A US federal court has approved an extension of the filing date for LATAM’s restructuring plan to mid-September. The South American airline should present its restructuring plan by the end of June. On Monday, the federal court for the southern New York district extended that deadline to September 15.
LATAM is still going through bankruptcy proceedings
South America’s largest airline filed for bankruptcy protection in May 2020. At the time, LATAM CEO Roberto Alvo said that travel restrictions were causing the airline to run out of money, leaving LATAM with no choice but to protect itself from bankruptcy as it tried to deal with its finances and rising debt.
As part of the bankruptcy protection proceedings, LATAM should submit its restructuring plan to the federal court by June 30th. But at the beginning of last month the Chilean airline announced that it would seek an extension.
“The request for renewal is a common alternative that is being considered as part of the process and does not change the LATAM Group’s intention to leave Chapter 11 by the end of this year.” Simple Flying reported from a LATAM spokesperson.
LATAM will access additional funding in June
The trial on Monday confirmed the extension. LATAM remains confident of surviving the bankruptcy process safely and the airline flies all the time – albeit at a reduced level. LATAM’s passenger operations for June 2021 were estimated at 36% (measured in available seat kilometers) compared to the same month in 2019.
In June, LATAM estimated that it operated around 691 domestic and international flights a day, connecting 114 destinations in 14 countries. LATAM remains a major operator in Brazil, Chile, Colombia, Ecuador and Peru. However, the airline is leaving the Argentine market.
LATAM has also confirmed that it will have access to an additional $ 500 million in self-financing. This is the airline’s second withdrawal from the fund. Administrators made up to $ 2.45 billion available to LATAM as part of funding terms. So far, the airline had fetched $ 1.15 billion.
Citing health and travel restrictions imposed by the authorities in the various countries in which LATAM operates, LATAM informed regulators that an additional $ 500 million had been requested in June. LATAM expected the funds to be received within days of the request.
LATAM is confident that a stronger airline will emerge from the bankruptcy
Despite the three-month delay in submitting the restructuring plan, LATAM remains confident that it will be able to end the bankruptcy proceedings by the end of this year. LATAM CEO says his airline will become a stronger airline, better able to compete in the highly competitive South American aviation market.
“We trust that LATAM will emerge stronger from the crisis, with a cost structure that is unbeatable in the region.”
Roberto Alvo hopes that LATAM will fly between 60% and 80% of its capacity for 2019 by the end of 2021. He aims to return to 100% of capacity within two years.
Three of South America’s largest airlines are now operating under bankruptcy protection regulations. Colombia’s largest airline and Latin America’s second largest airline, Avianca, filed for bankruptcy protection in May 2020. Aeromexico followed suit a month later and applied for protection in June.
The rapid recourse to bankruptcy protection at the beginning of the global travel downturn in March 2019 highlighted the financial weakness of South America’s largest airlines. The radical intervention now imposed by the restructuring process will move the airlines into a better financial future.