U.S. company sues Mexicana de Aviación

U.S. company sues Mexicana de Aviación

MEXICO - Mexicana de Aviación is facing a lawsuit in the United States for breach of contract with SAT Aero Holdings, the company in charge of leasing airplanes and hiring crew for the new state-owned airline.

The complaint comes as a surprise for the Mexican company and casts doubts on its financial stability almost before it has even taken off. SAT Aero Holding is claiming the payment of US$838.5 million in damages, plus another US$2.4 million in additional costs.

The American company was in charge of acquiring the airplanes for Mexicana. According to SAT's version, the López Obrador government promised to bear the associated costs in the last instance, something that has not happened. Alarm bells went off when the first payment of US$5.5 million to lease the first two planes out of a total of 10 was missed, according to information from Bloomberg.

"Unfortunately, after SAT spent months negotiating the relevant financing and lease documents with the prospective bank and lessors, the airline refused to sign any documents with these institutions," reads the lawsuit filed in a New York court.

Mexicana de Aviación was born in December last year as an initiative of López Obrador's government to create a low-cost national airline to compete with Viva Aerobús and Volaris.

It was the Secretary of National Defense (Sedena), Luis Crescencio Sandoval González, in December last year, when he made public the agreement with SAT Aero Holdings.

President López Obrador announced in January of this year that Mexicana de Aviación would start operating with an initial fleet of 10 aircraft. However, so far it only has five aircraft from TAR.

In addition to the acquisition of the aircraft, the U.S. company was contracted by the Sedena for the insurance contract and the training of air personnel and crew.

"SAT has made efforts to work with the Secretary of Defense to resolve these issues. But, instead of remedying these various violations, Mexicana de Aviación, in a confusing manner, has sought to impose financial penalties on SAT and hold it responsible for failing to deliver any of the identified aircraft," the U.S. company charges.