LATAM Airlines Group S.A. announced on Tuesday that the company and its affiliates in Chile, Peru, Colombia, Ecuador and the United States have filed for voluntary protection under the U.S. Chapter 11 Bankruptcy process.
Today, the LATAM Airlines Group S.A. announced that the company and its affiliates in Chile, Peru, Colombia, Ecuador and the United States have filed for voluntary relief under the U.S. Chapter 11 Bankruptcy reorganization process. The Group’s affiliates in Argentina, Brazil and Paraguay are not included in the filing. The bankruptcy filing is supported by the Cueto and Amaro families as well as Qatar Airways, two of LATAM’s largest shareholders. The bankruptcy process will allow LATAM to resize their operations and reorganize their balance sheet as the Group navigates the reduced demand environment caused by the global COVID-19 pandemic. In Tuesday’s announcement, LATAM’s Chief Executive Officer, Roberto Alvo said,
“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.”
LATAM has secured up to $900 million of debtor-in-possession (DIP) financing with the support of shareholders including the Cueto and Amaro families as well as Qatar Airways. As of the filing, the Group had approximately USD$1.3 billion in cash on hand. The company and affiliates are also in discussions with the governments of Chile, Brazil, Colombia and Peru to assist in the sourcing of additional financing and to protect jobs. Also commenting on today’s announcement, LATAM’s Chairman of the Board, Ignacio Cueto added,
“Faced with the biggest crisis in the history of aviation, the Board has approved this path forward having analyzed all the available alternatives to ensure the sustainability of the group. As we have adapted to new realities in the past, we are confident that LATAM will be able to succeed on the post-COVID-19 context and continue to serve Latin America, connecting the region to the world.”
LATAM Airlines Group S.A. and affiliates will continue to operate passenger and cargo flights as normal based on demand and travel restrictions. All current and future tickets, travel vouchers, frequent flyer miles and benefits will be honored, and the Group’s employees will continue to receive pay and benefits as provided in their employment agreements. Suppliers will also receive timely payments for goods and services delivered from May 26, 2020 forward. Travel agencies and other commercial partners will experience no disruptions in their relationships with the Group.
The U.S. Chapter 11 Bankruptcy reorganization process is markedly different from the concept of “quiebra”, “bancarotta”, or liquidation. The reorganization process will allow LATAM to continue to operate normally while the Group works with the court and creditors to resolve the case. The company’s management team will remain in place throughout the reorganization and transformation process and the Chapter 11 filing will allow LATAM to emerge as a more agile, resilient and sustainable airline Group. As previously mentioned, LATAM’s affiliates in Argentina, Brazil and Paraguay are not included in the Chapter 11 filing. The company’s affiliates in Brazil are currently in discussions with the Brazilian government about the next steps and financial support for their operations in Brazil.
Source: LATAM Airlines Group S.A.