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Latam, South America’s largest airline group, has filed for Chapter 11 bankruptcy reorganization.
The filing, made Monday in a federal bankruptcy court in New York, applies to Latam’s subsidiaries in Chile, Peru, Colombia, Ecuador and the U.S. Its largest affiliate in Brazil is not included in the filing, nor are affiliates in Argentina and Paraguay. The carrier said that it is in discussions with the Brazilian federal government about potential financial support.
Latam said that operations will continue throughout the reorganization process at a level supported by demand. The company plans to use the reorganization to reduce debt, access new sources of financing and transform its business to the new industry reality caused by Covid-19.
“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,” CEO Roberto Alvo said.
During the reorganization, travel agencies will experience no disruptions in their interactions with the Latam group, the airline said. All tickets, travel vouchers, frequent flyer miles and frequent flyer benefits will be honored.
Latam’s bankruptcy filing follows the Chapter 11 filing of Colombia-based Avianca, the second largest South American airline group.
Latam said three shareholders — Qatar Airways, Chile’s Cueto family and Brazil’s Amaro family — are supporting the reorganization and have agreed to provide up to $900 million in debtor-in-possession financing, which is financing secured during a bankruptcy process. Delta Air Lines, Latam’s largest shareholder, wasn’t mentioned in a news release about the bankruptcy. The carriers recently agreed to form a joint venture that is pending regulatory approval.
At the end of 2019, ahead of the Covid-19 crisis, Latam had $21.1 billion in assets and $18 billion in debt, according to the bankruptcy filing.
Source: travelweekly.com
