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 Business News | August 2005 
Mexican Airline Privatization Draws Investor Interest
 MarketWatch
Mexico City - Mexican airline holding company Cintra SA (CINTRA.MX) said late Tuesday it has received 21 packets of interest from investors considering the purchase of stakes in the country's two biggest airlines.
Cintra said it will evaluate the letters of interest and supporting documents to determine which groups will be able to participate in the privatization of top carriers AeroMexico and Mexicana.
AeroMexico, which dominates domestic air travel in Mexico, attracted interest from 10 groups of investors while Mexicana drew interest from 11. All of the groups consisted of a mixture of local and international investors.
Foreigners are limited to minority stakes in the carriers and must partner with Mexican investors in order to participate in the sale. Cintra is hoping to sell at least 51% of each carrier by the end of the year.
Cintra declined to disclose the names of interested parties. The holding company said additional investors can still participate, but only by joining one of the groups that has already turned in a packet of interest.
Spanish carrier Iberia Lineas Aereas de Espana SA (IBLA.MC) said earlier this month it's interested in bidding for Mexicana, the country's top international carrier. Mexicana is being sold together with a new low-cost carrier, Click.
Other international carriers have been mum on potential interest in the Mexican airlines.
Mexican daily Reforma reported that interested domestic investors include a group of pilots and businessman Olegario Vazquez, who owns upscale hotel and hospital chains.
The flagship carriers are being sold separately, although investors are allowed to submit bids for both. The airlines, which together control close to 80% of domestic air travel, merged in the early 1990s.
The government acquired control of the carriers along with other assets seized in the bank bailout of the mid-1990s, and created Cintra to manage them. Individuals or institutions involved in the bailout, or that benefited from the bailout, have been barred from participating in privatization.
Credit Suisse First Boston (CSR) is managing the sale.
Cintra is hoping that greater competition and lower fares can help an additional 50 million domestic passengers take flights each year. Currently Mexican airlines transport roughly 18 million passengers a year on domestic routes, while an estimated 2.5 billion trips are made by highway.
In early Wednesday trade on the Mexican Stock Exchange, Cintra A shares were advancing 0.1% to 8.00 pesos ($1=MXN10.5881).
In recent weeks, meanwhile, a string of local investors and foreign carriers have announced plans to launch low-cost airlines in Mexico. |
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