According to a statement released today by LATAM Airlines, the airline group has filed for Chapter 11 Bankruptcy. Airlines in South America are suffering in the face of Covid-19 travel restrictions. Avianca airlines, Colombia’s national carrier filed for Chapter 11 bankruptcy in May.
LATAM served 70 million passengers last year and has a fleet of over 300 aircraft with subsidiaries across South America. The airline has a long history in South America, tracing its roots back to LAN airlines founded in 1929.
LATAM will be able to keep operating under chapter 11 bankruptcy rules. The airline group will continue to operate passenger and cargo flights. LATAM said, ‘U.S Chapter 11 financial reorganisation process provides a clear and guided opportunity to work with our creditors and other stakeholders to reduce our debt [..] it is very different from the concept of bankruptcy in other countries and is not a liquidation proceeding’
Job cuts and the future
LATAM has made around 1900 employees redundant and has cut 95% of it’s flights. Roberto Alvo, the CEO of LATAM, said ‘We are looking ahead to a post-Covid 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’. There has been no government help for the airline so far, but discussions are taking place with governments in Chile, Brazil, Colombia and Peru for further government bailout help.
LATAM has provided South America with essential connectivity throughout its history. Chapter 11 allows LATAM airlines the breathing space to consolidate its debts, restructure and come back stronger.