LATAM’s bankruptcy protection extended until mid-September
A US federal court has approved an extension of the submission date for LATAM’s restructuring plan to mid-September. The South American airline was due to present its restructuring plan at the end of June. On Monday, the Federal Court for the Southern District of New York extended that deadline to September 15.
LATAM still in bankruptcy proceedings
South America’s largest airline filed for bankruptcy in May 2020. At the time, LATAM CEO Roberto Alvo said travel restrictions were creating a cash flow shortage for the company. airline, leaving LATAM with no choice but bankruptcy protection as it sought to manage its burgeoning finances and debt. .
As part of the bankruptcy protection process, LATAM was expected to present its restructuring plan to the Federal Court by June 30. But early last month, the Chilean airline said it would seek an extension.
“The extension request is a common alternative considered in the process and does not change the intention of the LATAM group to exit Chapter 11 by the end of this year”, Simple Flying reported a LATAM spokesperson.
LATAM secures additional funding in June
Monday’s court hearing upheld the extension. LATAM remains confident that it will exit the bankruptcy process safely, and the airline continued to fly throughout the period, albeit at a reduced level. LATAM’s passenger traffic for June 2021 was estimated at 36% (measured in available seat-kilometers) compared to the same month in 2019.
As of June, LATAM estimated to operate around 691 daily domestic and international flights, connecting 114 destinations in 14 countries. LATAM remains an important operator in Brazil, Chile, Colombia, Ecuador and Peru. However, the airline is leaving the Argentinian market.
LATAM also confirmed that it was getting an additional $ 500 million from debtor-in-possession financing. This is the airline’s second withdrawal from the fund. The directors have made up to US $ 2.45 billion available to LATAM under the funding arrangements. To date, the airline had accessed $ 1.15 billion.
Citing health and travel restrictions imposed by authorities in the various countries where LATAM operates, LATAM told regulators that a request for an additional $ 500 million was made in June. LATAM expected to receive the funds within days of the request.
LATAM confident to lift stronger airline out of bankruptcy
Despite the three-month delay in presenting its restructuring plan, LATAM remains confident that it will exit bankruptcy proceedings by the end of this year. The CEO of LATAM said his airline would become a stronger airline, better able to compete in the fierce South American aviation market.
“We hope that LATAM will emerge from the crisis stronger, with an unbeatable cost structure in the region.”
Roberto Alvo expects LATAM to fly between 60% and 80% of its 2019 capacity by the end of 2021. He plans to return to 100% of its capacity within two years.
Three of South America’s largest airlines now fly under bankruptcy protection provisions. Colombia’s largest carrier and Latin America’s second-largest airline, Avianca, filed for bankruptcy in May 2020. Aeromexico followed suit a month later, seeking protection in June.
The swift resort to bankruptcy protection at the onset of the global travel crisis in March 2019 highlighted the financial weakness of South America’s largest airlines. The radical surgery now imposed by the restructuring process will put airlines in a better financial position in the future.