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Market News After Aeromar's Stoppage, Mexico's Flight Workers Expect Turbulence
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After Aeromar's Stoppage, Mexico's Flight Workers Expect Turbulence

Author Avatar TOPONE Markets Analyst
2023-02-24 09:47:12

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Workers in Mexico's aviation industry are fortifying themselves for more turbulence as financial, legislative, and safety barriers continue to mount.


Even though the heavily indebted Aeromar was a relatively modest operation compared to its competitors, its closure is a symptom of a national problem, according to the flight attendants' union.


In total, Aeromar left behind debts of approximately 7 billion pesos ($381.28 million), according to the union, citing estimates by attorneys.


Last week, President of Mexico Andres Manuel Lopez Obrador stated that Aeromar was "poorly managed" and that unspecified legal action was being taken.


Lopez Obrador also promoted the government's intentions to purchase and convert Mexicana, another defunct airline, into a military-run commercial airline.


Former Mexicana employees have not yet been terminated, and flight attendants' union members have filed more than 100 petitions, according to the organization.


Ada Salazar, a union leader, stated, "We do not want this error to be repeated (with Aeromar)." Remember that legal procedures in Mexico are slow.


Workers are also concerned that new legislation could contribute to Mexico's aviation woes.


Congress is currently considering a proposal to reform the sector, which unions and airlines concur is necessary, but the sector has spoken out against several of its terms.


Thursday, Congress also enacted a law granting the Mexican military a more prominent role in airspace monitoring.


This has caused concern, as has the proposal to authorize foreign airlines to operate domestic routes within Mexico, a practice known as "cabotage."


Volaris's chief executive officer stated on Thursday that industry leaders have informed the transportation ministry and legislators that cabotage is not required.


The modifications are intended to restore Mexico's Category 1 aviation safety classification, which the U.S. Federal Aviation Administration downgraded in May 2021. 


Lopez Obrador has asserted that "cabotage" and the establishment of the military-run Mexicana would be beneficial to consumers.

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