LATAM Wants To Add 5 Boeing 787 Dreamliners To Its Fleet

LATAM Airlines Group has received authorization from the US Bankruptcy Court to enter into lease agreements for five Boeing 787 Dreamliner aircraft. These planes will allow the South American airline to have more flexibility to manage its fleet after its Chapter 11 process. Let’s investigate further.

What do we know?

LATAM has entered into agreements with Avolon Aerospace Leasing and Orix Aviation to lease five Boeing 787-9 Dreamliners. Avolon will lease three aircraft with serial numbers (MSN) 38891, 38893, and 38895. Meanwhile, Orix will rent two planes with MSNs 63316 and 63321.

All five planes previously operated with Norwegian Air, according to data by ch-aviation. They are between 2.39 and 4.31 years old and have a market value between US$88.7 million and US$99.2 million, according to valuations made by Collateral Verifications LLC.

We still don’t know when these aircraft will enter into service with LATAM. The Avolon Dreamliners are parked at San Bernardino International airport in California; Orix Aviation’s planes are in Arizona and Norway.

LATAM LA — The airline is adding former Norwegian 787s. Photo: Vincenzo Pace | Simple Flying

Downsizing orders while finding new leases

Recently, LATAM Airlines Group and Boeing announced an agreement to reduce the standing order for six B787 Dreamliners to just a couple. This negotiation was part of LATAM’s Chapter 11 process, which has led the airline to downsize its fleet by rejecting the leasing contracts of many aircraft, including four Dreamliners and the entire fleet of Airbus A350 planes.

The other two Latin American airlines in Chapter 11, Grupo Aeromexico and Avianca, have made similar moves. They also have rejected leasing contracts, and the Mexican operator downsized its Boeing 737 MAX order with Boeing.

Despite freeing up some capital by reducing their orders for new planes, both Aeromexico and LATAM have recently announced their intention to increase the size of their fleets. They have followed different paths (though with some similarities).

For instance, Aeromexico reduced its order for 54 Boeing 737 MAX to 24 B737 aircraft (20 MAXs and four 737-800s) and four B787 Dreamliners. Then, it announced an agreement with Dubai Aerospace to lease 12 additional MAX aircraft.

Meanwhile, LATAM reduced its order with Boeing and agreed with Avolon and Orix Aviation to lease new Dreamliners. Additionally, LATAM agreed with Airbus to purchase 28 additional A320 aircraft.

Up to four LATAM Boeing 787 Dreamliners will operate in Brazil. Photo: Vincenzo Pace | Simple Flying

Why are the airlines doing this?

LATAM Airlines Group explained its strategy of downsizing its fleet and orders while looking for new leases. It explained,

“Since the Petition Date, the Debtors have focused on the rightsizing of their fleet obligations. Such efforts have included seeking the rejection and return of certain aircraft that the Debtors have determined are no longer necessary and are uneconomical [...]. In parallel with these rejection efforts, LATAM has sought proposals and engaged with aircraft lessors regarding both existing lease arrangements and new lease arrangements.”

The new Boeing 787-9 aircraft have significantly lower costs. For instance, LATAM came to an agreement with the lessors to pay by the hour the use of these planes.

The new lease agreements include "among other things, a favorable power by the hour-based rent for an established period and a rent lower than previously paid under the terms of similar lease agreements. As such, the New Lease Agreements will result in considerable savings," said LATAM.