Latam expects to leave bankruptcy protection in 2021
Latam Airlines, Latin America's largest airline, ends 2020 expecting a gradual improvement in flights and revenue and projects to come out of bankruptcy protection in the second half of the next year.
With a debt pile of almost $18 billion, the company that emerges from the brutal shrinkage of the air transport market caused by the coronavirus pandemic is much leaner, and cash reserves were reinforced after it borrowed $2.45 billion.
Latam is under bankruptcy protection in the US since May. In July, the Brazilian operation was included in the process.
"The $2.45 billion is the amount necessary for the company to operate until leaving the judicial recovery plan. Debts contracted by July 9 are frozen and will start to be paid after leaving the judicial recovery," Latam Brasil's CEO Jerome Cadier told Valor.
In addition, Mr. Cadier says that the company's reserves have been strengthened with the gradual recovery of sales of airline tickets. He says the expected exit from the bankruptcy protection in the second half of 2021 is in line with the initial estimate disclosed by the company, which was to end the process in 12 to 18 months.
On September 18, a US court approved Latam group's financing plan in the debtor in possession model, which gives creditors priority in receiving the amounts. The financing was established in two tranches.
Tranche A, of up to $1.3 billion, is led by Oaktree Capital Management, which has committed $1.1 billion, and Knighthead Capital will participate with $175 million. Tranche C includes $1.15 billion and is composed of $750 million committed by Qatar Airways and the Cueto and Eblen groups, plus $250 million from Knighthead Capital and $150 million from a fund managed by Toesca S.A. Administradora General de Fondos.
Latam's judicial recovery process includes debts of $18 billion. In addition to postponing the maturities of these debts, Mr. Cadier says, the company is negotiating new contracts with aircraft and engine leasing companies. "If the lessor does not want to discuss, we have the option to return the contracted aircraft. This is a crucial advantage, which Azul and Gol do not have. This puts more pressure on their cash reserves than ours," Mr. Cadier says.
Latam returned 14 planes of the 158 it operated in Brazil before the pandemic, and 40 aircraft are grounded. The company had 342 planes around the world, 25 of which have already been returned.
"We are negotiating with all lessors. There is the possibility...
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