Latin America’s largest airline LATAM has today filed for Chapter 11 bankruptcy protection in the US.
LATAM airlines along with its affiliates in Chile, Peru, Colombia, Ecuador, and the US, have applied for the voluntary protection. The filing does not include its Brazilian, Argentinian and Paraguayan affiliates.
The airline will continue to fly and has stated that its Pass Miles program and held flight vouchers will not be affected.
LATAM announced this news in a press release, stating Chapter 11 provides a legal framework under which LATAM and its included affiliates in Chile, Peru, Colombia, Ecuador, and the US will be able to restructure and right-size their operations. Debts will likely be restructured to give the airline breathing room and will enable the airline to ensure what it is calling ‘long-term sustainability. CEO Roberto Alvo stated in the release:
“LATAM entered the COVID-19 pandemic as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future.
“We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option to lay the right foundation for the future of our airline group. We are looking ahead to a post-COVID-19 future and are focused on transforming our group to adapt to a new and evolving way of flying, with the health and safety of our passengers and employees being paramount.”
The group has stated that it has secured support from its major shareholders, which include the Cueto and Amaro families as well as Gulf carrier Qatar Airways. These stakeholders will be providing up to $900 million in debtor-in-possession financing.
However, there’s no word yet on whether its largest shareholder, Delta Air Lines, with a 20 per cent stake in the company, will step in to help. The airline noted in its statement that,
“To the extent permitted by law, the group would welcome other shareholders interested in participating in this process to provide additional financing.”
