October 26, 2020 – The Court hearing the Grupo Aeroméxico case has extended the periods during which the Debtors have an exclusive right to file a Chapter 11 Plan and solicit acceptances thereof, through and including February 25, 2021 and April 26, 2021, respectively [Docket No. 577]. Absent the requested relief, the exclusive periods are scheduled to expire on October 28, 2020 and December 28, 2020, respectively.

As we saw with the extension request filed by LATAM Airlines Group S.A., these Debtors have not only been dealing with complex capital structures and international operations, they also have to deal with COVID-19. Not only from an operational perspective but also because the Debtors and stakeholders simply do not have the vision necessary to formulate business plans; with business plans a necessary predicate to bankruptcy plans. They need to understand fleet requirements before turning to bankruptcy tools to adjust their capital structure and they need to be able to provide stakeholders with a business outlook upon which those stakeholders can make educated assessments as to whether to support the Debtors' Plan. The Debtors' planes are grounded by COVID-19 and so is their Plan.

In short the Debtors provide that as a result of dramatic reductions in flight capacity, "the Debtors presently only require a portion of its aircraft available for current operations, which, in turn, makes, among other things, fleet planning and negotiating with counterparties based on aircraft usage extraordinarily difficult. In addition, the ongoing and uncertain nature of the pandemic complicates the Debtors’ ability to formulate a long-term business plan and develop a path for exiting chapter 11 as the Debtors must plan for an untold number of potentialities, including those based on historic, unprecedented market conditions.”

The Debtors request motion [Docket No. 530] states, “The Debtors have accomplished a great deal in the first three months of these cases and are well-positioned for the next phase of these proceedings. But, there is certainly plenty more to accomplish in order to position the Debtors to emerge with a sustainable balance. The months ahead will be focused on many weighty topics, including rationalizing the Debtors’ aircraft fleet and workforce, claims analysis, and formulating the Debtors’ Chapter 11 Plan… As of the Petition Date, the Debtors workforce included nearly 15,000 employees in various locations world-wide. Given the magnitude of these Chapter 11 Cases, it would be unimaginable that the Debtors could have formulated and proposed a Chapter 11 Plan within 120 days of the Petition Date.

Moreover, the circumstances surrounding these Chapter 11 Cases are unprecedented. The global pandemic and the resulting economic crisis and ongoing uncertainty, especially in the aviation industry, create a perfect storm of challenges for the Debtors’ business. Mexican domestic capacity was reduced by as much as 75% and international capacity was reduced by as much as 90%. As a result, the Debtors presently only require a portion of its aircraft available for current operations, which, in turn, makes, among other things, fleet planning and negotiating with counterparties based on aircraft usage extraordinarily difficult. In addition, the ongoing and uncertain nature of the pandemic complicates the Debtors’ ability to formulate a long-term business plan and develop a path for exiting chapter 11 as the Debtors must plan for an untold number of potentialities, including those based on historic, unprecedented market conditions. As such, Chapter 11 Plan negotiations are likely to be complex and time-consuming, and to be aided by an extended exclusive period.”

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