LATAM Airlines Group SA and its affiliates in Chile, Peru, Colombia, Ecuador and the USA have filed for voluntary protection under the USA Chapter 11 financial reorganisation process.
With effects of COVID-19 on the worldwide aviation industry, this reorganisation 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, while enabling the group to adapt its business to this new reality.
The Chapter 11 financial reorganisation process will enable LATAM and said affiliates to emerge more agile, resilient and sustainable. LATAM and its affiliates will continue flying as conditions permit throughout the process.
Roberto Alvo, CEO, LATAM, 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.?
The group has secured the financial support of shareholders, including the Cueto and Amaro families, which have lasting ties to LATAM, and Qatar Airways, to provide up to $900mn in debtor-in-possession (DIP) financing. To the extent permitted by law, the group would welcome other shareholders interested in participating in this process to provide additional financing. In addition, as of the filing for voluntary protection under the U.S. Chapter 11, the group had approximately USD$1.3 billion in cash on hand.
They are in discussions with their respective governments of Chile, Brazil, Colombia and Peru to assist in sourcing additional financing, protect jobs where possible and minimise disruption to its operations.
?Faced with the biggest crisis in the history of aviation, the Board has approved this path forward having analysed all the available alternatives to ensure the sustainability of the group. We are confident that LATAM will be able to succeed in the post-COVID-19 context and continue to serve Latin America, connecting the region with the world,? said Ignacio Cueto, chairman of LATAM?s board of directors.
Image Credit: Alexandro Dias/ Flickr
