MEXICO CITY (Reuters) – Mexico’s government on Thursday ruled out a financial rescue of the country’s airlines, which have been hammered by a sharp drop in global demand for travel and restrictions imposed due to the coronavirus pandemic.
Aeroméxico <AEROMEX.MX> announced in late June the start of a restructuring process under Chapter 11 bankruptcy proceedings in the United States, while rival Interjet has also been struggling under the burden of coronavirus-imposed restrictions.
Javier Jimenez, Mexico’s Minister for Communications and Transportation, told reporters the government was in contact with the industry and exploring options to help them but said there would be no offers of a financial rescue.
“There will be no rescue, but there will be support,” said Jimenez, reiterating the stance of the administration of President Andres Manuel Lopez Obrador.
The leftist leader has repeatedly ruled out private sector rescues, saying past bailouts only helped the rich and saddled Mexico with unsustainable debt.
“From the outset, it was said the country is not in a position to do it, nor minded to do it, because the bailouts are still being paid for by Mexicans, peso by peso,” he added.
Jimenez said the granting of loans and guarantees to companies through development banks was currently being negotiated.
Mexico is one of few countries in the world that has not implemented a government support plan for its airline industry to help it cope with the impact of the virus, according to industry reports.
(Reporting by Noé Torres; Editing by Drazen Jorgic and Daniel Wallis)