Mexico to Auction Two Airlines

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Last updated at: (Beijing Time) Monday, July 15, 2002

Mexico to Auction Two Airlines

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Six years after the government seized Mexico's two largest airlines during an economic crisis, both are back on the auction block despite the slump in the airline industry caused by the Sept. 11 terrorist attacks.

Officials say Mexican investors and several U.S. airlines �� including American, Continental and Delta �� have expressed interest in buying shares of Mexicana and Aeromexico, which together handle about 80 percent of domestic air traffic.

Mexico's antitrust watchdog agency, the Federal Competition Commission, has ruled that the two must be sold separately to preserve competition.

Some analysts question whether Mexico's market can support two large, independent carriers. Unions and lawmakers say they fear cutthroat competition could drive one out of business.

Both airlines have been operated by a government-controlled holding company since 1995. With little competition, the two airlines usually offer the same rates for the same routes, and it often costs more to fly within Mexico than to fly to the United States.

The government first announced plans to sell the airlines in 2000. The sale was delayed first by lawmakers who argued that the companies should be kept together, and later by the impact of the Sept. 11 attacks on the airline industry worldwide.

Officials at Cintra, the holding company that manages both airlines, say the auction could take place by the end of the year. Merrill Lynch has been hired to oversee the sale.

Source: Agencies

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