MEXICO CITY, Aug. 6 (AFP) – Mexico's Mexicana de Aviacion, one of the world's oldest airlines, was granted bankruptcy protection Thursday, enabling it to continue operations as it steers through its rough financial state.

The airline, which was founded in 1921, suspended ticket sales on Wednesday after seeking protection from Mexican and US creditors over its unprofitable model, mainly due to the worldwide crisis in the aviation sector last year, compounded by the swine flu epidemic that depressed tourism to Mexico.

According to Mexicana, Mexico's second largest airline, it has $786 million in debts and $865 million in revenues, but is hoping to reach a restructuring deal without having to disrupt day-to-day operations.

''A federal judge has granted the legal protection sought'' by the airline against creditors, a Mexicana source told AFP on condition of anonymity, ensuring the company assets are not seized by the creditors.

The company's fleet comprises 65 aircraft from European manufacturer Airbus and two US-made 767 from Boeing, and transports some 22,000 passengers on 220 daily flights, according to Mexicana figures.

The airline had earlier attempted to kick off paycut negotiations with pilots and flight attendants to avoid bankrupcy – a drop of up to 41 percent and the axing of 700 jobs – in order to survive, but the union has so far rejected the cuts.

''The sale of tickets was suspended Wednesday, but flights continue to operate normally. In some cases, tickets purchased weeks earlier are being transferred to other airlines that are business partners with Mexicana,'' a source in the company told AFP.