LATAM Airlines Files for Chapter 11 Bankruptcy

Daniel Fowler
May 26, 2020

"The special site the company prepared ensures that the Chapter 11 financial reorganization process is not a liquidation process".

Latin America's largest airline LATAM filed for bankruptcy in the United States on Tuesday, the company said in a statement, following a drastic slump in business caused by the coronavirus pandemic.

Passenger and cargo flights will continue to operate, and employees will still be paid, it said.

LATAM, formed when Chile's LAN merged with Brazil's TAM in 2012, said its Brazilian affiliates are in discussions with the Brazilian government about the next steps and financial support for operations in the country. This comes as aviation faces its toughest challenge in history in the wake of the coronavirus crisis.

LATAM is an instantly recognizable brand for South Americans, dominating worldwide air travel in the region, as well as a leading domestic flight operator in Brazil, Colombia, Chile, Argentina, Peru and Ecuador.

Chief Executive Roberto Alvo said Latam was "healthy and profitable" before the pandemic brought most of the world's flights to a halt.

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'We have implemented a series of hard measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option, ' LATAM Chief Executive Officer Roberto Alvo said in a statement.

"We are looking ahead to a post-Covid 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", he added.

LATAM says it will continue to fly as conditions permit throughout the process.

LATAM said that as of Tuesday it had $7.6 billion in debt, including $460 million in loans tied to its Brazilian subsidiary which is not part of the bankruptcy process.

The company announced that it obtained financing commitments from shareholders related to the Cueto and Amaro families, and Qatar Airways for $900 million that will be made available once the agreements determined by the special administration are confirmed. Between them, these stakeholders will be providing up to $900m in debtor-in-possession financing. "We remain firmly committed to our partnership with LATAM and believe that it will successfully emerge a stronger airline and Delta partner for the long term", Bastian said.

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