Back to top

Analyst Blog

In order to enhance profitability, Citigroup, Inc. (C - Analyst Report) 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 16.11% 
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, Atlanta-based Delta Air Lines Inc. (DAL - Analyst Report) 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 ever since.
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 (BAC - Analyst Report) 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).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
TRIQUINT SE… TQNT 20.61 +6.21%
RF MICRO DE… RFMD 12.41 +5.53%
VASCO DATA… VDSI 14.83 +5.07%
CHYRONHEGO… CHYR 2.85 +4.78%
PLANAR SYST… PLNR 5.02 +2.87%