Shares in Aeromexico bounce back after sharp losses

FILE PHOTO: The logo of the aerial company Aeromexico is seen at the Aeromexico counter at Benito Juarez international airport in Mexico City, Mexico, July 1, 2020. REUTERS/Edgard Garrido

MEXICO CITY (Reuters) - Shares in Aeromexico climbed as much as 27% on Thursday after nosediving a day earlier on the Mexican airline’s announcement it had started bankruptcy proceedings as the coronavirus pandemic battered business.

Aeromexico AEROMEX.MX, part-owned by Delta Air Lines Inc DAL.N, said on Wednesday it will offer fewer flights and have fewer planes as it begins Chapter 11 restructuring.

The company is the third airline to file for bankruptcy protection in Latin America, where carriers hit by the coronavirus have had limited help from governments.

Mexico’s government has given no indication so far that Aeromexico could receive any sort of state aid. Neither has the airline.

Mexican President Andres Manuel Lopez Obrador has repeatedly said he will not bail out big business during the pandemic. In past crises, rescue packages meant the poor were diverted to benefit the wealthy, he has said.

“The government has been very clear in not supporting companies with public funds,” said Marco Antonio Montanez, deputy director of equity research at Vector Casa de Bolsa.

The company’s shares plunged as much as 65.7% to record lows on Wednesday before trimming some of those losses later in the day. Thursday’s bounce took the shares as high as 5.29 pesos at one point, up nearly 27%. They pared some of those gains to close nearly 18% higher on the day.

Rating agency Standard & Poor’s cut Aeromexico’s credit ratings to D from B- on Wednesday and forecast the airline would only be flying at half-capacity by the end of 2020.

Reporting by Noe Torres and Anthony Esposito, Editing by Alistair Bell and Tom Brown