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Grupo Aeromexico SAB de CV is nearing the finish line of its restructuring with a proposed plan to reduce debt by more than $1 billion, but must first overcome opposition from junior creditors who say existing shareholder Delta Air Lines, among others, is benefiting from the deal at their expense, Reuters reported. The Mexican airline, after nearly two years in bankruptcy, will make its case for the plan in a New York bankruptcy court on Jan. 27. Aeromexico, which in June 2020 filed for chapter 11 protection in the United States with $2 billion in debt, says it has secured the votes needed from its creditor classes to move forward with the deal despite lingering objections from some groups. The plan, which Aeromexico says will result in a total enterprise value of $5.4 billion and preserve 13,000 jobs, would give its largest creditor, Apollo Global Management, the largest stake here in the company. But the committee representing general unsecured creditors, some of whom could see just pennies on the dollar, says the plan unfairly benefits insiders. The committee, which includes a pilots union, Falko Regional Aircraft Limited, Nordic Aviation Capital and the trustee to a group of noteholders, argues that the deal must be held to higher standards than a typical chapter 11 settlement because insiders are involved. It said the voting results only show one class of general unsecured creditors in support of the plan because the company used a “loophole” to value certain claims lower than what the creditors say they are worth. Aeromexico, however, said creditors could have challenged that arrangement before the voting procedures were approved but failed to do so.

The U.S. Transportation Department (USDOT) announced yesterday that it is issuing a new rule to make it easier for regulators to move faster to protect airline customers from unfair and deceptive practices, Reuters reported. The new regulation will simplify and speed hearing procedures the department uses when issuing protection rules to prohibit unfair or deceptive practices by airlines and ticket agents. The USDOT plans future rules on airline ticket refunds and transparency of airline baggage and other fees. It will also soon issue guidance on the definitions of "unfair" and "deceptive" for purposes of airline customer protection, the department said in a statement. Under the new rules, the department will require airlines or others seeking hearings on proposed government regulations on unfair aviation practices to move faster, make clear hearings will be granted only if in the public interest, and eliminate a requirement that hearing officers issue detailed reports.

American Airlines said yesterday that it lost $931 million in the final three months of last year, as the Omicron variant of the coronavirus has pushed back the industry’s rebound, the New York Times reported. After a year of recovery punctuated by setbacks, airlines are now focused on returning to profitability in 2022. Industry executives are hoping for a robust spring and summer driven by rebounds in corporate and international travel. “Over the past year, we have experienced periods of high travel demand countered by periods of decreased demand due to new COVID-19 variants,” American’s chief executive, Doug Parker, said in a statement on Thursday. “This volatility has created the most challenging planning environment in the history of commercial aviation.” Omicron forced airline workers to call in sick at record rates over the holidays, compounding problems caused by winter storms and contributing to tens of thousands of cancellations during one of the year’s busiest travel periods. But American notably performed better over that period than its peers. Over the two weeks starting on Dec. 25, American canceled just under 1,500 flights, compared with more than 4,300 at Southwest Airlines, more than 2,500 for United Airlines and more than 2,000 for Delta Air Lines. The cancellations represented 4 percent of American’s schedule, versus 9 percent for Southwest, 8 percent for United and 5 percent for Delta. Omicron will continue to weigh on demand in January and February, American said. The airline expects capacity, as measured by seats sold and distance flown, to be about 8 to 10 percent less in the first three months of this year than in the same period in 2019. Revenue is expected to be down 20 to 22 percent.

Grupo Aeroméxico SA B de CV is close to clinching court approval for a proposed corporate reorganization about 18 months after filing for chapter 11, although some creditors argue the bankruptcy plan unfairly enriches certain shareholders and shouldn’t be confirmed, WSJ Pro Bankruptcy reported. Some of Aeroméxico’s unsecured creditors — including Invictus Global Management LLC, Corvid Peak Capital Management LLC and Hain Capital Group LLC — say the proposed reorganization, which would recapitalize the business and bring in new owners, unfairly rewards certain insiders and creditors poised to own significant stakes in the airline after it exits bankruptcy. Objecting creditors said in court papers Tuesday they weren’t offered the same opportunity to subscribe to a planned sale of Aeroméxico equity as others with equal standing under bankruptcy law. “No bankruptcy court has ever approved…a plan of reorganization in which certain select creditors received a recovery on account of an investment opportunity while all other creditors in the same class were entirely excluded at the time of solicitation,” the objecting creditors said in a court filing.

Mexican carrier Aeromexico said on Monday that its shareholders have approved a capital increase as part of its restructuring plan to emerge from bankruptcy, Reuters reported. In two meetings held on Friday, shareholders agreed to hike the share capital by $4.267 billion, which is subject to a third party making a public tender offer of its current shares. The increase will come from the issuance of some 682 trillion common shares, which will be paid for through a $3.44 billion debt capitalization and an $828 million injection. Aeromexico's biggest creditor in its U.S. chapter 11 case, Apollo Global Management, will swap its debt into equity as part of the reorganization, becoming the airline's largest stakeholder. Delta Air Lines Inc, which had controlled a majority of Aeromexico before the bankruptcy, will hold roughly a fifth of its stock coming out of bankruptcy. Aeromexico has 682.1 million shares in circulation. Existing equity shareholders will see their stakes essentially wiped out. Aeromexico also said shareholders had agreed to issue another 68.2 trillion shares, which will remain in the company's treasury.

Local creditors of Latam Airlines Group SA are up in arms over a bankruptcy plan that would leave them with next to nothing even as holders of overseas bonds get almost all their money back, Bloomberg News reported. BancoEstado SA, a Santiago-based bank acting on behalf of local noteholders, has asked Latin America’s largest airline to improve its terms. The investors are threatening to sue if their demands aren’t meant, and contend that as a Chilean company, Latam should have filed for protection in local courts — instead of New York — that would have treated domestic creditors better. Local bonds have plunged since the airline’s latest plan to exit bankruptcy was filed in November, with inflation-linked notes due in 2029 trading at 10 cents, according to extrapolated prices calculated by data provider LVA Indices. Overseas bonds, meanwhile, have been among the country’s best performers. Securities due in 2024 have surged to 96 cents on the dollar, from as low as 20 cents in the weeks after the bankruptcy filing in May 2020.

Mexican carrier Aeromexico said yesterday that its creditors have overwhelmingly approved the company's restructuring plan as part of its efforts to emerge from bankruptcy, Reuters reported. Aeromexico said in a statement that the voting ended on 7 Jan. and 86% of the creditors who voted backed the plan. "The conclusion of the voting process and the strong support from the company's creditors represents a key milestone in Aeromexico's restructuring process," the company said. It also puts Aeromexico in a strong position to "obtain Court approval for the plan", the company added. Shares in the Aeromexico, which filed for chapter 11 bankruptcy protection in the U.S. last year amid the pandemic, have been wildly seesawing in recent weeks amid speculation about its bankruptcy proceedings. A meeting of the company's shareholders is due to be held on Friday, where they will discuss the restructuring plan. The court is then due to consider confirming the plan on 27 Jan., Aeromexico said.

Bad weather and coronavirus outbreaks among workers continued to disrupt schedules across the United States, but airlines have also called off many recent flights, in advance, so they can correct course at a traditionally slow time for travel without surprising customers with last-minute cancellations, the New York Times reported. About 5,000 flights were canceled from Friday through Sunday, according to FlightAware, a data tracking service, with the daily number of cuts declining steadily over that period. Southwest Airlines suspended over 1,000 flights, more than any other carrier. SkyWest Airlines, which operates flights for several major carriers, and United Airlines each canceled more than 500 flights. The turmoil began before Christmas, caused by bad weather in the West and staff shortages because of virus outbreaks among employees. Snowfall in the Northeast continued to wreak havoc at major airport hubs across the country into the first weekend of this month. “Given the ongoing surge in Covid cases and related sick calls, we’ve been working with each of our major partners to proactively reduce our January schedules,” SkyWest said in a statement. The airline operates flights for United, Delta Air Lines, American Airlines and Alaska Airlines and said the pullback is intended to “ensure we’re able to adequately staff our remaining flying as we work to recover in the coming weeks.”

Airlines are struggling through one of the most severe and persistent mass-cancellation events of the past decade, according to data compiled by FlightAware, after U.S. COVID-19 infections surged too quickly for carriers to manage without upending holiday travel, wreaking havoc on already-stretched airline workforces. Now carriers are assessing how to better manage what could continue to be a difficult period, at least for the next few weeks, the Wall Street Journal reported. Airlines have canceled more than 1,000 daily U.S. flights for 12 straight days, including over 2,000 on Thursday. Flights scrubbed from Christmas Eve through Jan. 5 exceeded 22,000, more than 7% of the number airlines had planned to fly, according to FlightAware, a flight-tracking service. For airlines, the upheaval of the pandemic is heading into a new phase. Unlike in early 2020, when terrified passengers canceled trips in droves, new variants dent but don’t decimate appetite for travel. But airlines are still rebuilding their operations. The twin challenges of rising numbers of employees calling out sick after being infected or exposed to COVID-19, and a series of severe winter storms that hit major hubs from Seattle to Chicago to Washington, D.C., created the perfect conditions for travel chaos. (Subscription required.)

Philippine Airlines Inc. received approval to tap $150 million in additional financing and plans to cut its debt by $2 billion, after winning approval last month from a U.S. court for its reorganization plan, Bloomberg News reported. “There are immense challenges ahead, but we look forward to tackling them as a reinvigorated Philippine Airlines, better positioned for strategic growth to continue serving our customers,” President Gilbert Santa Maria said in an emailed statement Friday. The flagship carrier, majority owned by billionaire Lucio Tan, is one of several to enter debt restructuring in the U.S. Aeromexico and Colombia’s Avianca Holdings have both sought court protection in New York. Philippine Airlines received the go-ahead from the court after its reorganization plan didn’t face any major opposition from debt holders. The airline has the option to obtain up to $150 million in additional financing from new investors, it said in the statement. It had already been given permission to access $505 million worth of equity and debt financing to help it meet obligations.