LATAM Files for Bankruptcy
Avianca, Latin America’s second-largest airline and the second-oldest continually operating airline in the world, filed for bankruptcy two weeks ago. Now LATAM, Latin America’s largest air carrier, has followed suit.
On May 26, 2020, LATAM and its affiliates in Chile, Peru, Colombia, Ecuador and the United States filed to carry out a voluntary reorganization and restructuring of its debt under the Chapter 11 financial reorganization process. The U.S. Chapter 11 process is designed to allow companies like LATAM to operate their business as usual while they reorganize. LATAM will continue flying, paying its employees, meeting benefit obligations, and paying critical suppliers, as well as respecting LATAM Pass miles and flight reservations.
LATAM, whose shareholders include Chile’s Cueto family and Delta Air Lines Inc., is operating on a reduced schedule and has commitments for a bankruptcy loan of as much as $900 million, Bloomberg reports.
“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,” Chief Executive Officer Roberto Alvo said in a statement.
Latam listed assets of more than $21 billion and total liabilities of almost $18 billion in its bankruptcy petition.