Latin America’s biggest airline and its affiliates in Chile, Peru, Colombia, Ecuador and the US sought Chapter 11 bankruptcy protection in Manhattan federal court as part of a reorganization brought on by the virus crisis, which has gutted air travel around the world.
“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,” LATAM CEO Roberto Alvo said in a statement.
LATAM said it will keep operating passenger and cargo flights amid the restructuring, though they’ll be subject to demand and travel restrictions.
The Chile-based company said it has up to $900 million in financing from shareholders — including the Cueto and Amaro families and Qatar Airways — to support it during the bankruptcy process.
LATAM’s second-largest shareholder is American carrier Delta Air Lines, which paid about $1.9 billion for a 20 percent stake last year.
LATAM has between $10 billion and $50 billion in assets and liabilities, according to its bankruptcy petition. The S&P and Fitch ratings agencies downgraded the company Friday after it confirmed that it missed debt payments.
LATAM flew more than 74 million passengers to about 145 destinations and launched 26 new routes last year, when it raked in more than $10 billion in revenues, the company said. But that was before the coronavirus pandemic led to a roughly 95 percent drop in its passenger service, which accounts for most of its operating revenue, according to a court filing.
“At the beginning of 2020, LATAM was financially and operationally one of the strongest groups in Latin America and poised to continue its upward trajectory,” chief financial officer Ramiro Alfonsín Balza said in a court filing. “Unfortunately, like so many businesses around the world, the unprecedented effects of the COVID-19 global pandemic have significantly affected LATAM’s operations and its business plan.”
LATAM is just the latest airline that the coronavirus has forced into bankruptcy. Virgin Australia sought bankruptcy protection in April, followed by Colombia’s Avianca earlier this month.
With Post wires