LATAM says no impact on cargo as it files for bankruptcy protection
26 / 05 / 2020
By David Kaminski-Morrow FlightGlobal
South American operator LATAM Airlines Group, along with some of its affiliates, is filing for US Chapter 11 creditor protection in order to undertake a restructuring process.
The company says the voluntary filing has the support of key shareholders Cueto Group and Qatar Airways, which will provide up to $900m in debtor-in-possession financing.
While affiliates in Chile, Peru, Colombia, Ecuador and the US are included in the filing, those in Argentina, Brazil and Paraguay are not.
LATAM stated that it is aiming to “transform its business” to maintain a “leading position” in Latin American air transport during recovery from the coronavirus crisis.
It stressed that there will be “no impact” on passenger and cargo operations.
“This re-organisation process provides LATAM with an opportunity to work with the group’s creditors and other stakeholders to reduce its debt, access new sources of financing and continue operating,” it added.
LATAM and the affiliates will be able to “re-size” their operations, to match new levels of demand, and re-organise balance sheets to become “more agile, resilient and sustainable”.
“This path represents the best option to lay the right foundation for the future of our airline group,” said chief executive Roberto Alvo, pointing out that LATAM was “healthy and profitable” before the crisis caused a collapse in the air transport sector.
LATAM states that the shareholders’ financial support “demonstrates a belief” in the company and its affiliates.
“To the extent permitted by law, the group would welcome other shareholders interested in participating in this process to provide additional financing,” it added.
LATAM said it had around $1.3bn in cash on hand at the time of filing. It is in talks with governments of its South American home states to source further funds, to protect jobs and minimise disruption.