LATAM Airlines Group, filed for Chapter 11 bankruptcy on May 26th, according to a statement released on its website. LATAM’s CEO Roberto Alvo cited coronavirus-related travel restrictions as a main driver for the decision to file for bankruptcy. “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,” Alvo said in an infographic explaining the bankruptcy filing. This is the second major airlines in the region to file for bankruptcy in the month of May. Colombia-based Avianca filed for bankruptcy in the US Southern District of New York after facing coronavirus-related financial problems, CNN wrote.
LATAM said it raised up to $900 million to support operations through its bankruptcy reorganization from major shareholders, including the Cueto familyQatar Airways. LATAM said that as of May 26th its debts totaled $18 billion. The airline was downgraded by S&P and Fitch after not paying interest and principal on $1 billion worth of debt tied to new aircraft purchases, according to Reuters.
LATAM’s Brazil unit is not a part of the bankruptcy, and the company said it might file for bankruptcy as well. A source close to Latam’s negotiations in Brazil said that bailout talks were continuing. Delta Air Lines last year paid $1.9bn for a 20 percent stake during better times for the industry, becoming one of the largest shareholders in the company. LATAM laid off 1,800 employees out of more than 40,000 in the lead-up to its bankruptcy filing, as reported by Al Jazeera.
LATAM and its affiliates are also in discussions with their respective governments of Chile, Brazil, Colombia and Peru to assist in sourcing additional financing, protect jobs where possible and minimize disruption to its operations, company stated.
LATAM group is committed to preserving business continuity as it reorganizes – especially with respect to employees, customers, suppliers, commercial partners and local communities.
- LATAM Airlines Group S.A. and its affiliates will continue to operate passenger and cargo flights, subject to demand and travel restrictions.
- All current and future tickets, travel vouchers and frequent flyer miles and benefits, as well as flexibility policies, will be honored.
- The group’s employees will continue to be paid and receive benefits as provided in their employment agreements.
- Suppliers will be paid in a timely fashion for goods and services delivered from May 26, 2020 forward and throughout this process.
- Travel agencies and other commercial partners will experience no disruption in their interactions with the LATAM group.
For detailed information visit: https://www.latam.com/en_un/press-room/releases/LATAM-announces-reorganization-to-ensure-long-term-sustainability/
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