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July 17, 2024
But, let’s answer the question: how are Avianca, Aeromexico, and LATAM Chapters 11 going? 

Photo: Daniel Martinez Garbuno

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It’s been more than a year now since Avianca, Aeroméxico, and LATAM Airlines Group filed for bankruptcy in the United States. The three most important and historical carriers in Latin America have moved steadily forward and now see the iconic light at the end of the tunnel. But, let’s answer the question: how are Avianca, Aeromexico, and LATAM Chapters 11 going? 

First Avianca’s Chapter 11

Avianca was the first Latin American airline to start a Chapter 11 process due to the COVID pandemic. 

The airline has faced continuous losses; for example, in 2021’s first quarter, it posted a US$311 million net loss. Additionally, Avianca is still a long way from recovering its pre-pandemic traffic levels. According to data provided by the carrier, in 2021’s first quarter, it only carried 31% of the passengers it had in the same period in 2019. 

Avianca has also changed management, following the exit of the Dutchman Anko van der Werff, who went to SAS. 

Nevertheless, Avianca recently posted some good news. The carrier filed a motion, seeking approval of its exit debt financing. Avianca is looking for US$1.6 million to refinance its existing DIP obligations and provide approximately US$220 million in additional liquidity. 

Plus, Avianca continues its fleet consolidation plan. According to local reports, the company is planning to retire its ATR-72 fleet. 

Then, LATAM’s Chapter 11

LATAM Airlines Group’s Chapter 11 has been the most controversial one. The carrier is currently facing backlash from its creditors due to the Airbus A350 story with Delta Air Lines and Qatar Airways. 

Moreover, similarly to Avianca, LATAM’s traffic levels continue underperforming. In July, the South American giant operated at approximately 46% of its pre-pandemic capacity. LATAM is facing heavy travel restrictions in Chile, for instance. 

Nevertheless, Avianca received today authorization to extend its Filing Exclusivity Period to present and vote its reorganization plan until September 15 and November 8, respectively. 

In the meantime, LATAM continues to adjust its fleet. Following the A350 lease rejection, LATAM has a capacity gap to fill in its Brazilian long-haul fleet. Therefore, the airline is training its crews to operate the Chilean-registered Boeing 787 fleet.  

Finally, Aeromexico’s Chapter 11

In terms of passenger numbers, Aeromexico has had the best recovery among the three Latin American airlines. 

According to stats provided by the Mexican Government, Aeromexico is nearly 10% down in terms of domestic passengers; the international segment is more depressed due to travel restrictions but bouncing back quite strongly in the last few months. 

Nevertheless, financially Aeromexico continues to struggle, unable to compete with low-cost carriers. The airline posted a US$138 million net loss in 2021’s second quarter. 

Like LATAM, Aeromexico also has until September and November to present and vote its reorganization plan. 

Additionally, Delta will purchase US$185 million of Aeromexico’s debt, and a group of Mexican shareholders has the intention to participate in the new equity to be issued by Aeromexico. 

Final thoughts

So, to answer how are Avianca, Aeromexico, and LATAM Chapters 11 going, we could say they are going just fine. They’ve faced a few setbacks, as we’ve seen, but are on the right track to exit the bankruptcy process. 

Still, the three legacy airlines face tremendous pressure from the Latin American low-cost boom, with the likes of Volaris and Viva Aerobus in Mexico, Viva (former Viva Air) in Colombia, GOL, and Azul in Brazil consolidating as rivals.

author avatar
Daniel Martínez Garbuno
Daniel Martínez Garbuno is a Mexican journalist. He has specialized in the air industry working mainly for A21, a Mexican media outlet focused entirely on the aviation world. He has also published on other sites like Simple Flying, Roads & Kingdoms, Proceso, El Economista, Buzos de la Noticia, Contenido, and Notimex.

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