Delta to buy $185mn of Apollo’s Aeroméxico Ch11 debt

Delta Air Lines (DL, Atlanta Hartsfield Jackson) has announced its intention to exercise an option to buy USD185 million of the credit rights in the second tranche of the debtor-in-possession (DIP) loan that Apollo Global Management made to Grupo Aeroméxico.

On July 1, a Grupo Aeroméxico statement confirmed earlier reports that the American airline, which holds a 49% stake in its longtime Mexican partner, had opted to acquire a portion of the USD1 billion DIP financing from New York-based investment firm Apollo which the Aeroméxico (AM, México City Int’l) parent secured in August 2020 as part of its Chapter 11 restructuring in the United States.

Delta’s motivation, it added, is to provide support to the privately-owned Mexican flag carrier given its strategic relationship with its partner and its support of the company’s restructuring efforts.

Aeroméxico clarified last week that it would not seek to obtain funds from Delta as the US carrier had received United States public funds and could not as a consequence contribute capital directly.

Tranche 2 of the DIP financing provided USD800 million in total, while Tranche 1 was for USD200 million. The Mexican airline has reportedly already received all of the financing, so that it had a positive cash balance of USD844 million as of the end of May 2021. Grupo Aeroméxico is now in the process of completing its restructuring plan, which it intends to file by September 8 and enter a voting period, and finally exit the bankruptcy process later in 2021.