Dr. Carlos DIAZ RUIZ

Professor in Marketing & Consumer studies

Mexicana airlines stranded

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I used to work for an airline. Mexicana Airlines, unfortunately, is no longer flying. I need to say that I loved the airline; and in a way, I still do. I hope that MX will fly soon. I flew Mexicana during all my childhood, and when I got the opportunity to work for them, I was thrilled. It was like a dream to work for such an admired company.  Soon, however, the dream faded away.

Early on, I got the impression that top management, and I mean C-level managers, were not fit to lead. During my interactions, mostly on the commercial side, I got a very poor impression. Perhaps it was my few years living in an egalitarian country such as finland, but I was shocked by their leading style. C-level managers had either the autocratic style of those used to shout more than listening (usually a sign of a person who wants to legitimize that he does not know what is doing), or the technocratic style, of those who trust equations more than humans; the worse had them both. I used to describe my working at these times using the metaphor of working at the court of Louis XVI. I need to clarify that it was a problem of  a handful of key decision-makers only. Mexicana people can be blamed of being too bureaucratic, but in general most were professionals; even more, all loved the company. Once we were asked to renounce to 1/3 of the monthly salary to support the airline; we all did so for a few months. Nobody worked less hard, on the contrary. You can have a glimpse of the commitment of employees to their company in the video of Mexicana’s last flight.

On top of their ivory tower, top managers were too proud to consult anyone. They plotted schemes, confident on their own superior intelligence, yet made grave mistakes. It was a puzzle for me. Going into bankruptcy protection, is actually quite normal, Japan Airlines and American Airlines have been in this situation just recently. It is just a matter of reorganization, being honest with your creditors, and providers, and negotiate new conditions based on cash flow. Instead, managers paid all their debts to Grupo Posadas, the controlling corporation of course, but refused to take calls from worried providers. Self-imposed deadlines of the financial department were never met, or worse, avoided on purpose.

Still, even though their style was extremely hierarchical, I trusted those leaders. I knew of the complicated moments that the whole airline industry was suffering. Nevertheless, I could have never imagined, as evidence suggest now, that those C-level managers were planning to bankrupt the airline on purpose. The fourth oldest airline in the world, and a pillar of the Mexican Economy was forced to its knees by its own leaders who were evidently incompetent, but also possibly corrupt. Evidence suggests that Gastón Azcarraga, owner of the controlling Posadas Group (Grupo Posadas),  moved the control of all the brands, and the profitable operations from one company to another, in order to leave all the debts to Mexicana Airlines for it to go bankrupt, and in that way, get rid of the annoying unions. And I do agree that Mexicana unions were annoying, but the blatant attempt of backstabbing thousands of workers is just plain wrong, and even illegal.

Mexican authorities are unable to act against Gastón Azcarraga, and Manuel Borja, CEO at the time, on grounds that the airline is still in bankruptcy protection. Media reports that the ex-owners are lobbying to paralyze both the bankruptcy and the return to operations of the airline so that those responsible cannot be prosecuted. It is alleged that the crime prescribes in 3 years (see here and here).

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Author: Diaz Ruiz

Carlos A. Diaz Ruiz is Assistant Professor in Marketing at Kedge Business School in Bordeaux

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