BANGKOK (AP) — Latam Airways, South America’s largest service, sought U.S. chapter safety Tuesday because it grapples with a pointy downturn in air journey sparked by the coronavirus pandemic.
The Chapter 11 chapter submitting underscores the severity of the monetary challenges dealing with the journey trade because of the lockdowns, quarantines and different measures taken by governments the world over to stem the unfold of the virus that causes COVID-19.
Passenger and cargo flights will proceed to function throughout the reorganization, and staff will nonetheless be paid, the Santiago, Chile-based airline mentioned. Vacationers with current tickets and vouchers can nonetheless use them.
Chief Government Roberto Alvo mentioned Latam was worthwhile earlier than the pandemic introduced a lot of the world’s flights to a halt, however is now dealing with a “collapse in global demand.”
“We are looking ahead to a post-COVID-19 future and are focused on transforming our group to adapt to a new and evolving way of flying, with the health and safety of our passengers and employees being paramount,” he mentioned in a press release asserting the chapter submitting.
Latam Airways mentioned that it and several other of its affiliated corporations launched the Chapter 11 reorganization effort in america in a bid to scale back its debt and discover new financing sources.
Air journey has plunged to a fraction of the degrees it was simply months in the past because the virus unfold from China to nations across the globe, prompting rising alarm within the aviation trade. The Worldwide Air Transport Affiliation final month predicted that airways’ income from hauling passengers would drop $314 billion this 12 months, which means they might herald lower than half of what they did in 2019.
Latam’s transfer comes little greater than two weeks after one other main Latin American airline, Avianca Holdings, filed for chapter safety in New York. Australia’s second-largest service, Virgin Australia, sought chapter in its residence market final month.
Latam’s chapter submitting consists of guardian firm Latam Airways Group S.A. and its affiliated airways in Colombia, Peru and Ecuador, in addition to its companies within the U.S.
The corporate just isn’t together with its associates in Argentina, Brazil and Paraguay within the turnaround effort. It says it’s speaking with the Brazilian authorities about the best way to proceed with its operations there.
Latam is South America’s largest service by passenger site visitors. It operated greater than 1,300 flights a day and transported 74 million passengers final 12 months.
The airline had greater than 340 planes in its fleet and practically 42,000 staff on its payroll, in response to its newer annual report. It reported a revenue of $190 million in 2019.
It mentioned the reorganization effort has the help of two distinguished shareholders — the Cueto household in Chile and Brazil’s Amaro household — in addition to Qatar Airways, which owns 10% of the corporate.
These three shareholders have agreed to supply as much as $900 million in financing as Latam makes its means via the chapter course of. It at present has $1.three billion readily available, it mentioned.
Latam reached a deal to promote a 20% stake to Delta Air Strains for $1.9 billion final 12 months. Its announcement Tuesday made no point out of the Atlanta-based airline.
Delta CEO Ed Bastian expressed confidence in Latam’s administration in an emailed assertion responding to questions.
“Airways globally have been devastated by the COVID-19 pandemic, for which no marketing strategy might have adequately ready. We stay firmly dedicated to our partnership with LATAM and consider that it’ll efficiently emerge a stronger airline and Delta associate for the long run,” Bastian mentioned.
He didn’t say whether or not Delta may present additional monetary help, and the corporate declined to remark additional. Copyright 2020 The Related Press. All rights reserved. This materials may not be printed, broadcast, rewritten or redistributed with out permission.