Mexicana's False Dawn

The plan for Mexicana to restart at least some operations has 'sputtered to a halt' as PC Capital (described as a 'tiny boutique investment firm') which was chosen by a judge-appointed mediator in November as the best option to bring Mexicana back to life, has failed to attract investors!

Whilst the Unions finally accepted the reality that there would be massive Job Cuts if the Airline was to be restarted, potential investors have been unable to raise sufficient funds, in part due to severance pay costs and Union demands on Salaries. But these form only element of the estimated $8000 Million USD Debt restructuring that would be required to relaunch (a sum which daily increases). The result Mexicana once more slips back into the Darkness of a Company in the limbo between bankrupt and liquidated. Every day that passes means that Mexicana's hopes of a relaunch lessen, if this was the last attempt to get Mexicana flying again it would be a sad end for one of the oldest and often one of the most innovative carriers in Latin America.

See: Mexicana unsuccessfully tries to relaunch from Reuters

The previous posts in the Blog on Mexicana
05th August 2010 - Will Mexicana Survive?
25th August 2010 - Bringing Mexicana Back from the Brink - Step 1
31st August 2010 - Mexicana - Two Steps back and Teetering
12 November 2010 -A Brief Update on Mexicana
13 December 2010: - Another Brief Update on Mexicana

Another Brief Update on Mexicana

As those of you who follow this blog know I have a sentimental affection for Mexicana and monitored its decline and fall with a strange mixture of emotions.

However despite ceasing operations, efforts continued to revive the carrier and now the three main unions have finally accepted reality and with some creditor support, there is every chance a much reduced Mexicana will begin operations in the New Year.

For more on this see: Unions Back Mexicana Revival an Aviation Week Article.

The previous posts in the Blog on Mexicana:
05th August 2010 - Will Mexicana Survive?
25th August 2010 - Bringing Mexicana Back from the Brink - Step 1
31st August 2010 - Mexicana - Two Steps back and Teetering
12 November 2010 -A Brief Update on Mexicana

A Brief Update on Mexicana

After I effectively 'buried Alitalia' in a series of Posts, only to be proved wrong, I have been loath to write an obituary on Mexicana. It appears this was a sensible move (I hate apologising) because there is light at the end of the tunnel for Mexico's premier Airline. Like Alitalia the plan involves a massive reduction in Routes, Fleet and Staff. Therefore a successful re-launch will depend on the Unions as much as refinancing. More on this from:
USA Today Travel 11th Nov 2010: Rescue bid: Mexicana may fly again,
Bloomberg Businessweek 10 Nov 2010: Mexicana Unions Get $155 Million Bid to Save Company
Airwise/Reuters 10 Nov 2010: Mexicana Picks Recovery Business Plan

As with Alitalia, I have a sentimental attachment to Mexicana, so I hope the Unions accept the reality of the situation and Mexicana does indeed fly again.

The Parcel Bomb Attacks - Failure, or Win?

Despite the apparent sophistication of the Devices, the attack using Parcel Bombs Carried on Aircraft has, at least so far failed, or has it?

Even though detected, due the Media frenzy Worldwide a classic climate of Fear, Uncertainty & Doubt (FUD) has been generated, this in it's self could be considered a win by those who planned/authorised the attacks. There is nothing new about Parcel Bombs and other than these were designed to explode in Flight, were a reversion to 'old school terrorism'. What has changed is the way the Media now 'spin' such stories.

When Intelligence and Security services foil a planned attack without publicity, the Terror Planners, may, or may not learn a useful lesson from the failure, but there is no getting away from the fact it was a failure.

But when as in this case, the plan fails, but does so under the spotlight of intense Media Interest (almost obsessive analysis of every aspect) then the failure can be turned in to a PR win. Actually killing people can rebound by hardening the resolve of the targeted Nation, or Culture, but not killing anyone whilst reinforcing the possibility of at anytime doing so, generates the Fear, Uncertainty and Doubt.

Also the Media demands action, leading to Politicians having to react publicly and immediately, which can in turn result in unfortunate statements being made and possibly counterproductive reactive action being ordered.

I find causalities from IEDs tragic, but the IRA were using remotely detonated roadside devices 30+ years ago, parcel/letter bombs have been used by many groups , again including the IRA, even bombs on Aircraft predate Lockerbie by decades. What has changed is the way the Media Report these events (actually report is often an incorrect term, express opinions that they may not be qualified to give, is too often the case). It is fair to say groups such as Al-Qaeda has learned that in many ways the Western Media, due to the way they react to events, useful in assisting in raising the climate of Fear, Uncertainty & Doubt.

It probably why, although individual Journalists and film units have been targeted, no attacks have been launched against News Media Studios and Headquarters.

A cynical update of the view: 'A capitalist is someone who sells you the rope with which you then hang him', could be rewritten as 'The Western News Media's way of reporting, assists in the destruction of their way of life'.

Link to an Article in Aircargo News 02nd November 2010: Bomb plot fails but terror still rules

Mexicana - Two Steps back and Teetering

In my last post on Mexicana: Bringing Mexicana Back from the Brink - Step 1
ended with: but the future looks brighter than it did when I posted Will Mexicana Survive? on the 5th August.

Unfortunately the brightness I saw was a false dawn. The Darkness began to descend again on Mexicana when Tenedora K, the new owners of the holding company Nuevo Grupo Aeronautico attempted to lay off 1,366 Cabin Staff at below normal severance pay and then rehire some on new contracts. This was, perhaps unsurprisingly blocked by the Government.

Whilst this was a blow to the restructuring plan, it appears the fundamental problem was when the fast tracked 'Due Diligence' revealed exactly how bad the financial situation really was. This resulted in Tenedora K backing away from any new investment.

Result was inevitable, Mexicana began an orderly shutdown of operations starting on Friday the 27th August and completely ceased operations by midday Saturday the 28th August. This shutdown also included the two budget Carriers owned by Nuevo Grupo Aeronautico, Click and Link, but these are expected to return to operation. But where does this leave Mexicana?

Well in normal circumstances this would be the end of the line for the Company. But this isn't just another Airline; it is Mexico's National Carrier and a major employer and so frantic efforts will continue to resuscitate it.

Whilst objectively it is time to perhaps build a new National Carrier without the baggage of Mexicana's past, part of me hopes they do find a way of reviving Mexicana and returning it to when it was staffed by people determined to make it work as a company, not as a company to be milked by its workers.

Previous Posts on Mexicana:
Bringing Mexicana Back from the Brink - Step 1 25th August 2010
Will Mexicana Survive? - 05th August 2010

Bringing Mexicana Back from the Brink - Step 1

A Mexican Consortium has stepped to take a controlling interest in Mexicana. The consortium named Tenedora K has been formed specifically to buy a 95% Shareholding in Nuevo Grupo Aeronautico which is the holding company for Mexicana and its domestic operations offshoots Mexicana Click and Mexicana Link. The remaining 5% of the shares remains with the Pilots Union, who through their leader Fernando Perfecto, have been involved in attempts to find a buyer.

However before the deal can be finalised it still has to go through the due diligence processes and the urgently required Capital Injection is subject to investment conditions being favourable. However there has already been one casualty as Manuel Borja Mexicana's now former CEO left his post on the 20th August. Meanwhile the legal proceedings on the Mexicana Insolvency continue through the Mexican Courts.

The formation of the Tenedora K consortium has been carried out with impressive speed, with the assistance of Advent International, and assuming that the result of fast tracking 'Due diligence' falls within what is acceptable to the Consortium, then the completing the first step in saving Mexicana will depend on the Consortium making a massive Capital injection.

But completing this first step just provides a 'life support system' and the very real challenge for the new owners is the total restructuring of the Airline. This restructuring is going to have to be at all levels of the Business and I am sorry to say will have a major impact not just on staffing levels, but pay, benefits and conditions for those still employed. This will bring the new team into the same conflicts with the Unions (including the 5% Shareholding Pilots Union) as the previous Management. But whilst the Labour situation will headline, all other elements of the Business including Fleet and Route Structure, plus Ground Handling services and Back office functions including IT will need to be reviewed and where necessary pruned.

Mexicana's survival will require hard decisions, with a heavy human cost and it will be a painful journey, but the future looks brighter than it did when I posted Will Mexicana Survive? on the 5th August.

See Update: Mexicana - Two Steps back and Teetering 31st August 2010

Railways, Roads and Runways - Politics overriding National Interest

Over the Weekend I spent some time reading the Institution of Civil Engineers Report: Rethinking Aviation. This once again reminded me how pathetic British Transport Planning has been for the last 45 Years due to Party Political Interests being considered overwhelming important and the National Interest usually not only being an incredibly poor second, but often a even poorer third if a Cabinet Minister's constituency, or an important marginal is under threat. Couple this with Treasury and most other elements of the Senior Civil Service's distaste for spending money on infra-structure (bearing in mind where most of the Senior Civil Servants live, it is amazing any Infra-structure Projects, Major, or minor are ever progressed in the NIMBY dwelling Home Counties) and perhaps the current situation was inevitable.

My views on this subject have (at least in part) been covered in earlier posts notably: Politics of (Rail) Transport (October 2008) and High Speed Trains and Heathrows Third Runway (February 2010) and even in my Aviation History PDF Article on The Airlinks between Gatwick and Heathrow (Published back in August 2006 in the section: Current Situation and the Future - page 9).

My Post of October 2008 ended with the following:

Transport is too important nationally to be a political football. We have wasted at least 40 years, please, don't waste the next 40!

Well we are now over halfway through 2010 and I see no evidence that anything has changed for the better, just another change of Government pandering to populist politics! In my post of February 2010 I used the above Quote as my Highlight opening and then continued with:

In France where there appears a separation between National Interest and Party Politics so lacking in Britain, there has been a consistent integrated National Transport Policy, especially in regard to High Speed Rail for 40 Years. So the recent British political consensus on the need for High Speed Rail links and this cross-political support for some major projects has been a welcome 'chink of light'.

Unfortunately that Chink of Light was just the Head Lamp of onrushing Party Politics. So one of the first acts of the Coalition Government was to stop the third runway at Heathrow, Oh Good the National Interest loses again to doing what is popular rather than right! But then they are only continuing a tradition that stretches back to the mid-1950s and has continued regardless of the Party in Power.

In simple terms France (and Germany) make Strategic Plans that are then rolled out over decades, being updated as technology and national requirements change, but the basic plan survives all the changes in Government and proceeds on the basis of National, than Political Interests. In Britain, all plans however well structured and designed to meet long term national needs are not implemented as a structured package of complementary projects, at best they are cherry picked for short term political advantage and then argued over for years. Even if a small part of one plan finally makes it to being implemented, it sits in splendid isolation, locally of benefit but usually totally irrelevant to the overall National Requirement.

Railways, Roads and Runways are vital elements of National Infra-structure and the National Economy (to which you can add Ports, Shipping and thinking 'Green' the Inland Waterways) and should cover all regions of the UK in a unified long term plan. Almost every European Country thinks in these terms and those like France and Germany who have kept to their strategic plans have benefited whilst in Britain even the phrase 'Transport Policy' is an oxymoron as it is just one element in the Political Playground which has more in common with a primary school playground than mature considered policy making for the United Kingdom.

Politics of (Rail) Transport

Back in October 2008 I posted an Article on: High Speed Trains and Heathrows Third Runway which ended with:
Transport is too important nationally to be a political football. We have wasted at least 40 years, please, don't waste the next 40!

In France where there appears a separation between National Interest and Party Politics so lacking in Britain, there has been a consistent integrated National Transport Policy, especially in regard to High Speed Rail for 40 Years. So the recent British political consensus on the need for High Speed Rail links and this cross-political support for some major projects has been a welcome 'chink of light'. One project that seemed to be a beneficiary of this welcome change is the planned High Speed Link between London and the Midlands (part of a longer term plan: New high-speed rail plan unveiled BBC August 2009), which has been around for at least 5 years.

The Conservatives have broken the Political consensus on this project by commissioning their own panel of experts to look over the proposals, which were drawn up by High Speed Two, a public company. Now this panel has not yet issued its final report to its Conservative paymasters (gosh I thought all the parties were short of cash), but as part of the cross-party consensus the Labour Government offered the Conservative Opposition a preview of the forthcoming White Paper on the project and they refused.

The question is why chose this project?

Well Lord Adonis, the Transport Secretary has decided to take the risk of alarming potential Labour voters by publishing a detailed London-to-Birmingham proposal in the white paper that locates the tracks to within five metres in urban areas and 25 metres in the countryside. Note: How refreshing a Government Whitepaper that actually details what is really planned.

But endorsing such a tightly planned route could spell even more trouble for the Tories as well because it is widely expected to slice through the Conservative heartland of Buckinghamshire, including a swath of the Chiltern Hills - one of 40 areas of outstanding natural beauty in England and Wales.

So the Guardian found a 'talkative Tory party source' who:
Acknowledged concerns that the route could go through key constituencies between the home counties and the West Midlands, triggering complaints about property blight from house owners. "We don't want to lose 10 seats backing a route blindly," said the source - Hmm also honest, but depressingly so. It's all about Party Politics and s*d the National Interest!

So there we have it National Interest No, Party Politics Yes and what I saw as a 'chink of light' that possibly would burn brighter by encompassing other National Projects has just been shut off.

For the Conservative Party this 'strategy' appears to have backfired (as it deserved to) as the both the Government and the Lib-Dems have been able to take the moral high ground:
First Norman Baker for the Lib-Dems talking to the BBC:
"This peculiar decision of the Tories coupled with Osborne's spending cuts strongly suggest that the Tories are trying to kick high-speed rail into the long grass." "The Tories can't be trusted with our railways."
Nasty little political kicker at the end there Norman and you were doing so well!

Now Lord Adonis:
"Full public consultation will of course take place on any route proposed by the government. The consensus I seek is on the principle of high-speed rail, so that it can be taken forward on a cross-party basis in the next parliament."

Amusingly since the Conservative announcement yesterday, the Shadow Transport Secretary Theresa Villiers has had to spend most of her time defending the Conservative line by denying they were "playing politics".
Sorry but you were!

As the General Election begins to looms, who to vote for:
Labour, Conservative, or Lib Dems - In each party there are a few (too few) with talent, a few (even fewer) I respect (and not always the same people), but actually the thought of any of these parties forming the next Government is for me depressing and the stuff of nightmares..

Links:
Department of Transport Britain's Transport Infrastructure: High Speed Two
January 2009 - Warning 5Mb PDF - Very Interesting

From the Newspapers
18th February:
Guardian:-Tory fears of vote backlash put high-speed rail route in doubt
19th February:
Telegraph:- High-speed rail route 'under threat' as Tories refuse to support Labour's proposals

Times:-Tories put high-speed rail line in doubt

A Bit of History Courtesy of the BBC:
Why put the brakes on high-speed rail?

The Politicians:
Lord Andrew Adonis:
Department of Transport Profile ,the Telegraph Profile and Wikipedia Entry

Theresa Villiers:
Official Website - Conservative Party Site and Wikipedia Entry

Norman Baker:
Official Website - Profile On Norman Clegg's Site and Wikipedia Entry