Marcelo Montecinos/The Santiago Times Staff
SANTIAGO – In a not-entirely unexpected move, LATAM Airlines, the largest airline in Latin America, declared bankruptcy in the United States today. This on the heels of the bankruptcy of the second largest airline in Latin America, Colombia’s Avianca, two weeks ago. Both companies are the latest victims of the SARS-CoV-2 pandemic.
Due a loss of 95% of its passenger business, LATAM had to fire 1400 workers on May 15, and an additional 450 a week later. Despite lowering their payroll, the company could not overcome burning through $7 million dollars on a daily basis and carrying a total of $18 billion in debt. According to analysts at JP Morgan, LATAM now has up to 18 months to reorganize its finances and come out of bankruptcy.
Bankruptcy filings were filed in Chile, Colombia, the U.S. and Ecuador, but not in Argentina, Brazil and Paraguay.
Roberto Alvo, LATAM’s CEO 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”
While LATAM is currently talking to the governments of Chile, Colombia and Peru about a partial bail-out, the picture doesn’t look too bright since Chile’s billionaire President Sebastian Piñera was a major shareholder of LATAM previous to running for the presidency. A bail-out would also hit a nerve with most Chileans since they see airline travelling as a privilege of the rich.
The company promised that reservations will not be affected as it will continue with its flights. It hopes to fulfill its commitments with its creditors, which include Banco Estado, Santander Chile, Scotiabank Chile, BTG Chile, Itaú CorpBanca, HBSC Chile and Dirección Aeronáutica Civil.
As of the writing of this article, LATAM was trading at $1,275 Pesos (1.68 USD), down 36% from the previous close.