LATAM announces reorganisation through DIP financing

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LATAM Airlines Group S.A. and its affiliates in Chile, Peru, Colombia, Ecuador and the United States today initiated a voluntary reorganisation and restructuring of their debt under Chapter 11 protection in the United States with the support of the Cueto and Amaro families and Qatar Airways, two of the largest shareholders of LATAM.
   
The group has secured the financial support of shareholders, including the Cueto and Amaro families and Qatar Airways, to provide up to $900 million in debtor-in-possession (DIP) financing. To the extent permitted by law, the group would welcome other shareholders interested in participating in this process to provide additional financing. In addition, as of the filing, the group had approximately USD$1.3 billion in cash on hand.

The Chapter 11 financial reorganisation process is a proven legal framework under which LATAM and said affiliates will have the opportunity to resize their operations to the new demand environment and reorganise their balance sheets, enabling them to emerge more agile, resilient and sustainable. LATAM and its affiliates will continue flying as conditions permit throughout the process.

“LATAM entered the COVID-19 pandemic as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future,” said Roberto Alvo, chief executive officer of LATAM. “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 to lay the right foundation for the future of our airline group. We are looking ahead to a post-COVID-19 future and are focused on transforming our group to adapt to a new and evolving way of flying, with the health and safety of our passengers and employees being paramount.”

LATAM and its affiliates are also in discussions with their respective governments of Chile, Brazil, Colombia and Peru to assist in sourcing additional financing, protect jobs where possible and minimise disruption to its operations.

“Faced with the biggest crisis in the history of aviation, the Board has approved this path forward having analyzed all the available alternatives to ensure the sustainability of the group. As we have adapted to new realities in the past, we are confident that LATAM will be able to succeed in the post-COVID-19 context and continue to serve Latin America, connecting the region with the world,” said Ignacio Cueto, Chairman of LATAM’s Board of Directors.

LATAM Airlines Group S.A. and its affiliates will continue to operate passenger and cargo flights, subject to demand and travel restrictions. All current and future tickets, travel vouchers and frequent flyer miles and benefits, as well as flexibility policies, will be honored. The group’s employees will continue to be paid and receive benefits as provided in their employment agreements. The group has also announced that the suppliers will be paid in a timely fashion for goods and services delivered from May 26, 2020 forward and throughout this process.

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