Latam Airlines files for Chapter 11 bankruptcy protection

Andrew Cummings
May 26, 2020

The airline will continue to fly while it is in bankruptcy protection and its affiliates in Argentina, Brazil and Paraguay were not included in the so-called Chapter 11 filing.

In a press release issued today, LATAM has said that it is undertaking a voluntary reorganization and restructuring of its debt under Chapter 11 bankruptcy protection in the US.

LATAM is an instantly recognizable brand for South Americans, dominating worldwide air travel in the region, as well as a leading domestic flight operator in Brazil, Colombia, Chile, Argentina, Peru and Ecuador.

Passenger and cargo flights will continue to operate, and employees will still be paid, the Santiago, Chile-based airline company said.

Chief Executive Roberto Alvo said Latam was "healthy and profitable" before the pandemic brought most of the world's flights to a halt. It says it is talking with the Brazilian government about how to proceed with its operations there.

The International Air Transport Association has forecast a $15billion loss in revenue for Latin American airlines this year.

The firm joins Colombia's Avianca Holdings SA and Australia's Virgin Australia Holdings Ltd in bankruptcy protection as it seeks to restructure its debt.

Latin America's largest airline follows rival Avianca Holdings AVT_p.CN of Colombia in seeking USA bankruptcy protection.

In 2019, the group carried a record 74 million passengers, 5.4 million more than in 2018, and had launched 26 new routes.

LATAM said it had around $1.3bn in cash on hand at the time of filing.

The company announced that it obtained financing commitments from shareholders related to the Cueto and Amaro families, and Qatar Airways for $900 million that will be made available once the agreements determined by the special administration are confirmed.

US carrier Delta Air Lines Inc is the biggest shareholder in LATAM, having a year ago paid $1.9 billion for a 20% stake during better times for the industry.

Amid the coronavirus pandemic and hit to global travel, airlines have among those that have suffered the brunt of the impact.

He did not say whether Delta might provide further financial support, and the company declined to comment further.

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