After Avianca, LATAM Airlines also files for bankruptcy following “collapse” in demand

26.05.2020 at 11:31

Travel news

LATAM Airlines, Latin America’s biggest carrier is the latest casualty in the coronavirus crisis.

Latam Airlines has filed for bankruptcy protection, the second Latin American carrier this month to fall victim to the coronavirus crisis.

The company, the region’s largest airline, launched a Chapter 11 bankruptcy filing late on Monday in a federal court in New York.

A string of groups in the travel industry have filed for bankruptcy or sought government bailouts as the Covid-19 crisis wreaks havoc on the sector.

Colombia’s Avianca airline filed for bankruptcy protection on May 10 while European airline Lufthansa on Monday agreed a €9bn rescue from the German government.

“Latam entered the Covid-19 pandemic as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in global demand [that] has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future,” said Roberto Alvo, the group’s chief executive.

Latam, which reported revenues of $10.4bn last year, said it had secured up to $900m in credit from three of its largest equity holders and that it expected to continue operating during the bankruptcy proceedings.

The debtor-in-possession financing, a form of senior debt available to companies that have filed for bankruptcy, was provided by Qatar Airways, which owns roughly 10 per cent of the group’s equity, Chile’s Cueto family and Brazil’s Amaro family.

Latam is seeking further support from other equity holders. Delta Air Lines of the US, which is facing its own severe strains, is listed as Latam’s biggest shareholder with a nearly 20 per cent stake.

Latam is also in talks with Chile, Brazil, Colombia and Peru to “assist in sourcing additional financing, protect jobs where possible and minimise disruption to its operations.”

The group was founded in 2012 from the merger of Brazil and Chile’s biggest airlines, Tam and Lan, which at the time forged the world’s second-biggest carrier by market value.

Latam carried almost 69m passengers last year and employs about 41,000 people.

At the time of the bankruptcy filing, it had $1.3bn in cash on hand.

At the end of last year it had $21.1bn in assets and $18bn in debt, according to the bankruptcy filing in the Southern District of New York bankruptcy court.

Last year the company reported operating income of $742m, down from $887m in 2018.

Share

Keywords:

Leave a Reply

amsterdam australia bangkok barcelona berlin bratislava brazil brussels budapest cancun china colombo coupon code cuba dublin dusseldorf frankfurt hamburg india italy japan leipzig london madrid manchester mexico milan munich new york oslo paris prague reykjavik rome ryanair spain sri lanka stockholm thailand turkey usa venice vienna warsaw wroclaw

Book accommodation

Like us on Facebook / Twitter

Follow us on Facebook: www.facebook.com/Rushflights

Follow us on Twitter: @Rushflights

 

Booking sites

Airlines

Sign up for our Newsletter

Categories

Archives