LATAM Receives Flexibility With Returning Aircraft Including 787s And A350s

As LATAM moves on with bankruptcy, a court has ruled this week that LATAM can remove certain aircraft from its fleet. Regarding over 100 aircraft, the order provides the South American giant the possibility to withdraw the now-defunct Argentinian arm’s aircraft and remove a number of widebodies from the airline’s fleet, if it chooses. This flexibility could be just the thing the carrier needs to emerge the right size after bankruptcy.

The carrier could do away with its A350 fleet as a result of this order. Photo: Tom Boon – Simple Flying

The aircraft in question

In rulings from this week viewed by Simple Flying, the bankruptcy court has given LATAM flexibility in its future fleet options. At least five days before July 24th, LATAM will need to provide written notice to its lessors (or lessors to LATAM) about the removal of leased aircraft. If the carrier does not do so, the airline will be able to hold on to the planes for another 30 days on a rolling basis.

Included in this ruling are the following across the airline’s operations in Chile, Ecuador, and Brasil:

  • 9 Boeing 787-8s
  • 12 Boeing 787-9s
  • 21 Boeing 767-300ERs
  • 2 Boeing 767-300Fs
  • 3 Boeing 777-300ERs
  • 17 Airbus A319-100s
  • 31 Airbus A320-200s
  • 9 Airbus A321-200s
  • 7 Airbus A350-900s

This amounts to a total of 111 leased aircraft. Out of the airline’s 320 aircraft at the time of filing for bankruptcy, the carrier had 213 under finance leases with another 98 under operating leases. Some of those aircraft have already been removed.

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LATAM  does not need all the planes it had before it filed for bankruptcy. Photo: Getty Images

Does this mean LATAM will remove all of these aircraft?

Under bankruptcy, LATAM is working to restructure its operations and debts. Part of an airline bankruptcy also includes the ability to restructure its fleet and lease obligations. As for removing all of these aircraft from its fleet, it would make sense for some to go. Although, cutting 1/3 of the airline’s fleet would be a massive reduction and provide a bleak outlook for Latin American aviation.

Certain types of aircraft may be retired, however. The A350s make up a small number of LATAM’s fleet. With capacity for over 300 onboard those aircraft, there is not enough demand to justify that aircraft. In addition, earlier, some of these jets were on LATAM’s list to remove.

Already, the airline has transferred its order for 10 A350s to Delta and tried to offload four of them to the American carrier– which didn’t happen. It would thus not be surprising to see LATAM move forth with removing the A350s.

Even before the current crisis, LATAM sought to lessen its A350 commitments and fleet. Photo: Tom Boon – Simple Flying

As for the other aircraft, it is a mixed bag. With the LATAM Argentina arm being wound down, many of those aircraft are included in this motion. With excess capacity already across the carrier’s subsidiaries, these A320-200 aircraft will likely go.

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LATAM’s short-haul fleet is made up of A320 family aircraft. Photo: Getty Images

As for the Boeing 787s and 767s, LATAM still has unfilled orders for the Boeing 787-9. So, it is possible that some 787s could go away with the arrival of new ones, or else, the airline could maintain its 787 fleet and retire the 767-300ERs. The 787s are more fuel-efficient, although a little larger.

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The 787s are a significant part of the airline’s long-haul operations out of Chile. Photo: Getty Images.

The 767s serve some interesting routes– mostly out of Lima to cities like Mexico City, Barcelona, Los Angeles, and Miami, among others. On some of these routes, the 787 could take over with ease– especially if LATAM decides to reduce frequencies to Miami. However, some of these routes may not see a return due to the current crisis. It is worth noting that LATAM does have some of the youngest Boeing 767s out there.

Some 767s underwent retrofits recently. Photo: Getty Images

If LATAM is concerned with maintaining a competitive product on its fleet, then it could retain some of the aircraft that have undergone retrofits while retiring some of the others. Returning some aircraft that have undergone retrofits would mean sending some money down the drain, but it might be worth it in the long-run with cost savings.

Some aircraft will go. It would not make sense for LATAM to hang on to as many aircraft as it currently has, especially as the crisis shows no signs of abating in Latin America, and tourists remain wary about traveling to the continent.

LATAM recently shuttered its Argentina branch. Photo: Getty Images

Not the best news for lessors

For aircraft lessors, if LATAM chooses to return these planes, the market right now is not very hot. While it is expected to pick up in the future, it means lessors have to hold onto aircraft and store them for a little while. Or else, they would have to offer low prices to get some attention.

If the 767s head out, lessors could send them through an aircraft conversion process, and those planes could find a new life with booming cargo airlines, which are some of the only airlines ordering aircraft.

How many aircraft do you think LATAM will withdraw from its fleet? Which planes do you think LATAM should return, which should they keep? Let us know in the comments!