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Another One Bites the Dust: Mexicana Files for Bankruptcy

August 4, 2010 at 5:04 PM | by | Comments (0)

The string of great news for the oneworld airline alliance had to stop some time, and apparently that time was yesterday. That's when ailing Mexican national airline Mexicana officially filed for bankruptcy in the US and Mexico. The move will allow them to keep operating, though it obviously casts doubt on the company's long-term viability. It's also not a particularly positive sign for the airline industry as a whole, which really just can't catch a break.

Still, it's hard to say that this filing was totally unexpected. Between getting their air safety rating downgraded by the FAA and having their planes randomly confiscated by Canadian lessors, the airline wasn't exactly convening an overwhelming ethos of stability.

Industry watchers are going to key in on any number of Mexicana's weaknesses, but there's one factor in particular that promises to raise eyebrows. It turns out that the airline's lack of sustainability comes from abnormally high labor costs, with their flight crews earning wages several rungs above the industry median.

Mexicana's pilots and flight attendants earn 50 percent and 32 percent more than their US counterparts, respectively. Management couldn't get employees to accept broad cuts, costs stayed way above profits, and so the entire company went into bankruptcy. This is all beginning to sound both very familiar and somewhat ominous.

It also didn't help that global tourism is still in an economically-driven slump, and that Mexico specifically is having some tourism-related branding problems. But whatever the reason, Mexicana is carrying more than one billion dollars in debt. Ergo, this.

[Photo: JETdedt / Wiki Commons]

Related Stories:
· Mexicana Airlines files for bankruptcy [Telegraph]
· Airline Bankruptcy [Jaunted]
· Mexico Travel [Jaunted]

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