Latin America’s biggest airline, the Chile-based LATAM, on Tuesday filed for bankruptcy under the U.S. Chapter 11 bankruptcy code after the COVID-19 pandemic decimated passenger demand.
“The Chapter 11 financial reorganization process is a proven legal framework under which LATAM and affiliates will have the opportunity to resize their operations to the new demand environment and reorganise their balance sheets,” the airline said in a statement.
The group attributed its financial difficulties to the novel coronavirus outbreak.
“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,” chief executive Roberto Alvo said.
The reorganization will include LATAM’s affiliates in Chile, Peru, Colombia, Ecuador and the U.S., but not in Argentina, Brazil, and Paraguay.
The airline said it had secured the financial support of shareholders, including the Cueto and Amaro families and Qatar Airways, to provide up to 900 million dollars in debtor-in-possession financing.
LATAM will continue to operate passenger and cargo flights subject to demand.
It also pledged to honour reservations, vouchers and to continue paying employees and suppliers.
The bankruptcy of LATAM, which carried 74 million passengers last year, is the second one of a major airline in the region this month.
Colombia’s Avianca also filed for bankruptcy in the U.S. after the novel coronavirus made its revenue plunge by more than 80 per cent.
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