- The company has laid off 1,850 employees in Chile, Colombia, Ecuador and Peru in recent weeks after cutting 95% of its flights;
- Negotiations on additional funding and support are ongoing with the governments of Chile, Brazil, Colombia and Peru.
Latam Group, the largest air carrier in Latin America, filed for bankruptcy in a New York court while invoking the so-called Chapter 11 (Chapter 11), by which it seeks protection from the Justice while looking for ways to pay creditors and return to normal operations. By doing so, Latam has become the biggest airline company in the world to look for emergency financial reorganization amid the coronavirus crisis, according to Reuters.
Latam’s affiliates in Brazil, Argentina and Paraguay are not included on the initial bankruptcy filing.
Air carriers around the world – and those in Latin America in particular – were hit hard by the coronavirus outbreak, which triggered travel bans and made people afraid to fly.
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Latam’s bankruptcy filing follows Colombia’s Avianca, the second largest airline in the region, which sought bankruptcy protection weeks ago. Unlike Avianca, which was facing financial troubles before the pandemic, Chile-based Latam has been posting profits for four consecutive years totaling more than $700 million.
Latam has been carrying more than 70 million passengers a year on more than 300 aircraft. The company has laid off more than 1,850 employees in Chile, Colombia, Ecuador and Peru in recent weeks – its global workforce has around 40,000 people – after cutting 95% of its flights.
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Latam listed assets of $21 billion and total liabilities of nearly $18 billion in its filiong. To date, Latam has not had access to government rescue packages designed to help offset problems related to the pandemic. Negotiations are ongoing with the governments of Chile, Brazil, Colombia and Peru on additional funding and support, the airline said.
Origins from merger
Brazil accounts for about a third of Latam’s revenue in Latin America. Latam has its roots from the merger of Chile’s Lan and Brazil’s TAM, in 2012. “We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option,” CEO Roberto Alvo said in a statement regarding the filing.