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April 19, 2024
LATAM Emerges From Chapter 11

Photo: Daniel Martínez.

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On November 3, 2022, LATAM Airlines Group emerged from Chapter 11 bankruptcy protection. The airline spent two and half years reorganizing, downsizing costs and debt, and overall improving the company’s bottom line for years to come. 

LATAM emerges from bankruptcy protection

Yesterday marked a significant milestone for LATAM and its stakeholders, said Roberto Alvo, CEO of LATAM Airlines Group. The COVID-19 pandemic allowed LATAM to use the crisis in its favor, he added, and the airline was able to become leaner, faster, stronger, ready to compete, and ready to be better. 

LATAM voluntarily commenced a financial restructuring process in the United States in May 2020 to reduce its debt, access new sources of financing, and transform its business in response to the global pandemic. Having maintained its leading position while achieving significant cost savings, LATAM has emerged from the reorganization as a more efficient group, with a modernized fleet, the most extensive network of connections in South America, and the continent’s most extensive loyalty program.

The financial results

LATAM Airlines emerged with over US$2.2 billion of liquidity and approximately US$3.6 billion less debt on its balance sheet (equivalent to a 35% debt reduction from the pre-filing period). 

On November 15, 2022, LATAM will hold an Extraordinary Shareholders’ Meeting to renew the company’s Board of Directors, inform shareholders about the exit of the Chapter 11 procedure and the implementation of the Reorganization Plan, and resolve other matters such as the remuneration of the Board of Directors, said LATAM in a Form 6-K. 

Looking forward

Roberto Alvo added, 

“We are pleased that we have completed a significant transformation and emerged from our financial restructuring process with a strengthened financial position and a renewed commitment to operational excellence. As a group with a dynamic team of 30,000 employees and an unrivaled connectivity network, we look forward to continuing to offer passengers the best alternative for travel to, from, and within South America and to contribute in the broader sense to the various countries in which we operate and their diverse interests.”

As of October 2022, LATAM reached 144 destinations in 22 countries. It is expected to close the year with a global operation footprint (measured in Available Seat Kilometers, ASKs) of more than 85% compared to 2019. Next year it will launch 36 new routes. 

Meanwhile, LATAM Cargo and the cargo subsidiaries are in the midst of an expansion plan that will allow them to increase their respective fleets from 11 Boeing 767-300F aircraft in 2019 to a total of up to 20 767-300F planes in 2024. 

In terms of the commercial passenger fleet, LATAM entered into agreements with Airbus to acquire by 2029 a total of 87 A320neo family aircraft, which are 20% more fuel efficient. 

Finally, LATAM is implementing a joint venture agreement with Delta Air Lines, which will enable the airlines to increase their level of cooperation across the Americas, resulting in a greater number of routes, more and better connections, and the strengthening of frequent flyer program benefits.

LATAM Airlines has not yet published its 2022 third quarter results. 

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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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