A United States Federal Court has approved extending the submission date of LATAM’s restructuring plan to mid-September. The South American airline was due to present its restructuring plan by the end of June. On Monday, the Federal Court from the southern district of New York extended that deadline to September 15.
LATAM still flying through the bankruptcy process
South America’s largest airline filed for bankruptcy protection in May 2020. At the time, LATAM’s CEO Roberto Alvo said travel restrictions created a cash crunch at the airline, leaving LATAM with no option but bankruptcy protection as it sought to deal with its finances and burgeoning debt.
As part of the bankruptcy protection process, LATAM was due to present its restructuring plan to the Federal Court by June 30. But earlier last month, the Chile-based airline indicated it would seek an extension.
“The extension request is a common alternative contemplated within the process and does not modify the intention of the LATAM group to exit Chapter 11 by the end of this year,” Simple Flying reported a LATAM spokesperson saying.
LATAM accesses additional funding in June
Monday’s court hearing confirmed the extension. LATAM remains confident it will safely emerge from the bankruptcy process, and the airline has remained flying throughout – albeit at a reduced level. LATAM’s passenger operation for June 2021 was estimated to reach 36% (measured in available seats-kilometers) relative to the same month in 2019.
In June, LATAM estimated operating approximately 691 daily domestic and international flights, connecting 114 destinations across 14 countries. LATAM remains a significant operator in Brazil, Chile, Colombia, Ecuador, and Peru. However, the airline is exiting the Argentinian market.
LATAM has also confirmed it was accessing a further US$500 million from debtor-in-possession funding. This is the airline’s second withdrawal from the fund. Administrators made up to US$2.45 billion available to LATAM under the funding provisions. To date, the airline had accessed $1.15 billion.
Citing health and travel restrictions imposed by the authorities in the different countries where the LATAM operates, LATAM told regulators a request for a further $500 million was made in June. LATAM expected receipt of the monies within days of the request.
LATAM confident it will emerge from bankruptcy a stronger airline
Despite the three-month delay in presenting its restructuring plan, LATAM remains confident it will exit the bankruptcy process by the end of this year. LATAM’s CEO says his airline will emerge a stronger airline better able to compete in the cutthroat South American aviation market.
“We trust LATAM will exit the crisis strengthened, with an unbeatable cost structure in the region.”
Roberto Alvo hopes to have LATAM flying between 60% and 80% of its 2019 capacity by the end of 2021. He is eyeing returning to 100% capacity within two years.
Three of South America’s biggest airlines are now flying under bankruptcy protection provisions. Colombia’s largest carrier and Latin America’s second-largest airline, Avianca, filed for bankruptcy protection in May 2020. Aeromexico followed suit a month later, filing for protection in June.
The speedy recourse to bankruptcy protection at the beginning of the worldwide travel downturn in March 2019 highlighted the financial weakness behind South America’s biggest airlines. The radical surgery now imposed by the restructuring process will put the airlines in a better future financial position.