Executive Travel : Peso Plunge, Upstart Have 2 Mexican Airlines Weighing Fleet Reductions : Carriers: Mexicana and parent Aeromexico have suffered severe foreign exchange losses.

In the wake of the peso crisis and amid increasing competition from upstart airline Taesa, Mexico’s two largest airlines, Mexicana de Aviacion and its parent company, Aeromexico, are reportedly considering large fleet reductions.

Both airlines have suffered severe foreign exchange losses from the devaluation of the peso, the magazine Commercial Aviation Report said. Aeromexico will park its surplus fleet of McDonnell Douglas DC-10s and may ground or return other jets, according to the magazine.

Debt-loaded Mexicana said earlier this month that its troubles are getting even worse because of lean times ahead in the national market. Newcomer Taesa has expressed interest in buying a stake in Mexicana.

Mexicana said it suffered foreign exchange losses of about $215 million in December following the new peso’s devaluation against the dollar.

The airline said a very high share of its liabilities, estimated at about $1.3 billion, are in dollars, making it vulnerable to movements in the exchange rate.

“Financing costs will also be significantly affected; assuming average interest rates of 35% this year, they would rise by 60%,” the airline said.

It projected that the national market will shrink by 14% this year, a blow only lightly counteracted by a projected 3.4% increase in the international market.

“The figures do not look good. They are going to have to make some very difficult decisions,” one airline analyst told Reuters after the airline released its statement.

Mexicana’s parent, Aerovias de Mexico (Aeromexico), last week announced foreign exchange losses of $132 million in December. The two companies’ net 1994 results are expected to be poor.

After years of dominating the Mexican market, both airlines have been hurt by high costs and tough price competition from their rising competitor, Taesa.

But senior Mexicana officials have ruled out bankruptcy, instead promising a detailed cost-cutting plan, higher prices and an overhaul of operations.

Other key elements of the company’s strategy for 1995 will be to eliminate some unprofitable routes and strengthen its presence on more lucrative international routes. It said falling passenger volume will be offset by a reduction in seats available.

On the upside, Mexicana said the new peso’s devaluation has in effect increased the value of its dollar-denominated fixed assets by about $170 million.

Details of its restructuring program are expected late this month.