LATAM, the largest airline in Latin America, filed for bankruptcy in the United States on Tuesday, due to the drastic drop in activity caused by the new coronavirus pandemic, the company announced in a statement.
“On May 26, 2020, the LATAM Airlines Group filed to reorganize under the protection of Chapter 11” of the US bankruptcy law, the Latam statement said.
The company’s decision, which includes subsidiaries in Chile, Peru, Ecuador and Colombia, will not have an immediate impact on passenger or cargo flights, the statement clarified.
Before the pandemic, LATAM flew to 145 destinations in 26 countries and made around 1,400 daily flights.
This is a new blow to the commercial aviation sector severely hit by the new coronavirus pandemic, which has caused the closure of borders and the confinement of billions of people.
“Given the impact that the crisis generated by covid-19 has had on the aviation industry, LATAM has been forced to make a series of extremely difficult decisions in recent months,” said company CEO Roberto Alvo. , in a video.
“LATAM Airlines Group and its subsidiaries in Chile, Peru, Ecuador and Colombia entered into a voluntary reorganization under the protection of Chapter 11 in the United States,” said Alvo.
Chapter 11 allows a company that is unable to pay its debts to restructure without pressure from creditors.
Last month, the Chilean-Brazilian company said it had reduced its operations by 95% due to the global health crisis and in early May announced hundreds of layoffs.
“The United States Chapter 11 financial reorganization process offers a clear and guided opportunity to work with our creditors and other stakeholders to reduce our debt,” the company president said in the statement.
It also allows “addressing the business challenges that we, like others in our industry, face,” added Alvo.
– The case of Avianca –
Latam’s announcement comes two weeks after Colombia’s Avianca, the second largest airline in Latin America, also requested to file for bankruptcy in the United States to reorganize its debt “due to the unpredictable impact of the pandemic” on its business.
According to the International Air Transport Association (IATA), Latin American airlines will lose $ 15 billion in revenue this year, in the worst crisis in the sector’s history.
On Friday, the head of emergency situations of the World Health Organization (WHO), Michael Ryan, said that the region became “a new epicenter of the disease”, in particular Brazil, the sixth country in the world with the most died from the coronavirus (23,473) and the second with the most confirmed cases (374,898), only behind the United States.
In total, Latin America and the Caribbean register some 41,000 deaths from the pandemic, with some 766,000 reported cases, according to an AFP count based on official figures.
bur-kaf / amj / zm-mar
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