Latin America's biggest carrier, LATAM Airlines Group SA, said on Tuesday that it has filed for Chapter 11 bankruptcy protection in the US. It's seeking to restructure its debt after facing Covid-19-related financial problems.
Reservations, employee pay, flight vouchers as well as passenger and cargo operations will not be affected, according to the statement.
"We have implemented a series of hard measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option", CEO Roberto Alvo said in a statement regarding the filing.
Air travel has plunged to a fraction of the levels it was just months ago as the virus spread from China to countries around the globe, prompting growing alarm in the aviation industry.
The International Air Transport Association has forecast a US$15 billion loss in revenue for Latin American airlines this year.
But unlike Avianca, Chile's LATAM posted profits for four consecutive years totaling more than $700 million. Australia's second-largest carrier, Virgin Australia, sought bankruptcy in its home market last month.
LATAM laid off 1,800 employees out of over 40,000 in the lead-up to its bankruptcy filing. To file, foreign companies need only show that they have assets or operations in the U.S.
"Government aid is helping to keep the industry afloat". "LATAM is an worldwide airline, its shares trade in the United States".
Others are scrambling. Richard Branson is seeking help from the United Kingdom government and selling shares in his space company to prop up troubled Virgin Atlantic and other travel holdings.
Latam's affiliates in Brazil, Paraguay and Argentina aren't part of the bankruptcy case, which was filed in the Southern District of NY.
LATAM listed assets and liabilities in the range of $10 billion and $50 billion, according to a filing with the U.S. Bankruptcy Court in Southern District of NY. Talks are underway with governments in Chile, Brazil, Colombia and Peru about additional financing and assistance, the airline said.
The Cueto family - which is Latam's largest shareholder and holds two seats on its board of directors - acquired a stake in 1992 and control of the business in 1994.
The airline had more than 340 planes in its fleet and almost 42,000 employees on its payroll, according to its more recent annual report.
LATAM stated, minutes after announcing the restructuring, that it will continue to operate. Latam also has about US$1.3 billion in cash on hand.
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