The Interview

Sánchez Baker r of Aeroméxico

On the financial side, our challenge was to obtain highly competitive conditions. At the beginning of the process we set the objective of getting access to conditions in line with those of the top airlines around the world. We believe the fleet campaign allowed us to obtain a very competitive package.

The transaction is structured in such a way that it provides us with important flexibility to adapt our growth during the next decade to prevailing market conditions.

Q

What is the strategy for the purchase?

Since the start of the process we defined three main courses of action to guide our decision process. First, the price had to be competitive and we should obtain operating performance guarantees to make sure that the selected aircraft could perform our missions.

Second, the assurance of competitive maintenance costs. Out of the total price of a new aircraft, engines represent approximately 20% of the aircraft cost, but when operating the aircraft, the maintenance cost of the engines becomes 75% of the total. Therefore, as part of the competitive process we asked engine

manufacturers to commit rates for their PBH (power by the hour) programs. These rates, together with aircraft prices, were evaluated to make sure that Aeroemexico’s decision was the best in net present value terms over the long term.

Third, the deal had to provide flexibility in capacity growth. That is why we structured the deal with enough flexibility to make sure that Aeromexico has the correct capacity under different market environments.

your 2012 strategy? Q

Our current business model as a premium carrier has proven its resiliency and growth potential in complicated environments. We can proudly say that our strategy has proven to have a significant degree of flexibility which allows the company to adapt to market conditions without suffering drastic modifications. The economic environment of 2011 was certainly challenging to our company. Of course we had to undertake several tactical actions in order to keep our flight plan, but the essentials of the strategy remained untouched. A key component is related to our comprehensive risk management policy which takes care of fuel, FX and interest fluctuations and grants special relevance to fleet flexibility. As part of the strategy over 50% of Aeromexico’s expected fuel consumption for the next twelve months is hedged; 85% of financial debt as of June, 2012 is at fixed rate and over 90% of it is asset backed; also, given the important amount of dollar denominated revenues we collect, we are very close to have a natural hedge against FX volatility as our revenues almost match up to US dollar based costs. Lastly, we place substantial emphasis on the flexibility of our capacity. Our lease contracts are staggered to provide us

2011 saw global economic turmoil; do you think this has impacted on

with the flexibility to adjust our capacity in accordance to market conditions.

Another fundamental component of our strategy is our partnership with Delta Airlines. The MEX-US market is by far our most important international market and this partnership, through enhanced product offerings and better service, provides Delta and Aeromexico with the tools to win in such market.

Q

Is there anything else you would like to mention?

We are very excited about the future. The Mexican economy, the main market in which Aeromexico operates, has very positive perspectives and there is an important upside potential in upper and middle classes for air travel services. Aeromexico is well positioned to capitalize on the promising performance of Mexico in the future.

Aeromexico’s competitive strengths like its solid financial position, its leadership in the Mexican market and our partnerships with world-class companies such as Delta have placed us within a selected group of strong and profitable airlines. Aeromexico has entered into a virtuous circle: the acquisition of new technology aircrafts at competitive prices and with competitive financing translates into lower operating costs and higher margins. This, in turn, allows us to grow profitably and with a solid balance sheet.

Contact:

Ricardo Sánchez Baker Aeroméxico

Tel: 00 1 800 021 4000 Email: rsbaker@aeromexico.com.mx