LATAM’s Investors Seeks $1.5 Billion Loan

A group of investors at LATAM Airlines Group is looking to get a loan of up to $1.5 billion to help the troubled airline. As we know, last month, LATAM filed for Chapter 11 bankruptcy protection in the US, and is in the process of restructuring. Let’s investigate further. 

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LATAM is looking for a loan of up to $1.5 billion. Photo: Getty Images

Which investors are involved?

According to Reuters, the group of investors includes Blackrock Inc, Macquarie, HSBC Bank, and the Chilean company Moneda Asset Management. This group is looking for a loan between $1 billion and 1.5 billion. 

This amount would sum up to the additional financing promised by Qatar Airways and Grupo Cueto. When LATAM filed for Chapter 11, the carrier said that Grupo Cueto and Qatar Airways, two of the most prominent investors, had agreed to provide $900 million in funding. Meanwhile, LATAM said the goal was to obtain up to $2.5 billion to support South American operations.

Additionally, Delta agreed to pay $62 million in penalties after it declined to purchase four A350s from LATAM.   

All LATAM branches, except for those in Brazil, Argentina, and Paraguay, are currently in the Chapter 11 filing in the US. While the future of LATAM Argentina and LATAM Paraguay is presently unknown, LATAM Brazil is out of the filing because it is looking for assistance

LATAM Brazil
LATAM Brazil, LATAM Argentina, and LATAM Paraguay are not part of the filing for Chapter 11 bankruptcy. Photo: Getty Images

What is going on with LATAM lately?

Even though South America has grounded most air travel in the region, LATAM has been in the news a lot. From a collision with a cart in Sao Paulo to the announcement that it will get rid of 19 aircraft

This week, LATAM Brazil and Delta Air Lines filed their joint venture agreement to the antimonopoly regulator in Brazil. 

For Jerome Cadier, LATAM Brazil’s CEO, this alliance will allow the carrier to become a healthier, more agile, and competitive company. He added, 

“The process represents a first step towards the approval of the agreement that was recently signed. Once the necessary authorizations are obtained, Delta and LATAM will connect its routes between North and South America,” he said. Nevertheless, there’s no possible date of approval at the moment. 

Meanwhile, there’s still uncertainty as to what will happen with LATAM Argentina. The industry is worried about the future of the Argentinian carriers. 

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LATAM Argentina had over $260 million in losses between 2018 and 2019. Photo: Getty Images

What will happen with LATAM Argentina?

LATAM Argentina is not in the filing for Chapter 11 bankruptcy. One could say, LATAM Argentina has no one to ask for help. 

Argentinian journalist Diego Cabot recently wrote about this, saying that the skies in Argentina are turning blue and white – referring to the colors of Aerolíneas Argentinas. He added, 

“Aerolíneas is about to erase the red of Austral. It will do it by the end of the year when both airlines mix. The yellow of Flybondi is in emergency mode, and both JetSmart and LATAM are in real doubt right now.”

Currently, Argentina is banning all international operations until September. Meanwhile, the domestic flights might come back in the third week of July, but there’s a catch: Buenos Aires will have just one airport, Ezeiza International, and that’s the central hub of Aerolíneas. 

In the last few years, LATAM Argentina has had terrible financial results. In 2018, it lost $132 million, and in 2019 it lost a further $133.4 million. For 2020, before coronavirus, the airline expected to have another year of losses.

With the worst crisis in the air industry’s history, the red numbers will be even more significant. Meanwhile, LATAM Brazil earned $356 million in 2018 and $185.7 million in 2019. As Diego Cabot added, when the time comes, “there’s so much doubt as to which branch will be the priority to save in this emergency.”

What do you think about the future of LATAM Argentina? Let us know in the comments.