* Management wants to cut wages, staff
* Pilots, attendants may buy company if they keep brand
(Recasts first paragraph, adds CEO comments, details on
By Cyntia Barrera Diaz and Veronica Gomez Sparrowe
MEXICO CITY, Aug 2 Talks between the managers and
unionized workers of troubled Mexicana de Aviacion reached an
impasse on Monday, threatening the viability of the 89-year-old
Mexicana, with a debt of close to 10 billion pesos ($796
million), is the center of a fight between managers, who want
to sharply cut wages and staff to keep the company running, and
workers who refuse to see their benefits shrink further.
Mexicana Chief Executive Manuel Borja said management has
asked pilots and flight attendants to agree to wage cuts of 41
percent and 39 percent, respectively, as a way to reduce labor
"The real alternative is to have competitive collective
bargaining agreements," Borja said during a press conference.
He said payroll costs account for 20 percent of the company's
annual revenue, compared with 10 percent for its peers.
Pilots and attendants are reluctant to accept a new round
of pay cuts since they already gave up multiple benefits in
2006, saving Mexicana around $35 million per year. Route
reductions are also part of Mexicana's latest proposal to the
Workers have been granted the option to buy out Mexicana for
one peso by assuming a big chunk of the debt and agreeing to drop
the company brand name, Fernando Perfecto, head of the pilots
union, told Radio Formula station earlier on Monday.
Perfecto said this option would only be viable if Mexicana
granted workers the right to use the brand, a long-standing
asset the company's management is not willing to give up.
Borja and other board members want to keep the Mexicana brand
for two regional airlines, Click and Link, that have avoided the
financial troubles of Mexicana de Aviacion. All three companies
belong to holding Grupo Mexicana.
Mexicana, which is considering filing for creditor
protection to ease its financial troubles, has not defaulted
yet on any debt payments, Borja said.
Mexicana failed to place a $250 million bond earlier this
year after a government bank refused to provide a guarantee.
The airline has a $123 million loan with Mexican bank
Banorte (GFNORTEO.MX) and another $76 million credit with
development bank Bancomext.
However, three Mexicana planes -- two in Canada and one in
Chicago -- were grounded last week at the request of creditors
concerned over the company's financial health.
Mexicana only owns nine of the 64 aircraft in its fleet.
Borja declined to comment on whether the company has received
any termination notices from aircraft lessors.
($1 = 12.5585 pesos)
(Reporting by Cyntia Barrera Diaz and Veronica Gomez Sparrowe;
Editing by Gunna Dickson, Phil Berlowitz)