and Mexicana de Aviación, are also navigating turbulent times.

While U.S.-based airlines have laid off thousands of employees and suspended some routes following the terrorist attacks Sept. 11, the Mexican airlines are evaluating their flights to the United States.

Both lost millions of dollars during the weeklong suspension of flights to the United States and in the subsequent drop in air travel.

In response, the airlines are considering a number of options: reducing the number of flights north of the border, eliminating some routes to the United States and laying off thousands of workers.

A spokesman for Aeroméxico, which has 60 daily flights between the two countries, said it has not been able to fill more than 50 percent of its seats since the attacks. That's significant because 35 percent of its revenue comes from flights to and from the United States.

For its part, Mexicana Aviación, which flies 27 of its 59 planes to the United States, said the drop in demand has forced it to ground some of its fleet. The routes to and from the United States represent 40 percent of its revenue.

For both airlines, this crisis could not have come at a worse time.

A recession in Mexico and a stagnant economy in the United States have led to losses of $60 million for Sintra, the parent company of both airlines, in the first half of this year.

There also are additional costs. The new security measures imposed by the Federal Aviation Administration on foreign companies that fly to the United States forced the airline to hire more security personnel in airports across Mexico.

For now, both airlines are giving themselves a few days to see how the market responds before making decisions that would affect thousands of air travelers and workers.

"We're almost sure that there will be a drop in the number of flights, particularly from there to here," Fernando Martínez, a spokesman for Mexicana de Aviación, told the Mexico City daily Reforma. "We will have to adjust."

http://www.signonsandiego.com/news/business/20010926-9999_1b26mexico.html

-- Martin Thompson (mthom1927@aol.com), September 27, 2001

Answers

With fear like this spread throughout the world, why is it the stock market is going up this week? It makes no sense.

-- QMan (qman@c-zone.net), September 27, 2001.

The stock market always goes up at the end of quarter so that the mutual funds can dress up there performance. Its called window dressing.

-- Guy Daley (guydaley1@netzero.net), September 28, 2001.

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