LATAM Airlines Files Chapter 11 Bankruptcy

Latin America's largest airline, LATAM Airlines sought bankruptcy court protection in New York after travel restrictions grounded flights across the region.
LATAM Airlines Files Chapter 11 Bankruptcy
LATAM Airlines Files Chapter 11 Bankruptcy Photo: Simple Flying

LATAM Airlines said on Tuesday that it has filed for Chapter 11 bankruptcy protection in the U.S. The Chapter 11 allows the airline to continue operating flights.


This bankruptcy proceeding will protect LATAM's creditors and also allow the company to reorganize. It will also provide more time to pay its debt or sell parts of its business.

However, LATAM's subsidiaries in Brazil, Paraguay and Argentina aren't included in the bankruptcy case, which was filed in the Southern District of New York.

LATAM Airlines Files Chapter 11 Bankruptcy
This does not include its branch in other countries Photo: Getty


The Santiago-based airline said it secured funding from shareholders, including Chile's Cueto along with Amaro families and Qatar Airways, to provide bankruptcy loan of up to $900 million.

Currently, LATAM also has around $1.3 billion in cash on hand, according to the company.

Airlines from around the globe have been hit hard by the global outbreak of the corona virus pandemic. Due to this, governments have triggered travel restrictions. 

LATAM Airlines Files Chapter 11 Bankruptcy
LATAM has more than $7 billion inn debt Photo: Airbus


This will definitely impact the aviation industry widely, with Santiago-based LATAM serving more than 70 million passengers a year operating a fleet of over 300 aircraft. The airline also has more than $7 billion in debt.

Recently, LATAM eliminated more than 1,850 jobs in Chile, Colombia, Ecuador and Peru from its strong workforce of around 40,000 employees. Around 95% of its passenger operations are grounded.

LATAM Airlines Files Chapter 11 Bankruptcy
LATAM has eliminated employees recently Photo: LATAM


In a statement, LATAM Chief Executive Officer Roberto Alvo said:

"Exceptional circumstances have led to a collapse in global demand and has not only brought aviation 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."

Recently, U.S. President Donald Trump ordered to restrict non-U.S. citizens arriving from Brazil to control the spread of the corona virus. 

LATAM Airlines Files Chapter 11 Bankruptcy
Recently, Avianca also filed for bankruptcy Photo: Reuters


Few weeks ago, Latin America's second-largest airline Aviance Holdings, the parent company of Avianca has filed for bankruptcy on Sunday, after failing to receive any deadline for bond payment.

Since, global air traffic has fallen by 90%, the International Air Transport Association (IATA) has predicted that Latin American Airlines will lose $15 billion in revenues this year.

What do you think about LATAM's future? Feel free to share your thoughts in the comments below:


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