Grupo Aeroméxico confirms chapter 11 plan
We advised Grupo Aeroméxico as debtor in possession
Davis Polk has served as lead counsel to Grupo Aeroméxico, S.A.B. de C.V. and certain of its affiliates (collectively, “Aeroméxico”) in connection with their chapter 11 proceedings (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).
Aeroméxico is Mexico’s flagship carrier and the leading Mexican airline in terms of fleet size and network. Aeroméxico, which began its operations in 1934, offers passengers a full-service, premium experience to 85 global destinations, including every major city in Mexico. As a founding member of SkyTeam, an alliance of 19 international airlines dedicated to providing passengers with a seamless travel experience, Aeroméxico connects Mexico with the world. In addition, Aeroméxico has a strategic partnership with Delta that provides unique passenger flows in the Mexico-USA market, one of the most dynamic markets in the world.
Due to the economic distress and travel restrictions that resulted from the COVID-19 pandemic, Aeroméxico was forced to commence the Chapter 11 Cases on June 30, 2020. The cornerstone of Aeroméxico’s joint plan of reorganization (the “Plan”) is an exit financing facility that provides Aeroméxico with $720 million of new equity capital through the issuance of new equity and up to $762.5 million of new debt capital through the issuance of senior secured first-lien notes. The exit financing will be used, among other things, to (i) repay the DIP Facility, (ii) fund a cash payment of $450 million to unsecured creditors and (iii) finance a transaction that will result in PLM Premier, S.A.P.I. de C.V. — the owner and operator of Club Premier, Aeroméxico’s loyalty program — becoming a wholly owned subsidiary of Aeroméxico.
On December 10, 2021, the Bankruptcy Court approved Aeroméxico’s Disclosure Statement and the solicitation of Aeroméxico’s Plan. Holders of over $2.35 billion of claims voted to accept the Plan, which represents 87.45% (by amount) of all votes tabulated on the Plan. The Plan is premised on an estimated going concern total enterprise value of $5.4 billion for Aeroméxico, with a plan equity value of $2.564 billion.
Following a two-day trial that included settlements on the virtual courthouse steps with certain plan objectors, including the Official Committee of Unsecured Creditors, the Bankruptcy Court announced that it will confirm Aeroméxico’s Plan. As contemplated by the Plan, Aeroméxico will eliminate approximately $1.1 billion of debt from its consolidated balance sheet.
The Davis Polk restructuring team includes partners Timothy Graulich and Marshall S. Huebner, counsel Stephen D. Piraino, Josh Sturm, Steven Z. Szanzer and associates Stephen Ford, Richard J. Steinberg and Matthew B. Masaro. The litigation team includes partner James I. McClammy and associate Cristina M. Rincon. The finance team includes partner Vanessa L. Jackson. The mergers and acquisition and corporate teams includes partners Maurice Blanco and Leo Borchardt and associate Ernesto Talamás Velázquez. Members of the Davis Polk team are based in the New York and London offices.