UPDATE 2-Aeromexico says looking to restructure financial obligations, has not decided on Chapter 11

Aeromexico is analyzing its options for an orderly restructuring of its short- and medium-term financial commitments, the Mexican airline said on Friday, adding that it had not decided whether to seek Chapter 11 protections in the United States. Aeromexico shares fell more than 5% in early trading after a newspaper column said the Mexican airline was considering filing for bankruptcy. The company said it was identifying additional sources of financing and that it was analyzing “alternatives to successfully reach, in the short- and medium-term, an ordered restructuring of financial commitments.” “The company informs that we have not started, or made the decision to start, a restructuring procedure under Chapter 11,” it said in the statement. Aeromexico said any restructuring would not disrupt its operations. The future of many airlines has been in doubt after governments around the globe imposed curbs on travel to stem the spread of COVID-19, with Latin American airlines Avianca and LATAM already initiating bankruptcy procedures. Like other airlines, Aeromexico <AEROMEX.MX,> is struggling as demand plunged. Passenger numbers were down 92.4% in May versus a year ago. While some governments have given airlines a lifeline, Mexico’s leftist President Andres Manuel Lopez Obrador has been adamant that he would not use taxpayer money to bail out shareholders in large companies. U.S. law firm White & Case and Citigroup are advising Aeromexico, according to Mexican newspaper El Financiero. White & Case and Citigroup did not immediately respond to requests for comment. “We consider that the news is negative for the company, as it reflects the important liquidity and operational challenges stemming from the effects of COVID-19,” Mexican brokerage firm Monex wrote in a note to investors. Aeromexico had total liabilities of 116.6 billion pesos ($5.16 billion) as of March 31, according to its first-quarter results. U.S. airline Delta has a significant stake in Aeromexico.

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