In order to enhance profitability,
) has shed roughly half of its stake in Grupo Aeromexico,
according to Reuters. Airways of Mexico, SA de CV - a company
that operates as Aeromexico - is the flagship airline of Mexico
and is based in Colonia Cuauhtemoc, Cuauhtemoc, Mexico City.
Citigroup unit Banamex held a stake in Aeromexico.
Banamex has been consistently shedding its stake through a
number of transactions. In the aforementioned transaction,
Banamex sold its 18.53% stake for 16.50 pesos per share, which
resulted in an aggregate amount of $2.193 billion pesos ($172
million). Till date, Benamex has divested 20.33% stake in
Aeromexico. Citi's current stake in the airline stands at
A group of Mexican businessmen, led by the president of
Mexico's Grupo Lala, Eduardo Tricio Haro, bought a 20.19% stake
in Aeromexico, thus boosting their existing stake. Through
personal holdings and agreements with other shareholders Tricio
presently controls 20% of voting stock in the company.
Citi's interest in AeroMexico is a part of Citi Holdings
division, which was set up for its unwanted and underperforming
assets and businesses. However, the unit's waning revenues have
emerged as a headwind for Citi's finances. Citi Holdings reported
negative revenues of $833 million for the full-year 2012 compared
with positive revenues of $6.3 billion in 2011.
Earlier, in 2007, Citi was among a group of investors that
contributed a total sum of $250.0 million for the privatization
of Aeromexico. Despite this, the U.S. banking giant was the
principal shareholder with a 37% stake. Among others,
Delta Air Lines Inc.
) also held a roughly 5% stake in AeroMexico.
Since 2007, the banking major has maintained that its
investment in the Mexican airline is a provisional one and rumors
of Citi offloading its stake in AeroMexico have been doing rounds
Citi came up with the decision to divest its non-core and
unprofitable operations to focus more on its core business lines.
This comes on the back of a sluggish macroeconomic environment
and stringent regulatory landscape.
Several other financial institutions have started shedding
non-profitable businesses due to the slow economic growth. In
August this year,
Bank of America Corporation
) divested its international wealth management operations to
Switzerland-based private bank
Julius Baer Group Ltd.
) for roughly $882 million.
Citi currently retains a Zacks Rank #3 (Hold).
BANK OF AMER CP (BAC): Free Stock Analysis
CITIGROUP INC (C): Free Stock Analysis Report
DELTA AIR LINES (DAL): Free Stock Analysis
(JBARF): ETF Research Reports
To read this article on Zacks.com click here.