Latin America’s largest airline files for bankruptcy in the US: LATAM becomes latest victim of slump in air travel during coronavirus pandemic

• LATAM has filed for bankruptcy protection after impact of the coronavirus crisis
• Firm had already reduced operations by 95 per cent and cut thousands of jobs 
• The airline will continue to fly and some affiliates have not filed for bankruptcy 
• Here’s how to help people impacted by Covid-19

Latin America’s largest airline LATAM has filed for bankruptcy in the United States following a slump in business caused by the coronavirus pandemic. 

LATAM is the latest corporate victim of the health crisis which has brought air travel to a virtual standstill around the world. 

‘We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option,’ LATAM Chief Executive Officer Roberto Alvo said in a statement. 

The airline will continue to fly while it is in bankruptcy protection and its affiliates in Argentina, Brazil and Paraguay were not included in the so-called Chapter 11 filing. 

A LATAM plane sits at Melbourne International Airport in Australia last month, during a slump in air travel which has forced the company to file for bankruptcy 

US carrier Delta Air Lines Inc is the biggest shareholder in LATAM, having last year paid $1.9billion for a 20 per cent stake during better times for the industry.

LATAM said it had secured funding from other major shareholders, including the Cueto and Amaro families and Qatar Airways, to provide up to $900million.

The company’s affiliates in Chile, Peru, Colombia, Ecuador and the US have joined in the bankruptcy filing, the company said today. 

Chapter 11 proceedings allow a company that is no longer able to repay its debt to restructure without pressure from creditors. 

‘To the extent permitted by law, the group would welcome other shareholders interested in participating in this process to provide additional financing,’ the airline said, adding it had about $1.3 billion in cash on hand. 

Last month, the Chilean-Brazilian airline said it was scaling back its operations by 95 percent in response to the global health crisis. It also announced hundreds of job cuts earlier in May. 

The airline said there would be no immediate impact on passenger or cargo flights. 

The firm joins Colombia’s Avianca Holdings SA and Australia’s Virgin Australia Holdings Ltd in bankruptcy protection as it seeks to restructure its debt.

The International Air Transport Association has forecast a $15billion loss in revenue for Latin American airlines this year.

Before the pandemic, LATAM – a merger of Chile’s LAN and Brazil’s TAM – flew to 145 destinations in 26 countries, operating around 1,400 flights a day.

On Friday the World Health Organization declared Latin America ‘a new epicenter’ of the coronavirus pandemic, as cases surge across the continent. 

The surge has been most  prominent in Brazil, which now has the second highest number of confirmed Covid-19 cases after the US.

Latin America and the Caribbean have reported more than 41,000 virus deaths and over 766,000 total cases.  

A LATAM jet flies over Brazil, which is now seeing a surge in coronavirus cases – contributing further to the slump in air travel 

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