The Chapter 11 petition allows Latam to keep operating while the Chilean carrier works out a plan to pay creditors and turn around the business. Latam, whose shareholders include Chile’s Cueto family and Delta Air Lines Inc., continues to operate on a reduced schedule, and it has commitments for a bankruptcy loan of up to $900 million.
The money is coming from shareholders including the Cuetos, the Amaro family and Qatar Airways, according to a company statement. Latam also has about $1.3 billion in cash on hand.
Airlines the world over — and those in Latin America in particular — have been hit hard by the coronavirus outbreak, which triggered travel bans and made people reluctant to fly. Avianca Holdings SA, the largest air carrier in Colombia, filed for Chapter 11 bankruptcy earlier in May, burdened by the sharp drop in fliers and its own onerous debt load.
Latam’s affiliates in Brazil, Paraguay and Argentina aren’t part of the bankruptcy case, which was filed in the Southern District of New York.