Aeromexico Files for U.S. Bankruptcy, Citing 'Unprecedented' Challenges
Aeromexico is filing for bankruptcy protection in the United States, making it the latest carrier to succumb to the pressures of the coronavirus pandemic.
Mexico’s flagship airline announced Tuesday that it had applied to start restructuring under Chapter 11, which will allow it to continue flying.
“Our industry faces unprecedented challenges due to significant declines in demand for air transportation,” CEO Andrés Conesa said in a statement. “We are committed to taking the necessary measures so that we can operate effectively in this new landscape and be well prepared for a successful future when the COVID-19 pandemic is behind us.”
Like many airlines, Aeromexico has been forced to limit its operations as demand for air travel has dried up. Over the past few months, Aeromexico has grounded part of its fleet. In March, the airline announced it would start operating “cargo-only flights for the first time.”
The company is the latest Latin American carrier to file for Chapter 11 in the United States. In May, Chile’s LATAM and Colombia’s Avianca (AVH) also started bankruptcy proceedings, citing the loss of business from the pandemic.
Aeromexico intends to use the process “to strengthen our financial position, obtain new financing and increase our liquidity,” Conesa said.
CNN reports that day-to-day operations will continue as the company begins a financial overhaul. Passengers should still be able to fly using their existing tickets, and employees will continue to get paid as usual, according to management.
The company is also hinting at a gradual recovery. As air travel begins to rebound in some countries, Aeromexico will “expand flight service” imminently, with plans to double its domestic flights and quadruple international capacity in July compared to levels from last month, it said.
But the airline still faces a tough road ahead. The International Air Transport Authority has estimated that it could take more than three years for international travel to return to pre-crisis levels.
The carrier now needs to “create a sustainable platform to succeed in an uncertain global economy,” Conesa added.
Uber Launches On-Demand Grocery Delivery in Latin America and Canada
On Tuesday, Uber is launching an on-demand grocery delivery service in Latin America and Canada. This marks Uber’s first major move into the competitive world of online grocery shopping since acquiring Cornershop, a leading online grocery provider in Chile, Mexico, Peru, Canada, Brazil, and Colombia.
Grocery delivery will be available through both Uber’s main app and its Uber Eats app. Customers will see food delivery available from local grocery stores and will be able to receive their orders “in as little as one to two hours,” according to Uber Eats head of product Daniel Danker.
According to The Verge, the service is available starting in 19 cities across Latin America and Canada. Later this month, it will be available in the US, Danker added. When it launches, it will be included in Uber’s subscription services, Rider Pass and Eats Pass, in which customers can get free delivery on orders over $30.
The announcement follows the announcement of Uber’s $2.65 billion acquisition of Postmates. Uber is expanding its food delivery options as the coronavirus pandemic continues to crush its core ride-hailing business.
At the height of the pandemic in April, Uber said its ride-hailing division was down about 80 percent. And now, with the number of cases spiking in many parts of the US, the company’s losses could continue to grow.
“I think this would make a lot of sense in a pre-COVID world,” Danker said in a call with reporters. “But our world has just fundamentally changed. And so this represents even more of a huge responsibility for us.”
According to The Verge, bookings in the company’s Uber Eats division were up more than 54 percent year over year, due to increased demand for food deliveries, the company reported in May. Meal delivery has seen an increase in demand since mid-March, with 89 percent year-over-year gross bookings growth in April excluding India. But the company has also moved fast to abandon its unprofitable markets, recently shuttering its Eats business in eight countries.
Uber is entering a crowded market, with huge companies like Amazon and Instacart fighting for market share with major grocers like Kroger and Walmart. Last year, only 3 percent of grocery sales in the US took place online. Sales are certainly increasing during the pandemic — US online grocery revenue hit a record $7.2 billion in June — but customers say they feel hesitant to shop for groceries online for fear of being overcharged or experiencing late deliveries, according to a recent survey.
Raising $22.5M, Liftit Looks to Expand its Logistics Services in Brazil, Mexico, Chile and Ecuador
Colombian trucking and logistics services startup Liftit has raised $22.5 million in a new round of funding to capitalize on its newfound traction in markets across Latin America as responses to the COVID-19 epidemic bring changes to the industry across the region.
“We’re focusing on the five countries that we’re already in,” says Liftit Chief Executive Brian York.
As reported by Tech Crunch, the company recently hired a head of operations for Mexico and a head of operations for Brazil as it looks to double down on its success in both regions.
Funding for the round was led by Cambridge Capital and included investments from the new Latin American-focused firm H20 Capital along with AC Ventures, the venture arm of the second-largest Coca-Cola bottler in LatAm; 10x Capital, Banyan Tree Ventures, Alpha4 Ventures, the lingerie brand Leonisa; and Mexico’s largest long-haul trucking company, Grupo Transportes Monterrey. Individual investor Jason Radisson, the former chief operating officer of the on-demand ride hailing startup 99, also invested.
The new capital adds to Liftit’s $14.3 million Series A from some of Latin America’s top local investors. Firms like Monashees, Jaguar Ventures and NXTP Ventures all joined the International Finance Corp. in financing the company previously and all returned to back the company again with its new funding.
Investors likely responded to the company’s strong performance in its core markets. Already profitable in Chile and Colombia, Liftit expects to reach profitability across all of its operations before the end of the year, despite the global pandemic.
Of the 220 contracts the company had with shippers, half of them went to zero and the other half spiked significantly, York said. While Liftit’s major Colombian customer stumbled, new business, like Walmart, saw huge spikes in deliveries and usage.
“Managing truck drivers is incredibly difficult, and trucking, in our opinion, is not on-demand,” said York. “At the end of the day the trucking market in all of Latin America is a majority of independent owners. They’re not looking for on-demand work… they’re looking for full-time work.”
Less than 1% of the company’s deliveries come from on-demand orders. Instead, its service is comprised of scheduled shipments with optimized routes and efficiencies that are bringing customers to Liftit’s virtual door.
“We do scheduled trucking delivery so we integrate with existing systems that shippers have and start planning how many trucks they’re going to need and the routes they’re going to take and … tee it up exactly what is going to happen regardless what the traffic conditions are so we have been able to reduce the delivery times for the trucks,” said York.
Brazil’s Central Bank Discloses Rules for Open Banking
The Brazilian Central Bank approved the rules for the initial governance structure of the Open Financial System, also known as Open Banking.
The initial structure will be divided into three levels:
- Strategic: represented by the Deliberative Council
- Administrative: formed by the Secretariat
- Technical: composed by the Technical Groups
According to LatAm List, the Deliberative Council will be responsible for defining the structure’s internal regulations, deciding on the convention of the participating institutions, defining guidelines for the Secretariat and for the Technical Groups, and deciding on the other issues necessary for the implementation of Open Banking.
“The Secretariat will organize and coordinate the work and will be responsible for proposing, executing, and managing the structure’s budget, among other activities of an administrative nature. The Technical Groups will be in charge of preparing studies and technical proposals, according to the work plans approved by the Deliberative Council,” LatAm List reports.
The initial governance structure will be formalized by July 15, 2020 with a provision to replace it with a definitive structure until the implementation of the last stage of Open Banking on October 25, 2021.
A Thousand Pork Workers Tested Positive at JBS Plant in Brazil
More than 1,000 workers at a JBS SA pork plant in Brazil, or a quarter of those tested, were infected with COVID-19, according to figures from the Labor Prosecutor’s Office. While almost all have recovered, the high rate of infection reveals the challenges Brazilian meat companies face to keep plants running as the virus spreads in the nation.
According to Yahoo Finance, mass testing at JBS’s Dourados plant in Mato Grosso do Sul state started on May 25, according to documents shared by prosecutors. Of 4,134 employees tested, 1,075 were positive through July 1. JBS says 20 people, out of the plant’s 4,300-strong workforce, are currently off work due to COVID-19. The company said in a statement it implemented its contingency plan just after getting the first case confirmed at the plant, helping to avoid further contamination among workers.
In the same municipality, a poultry plant owned by BRF SA also reported a coronavirus outbreak, with 85 confirmed COVID-19 cases, of which 72 are recovered and back at work, according to figures from July 3 shared by the Prosecutor’s Office. The plant employs 1,500 workers. BRF said it voluntarily adopts a protocol for COVID-19 testing in all its units, including in Dourados, that aims to safeguard workers and operations. The company said it only releases the number of positive cases to competent authorities to respect employees’ privacy.
Both companies had said they are hiring to replace workers removed due to COVID-19 infections.
Brazil has become a new coronavirus epicenter with the number of infections only trailing the U.S. After first reaching the largest cities, the virus is now spreading through the countryside.
Since last week, China suspended meat imports from more than 20 plants in different countries that had reported Covid-19 outbreaks, including four Brazilian facilities, one owned by JBS. The move raises concerns about more suspensions and is expected to slow the growth of meat imports by the Asian giant, according to Rabobank.
Graphic Courtesy of Bloomberg
Brazil Burns Billions of Carbon Credits in Amazon Rout, CEO Says
The world’s biggest wood-pulp producer says cutting down the Amazon makes no business sense. While Brazil‘s President Jair Bolsonaro defends opening up the world’s largest rainforest to agriculture and mining, the head of Suzano SA said preserving the biome could earn the country $10 billion a year on the carbon credit market.
“It would be an incredible opportunity in the green carbon market if Brazil cut Amazon deforestation and burning to zero,” Chief Executive Officer Walter Schalka said in an interview. “It’s not a loan, or investment. It would profit from carbon credit sales.”
One of Brazil’s most outspoken executives on the environment, Schalka makes the case for preservation at a time when the forest is being destroyed at the fastest pace in more than a decade, amid lax rules and enforcement. In June, the first month of the country’s dry season, fires rose to a 13-year high, National Institute for Space Research data show.
However, tapping billions in carbon credits may have to wait. As reported by Bloomberg, there’s a gap in the system left by the transition to a global protocol to be designed by next year’s climate conference in Glasgow, Schalka explained. Once the new system is up and running, polluters will be able to buy credits from companies and nations that remove CO2.
For now, not even Suzano- which has 2 million hectares (4.9 million acres) of forested land- has been able to monetize the CO2 it removes in this fragmented market. Schalka will look to do so when the global system resumes.
About 40% of Suzano’s land is native forest and the rest is mostly eucalyptus plantations, which is renewed and expanded through the planting of 450,000 trees a day. The pulp giant aims to remove a net 40 million tons of CO2 from the atmosphere through 2030, which could generate about 800 million euros ($900 million) for the company in the next 10 years based on price references from the Kyoto Protocol of 20 euros per ton of carbon removed.
“Forest destruction is by far the nation’s largest source of CO2 emissions,” he said. “By eliminating that, Brazil could assume a different role, leading a global movement toward a cleaner economy.”
Mexican Company Launches Drone Delivery of Protective Gear to Hospitals
Mexico-City based firm Sincronia Logistica has begun deploying unmanned drones to deliver personal protective gear and other essential equipment to public hospitals in the central state of Queretaro, north of the capital.
Mexican healthcare workers have staged protests nationwide over the lack of personal protective equipment. The drones help stem the spread of the novel coronavirus by allowing for quick, contact-free drop-offs.
“In addition to reducing time, we’ve also reduced human contact,” said Diego Garcia, director of business excellence at Sincronia Logistica.
Sincronia Logistica says it has used drones to deliver donations of antibacterial gel, facemasks, gloves, 3D-printed face shields and other basic supplies for healthcare workers.
Doctors value the service, said Juana Angelica Garcia, director of the El Marques Public Hospital in the city of Queretaro, the state capital.
“In a situation where you need medical materials supplied fast without risking the health of the people involved, drone delivery has become a comprehensive and sure-fire option,” she said in a statement.
Building Blockchains Secretly in South America
Blockchain could bring technological revolution in Latin America, said Mario Blacutt, NULS core developer and Nerve Network founder, in an exclusive interview with Cointelegraph. Blacutt revealed his thoughts on the region’s blockchain environment and the hurdles he faced after former Bolivian President Evo Morales banned cryptocurrencies in 2014.
Blacutt, who recently revealed his real name to the public after having hidden under the pseudonym “Berzeck” for several years,” said blockchain technology will “undoubtedly” spark another decade of a technological revolution in Latin America.
Crypto adoption in Latin America “will likely accelerate”
He said the sooner governments realize crypto’s benefits, the better will be for their countries in terms of adoption.
“In Latin America, crypto adoption is relatively high for a few reasons, but mostly, people don’t trust their financial systems, and now that a global recession is looming, people do not believe their banking system will hold. So, crypto adoption will likely accelerate. A few countries may seize current opportunities and try to spearhead blockchain development, but it is still too early to know which countries may take the lead,” Blacutt added.
The NULS core developer said that the good news is that “more and more people are starting to understand the potential,” and it’s getting safer to acquire crypto, but highlights that there are some exceptions like Venezuela.
Latin American Socialism vs. Cryptos
Taking the case of Bolivia’s anti-crypto stance towards under Morales’ government, Blacutt elaborates on if he believes that both crypto and blockchain concepts are compatible with Latin American’s state philosophies:
“There was a socialist wave in Latin America, and usually, those governments strive for obsessive control and centralization to have a tighter grip on the economy and stay in power. Crypto operates in the exact opposite direction. Consequently, LATAM missed a golden opportunity to drive adoption and attract international investment companies. Fortunately, many of these governments have shifted power and things are starting to look better.”
Since blockchain technology is open-sourced and developed in a decentralized way, “Berzeck” says that it presents a “very rare opportunity” for Latin America and other underdeveloped regions to openly compete at the forefront of blockchain development.
But Blacutt warns that cryptos in general, not only in Latin America, is still seen as a means to “get rich fast,” and states the cryptos are speculative assets, “because we are not even close to showing its grossly huge potential market.”
He adds, “Understanding blockchain technology in order to implement efficient solutions is not trivial, it is complicated. In fact, many interested companies that contact us are interested in blockchain technology, but they don’t have any idea on how to map their business processes to the blockchain. That’s the biggest obstacle, which will take years to improve. Latin America is not exempt from these problems. It will depend on individual governments to try [and] tackle blockchain problems to accelerate adoption and make the transition smoother.”
Brazil's Hapvida Discloses Cyber Breach, Potential Client Data Leak
Brazilian health insurer Hapvida said in a securities filing on Monday it has suffered a cyber attack potentially involving access to the personal information of its customers.
According to Reuters, Hapvida said after a preliminary assessment of the security breach, the attackers did not access customers’ medical records or financial information. It said the attack was blocked by Hapvida’s own information security officers and third-party companies specializing in dealing with this type of issue.
A thorough analysis on the extent of the breach is still under way. The company is conducting a complete review of its infrastructure and applications aimed at strengthening protections and mitigating risks, the filing said.
What You Need to Know About the Reforms to Mexico’s Copyright Law
Last week, the Mexican Senate approved reforms to the country’s federal Copyright Law, in fulfillment with Mexico’s part in the USMCA, the free trade agreement that went into effect on July 1. The reform has been met with criticism in regards to its potential to diminish individuals’ right to freedom of speech online through platforms and social media.
Contxto interviewed Cinthya Gómez, Senior Associate at Novus Concilium, a legal firm specializing in tech and venture capital in Mexico to discuss how these reforms can help (or hurt) tech companies in the country and what happens next now that they’ve become effective.
What do Mexico’s Copyright Law reforms consist of?
Gómez: They stem from the USMCA so that Mexico’s Copyright Law aligns with that of the other North American countries. In fact, these reforms are quite similar to the United States’ Digital Millennium Copyright Act (DMCA), passed a few years back.The three important changes and they’ve also been major sources of controversy as of late:
1. The addition of the infamous “takedowns”, the legal mechanisms that allow the copyright owner to request that any online provider—such as a social media platform— remove a post or published work because it violates copyright. However, this is nothing new.
The DMCA has already been using this mechanism for some time now and I’m sure more than one of your readers has used this mechanism on Facebook, Instagram, or even Twitter.
What’s interesting is that this point has been viewed as “censorship” by many because content must be removed following a simple complaint of copyright infringement. However, the law also contemplates “counter-claims.”
In other words, a mechanism that allows the person who posted the content to demonstrate they have the rights to publish that material. Should they prove to have the faculties and rights to do so, the content is re-uploaded.
Moreover, a takedown request doesn’t imply initiating another procedure, like legal action, for example.
2. The reforms address access control technologies (e.g. digital rights management or DRM tools) and it becomes a federal crime to break these security mechanisms. Access control technologies serve to avoid copyright infringement over digital content.
This doesn’t mean we can’t fix our computers or that we can’t hire cybersecurity experts to test our systems.
In fact, the law addresses many of these scenarios as exceptions, including for research and development purposes in science or academia. [These reforms] must be understood as a way to face piracy and the blackmarket which unfortunately lead to significant losses for authors and artists.
3. A number of provisions within the Federal Criminal Code were changed to sanction violations primarily of access control technologies.
How can these reforms help or hurt small, tech-based businesses like startups and their users?
Gómez: Copyright protection promotes creativity and that greatly benefits startups, especially those that work with technology since these reforms bolster protection for their products.
Furthermore, I believe that this creates healthy competition among Mexican, American, and Canadian businesses as it places us all at the same level of copyright protection with practically identical mechanisms that address piracy among the three countries.
In reality, the only people or entrepreneurial projects that might be hurt by these reforms are those accustomed to violating access control technologies. Nonetheless, it’s a valuable opportunity entrepreneurs have to learn about intellectual property as there are many options to obtain licenses or legally transfer rights which will lead to developing more legitimate activities.
When it comes to these reforms, what comes next?
Gómez: First off, these reforms have not only been approved but are now effective in Mexico.
So now it’s necessary that entrepreneurs, users, and copyright holders learn about the implications of these changes because, unfortunately, there is a lot of misinformation floating around on the internet. If they don’t receive expert advice, there can be serious consequences when it comes to protecting their intellectual property.
Secondly, online services must implement the policies and mechanisms that the law and reforms cover. One can also expect parties to integrate systems that help detect copyright violations.
It’s been said that these measures lead to censorship, is this possible?
Gómez: I think there’s a huge difference between censorship and piracy, which is what the law wants to regulate. Besides, it’s necessary that we start giving artists and authors the respect they deserve. It’s all too common to hear someone is using the work of a third party without their consent and there’s a lot of misinformation that “if we saw it on the internet” then it’s free for use, when that’s not the case.
What’s worse is that through these actions we hurt others in many ways. A lot of work is protected by copyright and it’s what gives people jobs and sustains tons of families—it’s the livelihood of artists and authors.
Plus, let’s not forget that these reforms didn’t change pre-existing regulations for exceptions and that Facebook, Twitter, Google, and other businesses have been implementing these measures for years as a result of DMCA in the United States.
And up until now, people are still using memes [without being jailed or fined for it]. Unfortunately, with any good thing in the world, there will always be someone who wants to misuse it. So I can’t say this law is la vie en rose, but it’s important we understand these reforms. If we fail to grasp how the law works, we can’t determine when a situation is misused for a purpose other than copyright protection, concludes Gómez.
Mexico’s Copyright Law in short…
As bad as the reforms may appear on social media, their core goal to respect the work of creatives everywhere. Applying the letter of the law to reduce infringement will encourage artists and authors to continue making work we love to read and listen to.
This also favors tech startups as it offers more legal protection to shield their own creations and keep serving them up for us to enjoy. And more importantly, the law contemplates exceptions so we can take our laptops for maintenance as well as post memes on the internet.