LATAM Airlines and its subsidiaries in Chile, Peru, Colombia, Ecuador and the United States have filed for creditor protection under the U.S. Chapter 11 financial reorganization process.
Last April, the airline leader in Latin America , born from the merger of LAN in Chile and TAM in Brazil, had to resolve to reduce its flights by 95 per cent and suspend all of its international connections - 145 destinations in 26 country - due to the global COVID-19 pandemic.
A few weeks later, in May, LATAM announced the dismissal of 1,400 employees from its subsidiaries in Chile, Colombia, Ecuador and Peru.
Today, the air carrier begins " a process of reorganization" with the aim of "voluntary reorganization and restructuring of their debt" while enabling the company to transform its business to this new reality, reads a press release.
“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.”
Despite everything, LATAM says it wants to continue to actively prepare to welcome passengers again once the travel bans are lifted and demand increases:
"LATAM group is committed to preserving business continuity as it reorganizes – especially with respect to employees, customers, suppliers, commercial partners and local communities," the company said in a statement.
The airline has also received support from Cueto Group and Qatar Airways, its two main shareholders, which will commit $900 million in additional funding. Flights will continue without change.
Among the other commitments of LATAM:
- 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.
- Suppliers will be paid in a timely fashion for goods and services delivered from May 26th, 2020 forward and throughout this process.
- Travel agencies and other commercial partners will experience no disruption in their interactions with the LATAM group.
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