Aeromexico scales back ‘unsustainable’ flights, following United

Grupo Aeromexico, Mexico’s largest airline, is trimming its expansion plans as a seating glut drags down fares. Capacity will expand 7% the rest of this year, said CEO Andres Conesa. That’s down from a previous forecast of about 9%, he said, citing the need for increased discipline as rising fuel prices add to earnings pressure. The carrier is tapping the brakes as a weaker industry outlook has prompted investors to dump Mexican airline shares. Years of go-go growth have left the domestic market awash in capacity, while an open skies deal with the US prompted airlines from both countries to add cross-border flights. United Continental said last week it would chop flights to Mexico, saying service to some markets was unsustainable. “We’re starting to see the impact on profit, but it has more to do with excess capacity than weak demand,” Conesa said in an interview at Bloomberg’s offices in Mexico City. Aeromexico has been able to fend off some of the capacity-related pressure thanks to its joint venture with Delta, which owns 49% of the Mexico City-based company, Conesa said. Passenger traffic between Mexico and the US rose 6% in March from a year earlier, according to the Transportation Ministry.<br/>