Aeromexico Case Study Example

There were big plans set in place for the Mexico City-based airline, Aeromexico, before the 2020 Covid-19 pandemic hit. They had orders for over 20 new Boeing 737 MAX and four 787 Dreamliners. Shortly after signing the contract for those planes, the world as we knew it changed with the first worldwide pandemic in decades. This caused Aeromexico to put its plans on hold as they entered into chapter 11 bankruptcy. Now, over two years since the pandemic began, the airline industry as a whole, is beginning its recovery. That includes Aeromexico as they exit out of chapter 11 and begin to carry more and more passengers again. They have resumed their orders with Boeing to begin receiving the planes they ordered years ago. They are also in talks with the Brazillian aircraft manufacturer, Embraer, to potentially modernize their current fleet of Embraer 190s with the newest model, the Embraer 195-E2. They have been largely staying with the same couple brands and models of aircraft for years at this point, largely to keep costs down. They are currently operating the 787-900, 787-800, 737-800, 737 MAX, and the Embraer 190. They have used other Boeing aircraft in the past, such the 757 and the 777, however, they have been making changes to their fleet in order to bring down their maintenance costs. However, Aeromexico has not always operated Boeing aircraft. “in 1995, Aeromexico received its first Boeing 757 and in 2003 gets its first Boeing 737-700 as a replacement of its DC-9s. Since then, Aeromexico has been one of Boeing’s top 737 customers in Latin America” (Garbuno 2021). They still currently one of Boeing’s top customers as they begin taking deliveries of aircraft at the end of the pandemic.

Support

Aeromexico has been attempting to operate the latest and the greatest aircraft on the market while also, retiring certain models in order to bring down maintenance costs. Another company that has been conducting similar moves in relation to its fleet, is the Atlanta-based juggernaut, Delta. “Delta plans to retire its 18 widebody Boeing 777s by the end of 2020 as a result of the COVID-19 pandemic. The retirement will accelerate the airline’s strategy to simplify and modernize its fleet, while continuing to operate newer, more cost-efficient aircraft” (Delta 2020). This strategy has been seen throughout the industry in recent years as the oil and maintenance costs rise, airlines are tending to retire older versions of aircraft in favor of more fuel-efficient planes. Aeromexico also recently phased out its 777 fleet in favor of the 787 Dreamliner which is largely known as an incredibly efficient airliner. These moves by Delta have been shown to be incredibly efficient in keeping fuel costs down, which will absolutely help Aeromexico as they exit bankruptcy.

Recommendations

Aeromexico has taken the strategy of operating a small number of different types of jets, which has been shown to work with multiple United States-based airlines. I agree with this strategy. The whole strategy largely is based on Southwest and how they so effectively manage a successful route structure, while only operating the 737s. I absolutely agree with the plan that Aeromexico's upper management has churned out as I believe it has a good mix of downsizing the different types of aircraft they are running while also modernizing its fleet to ensure they are always operating the most advanced aircraft in the world. Only time will tell how it ends up working out for them as poor management has sometimes been shown to plague this Mexican flag carrier with their Covid-19 bankruptcy still being very close in the rearview mirror. They have done a good job reallocating funds to pull themselves out of bankruptcy and the plan in place to modernize their fleet looks promising, but as I said, time will tell with Aeromexico’s fate.