South American carrier LATAM Airlines has filed for US Chapter 11 bankruptcy protection.
It has become the world’s largest carrier so far to seek an emergency reorganisation due to the coronavirus pandemic.
LATAM laid off 1,800 employees out of more than 40,000 in total in the lead up to the bankruptcy filing.
The Chapter 11 filing has the support of the Cueto and Amaro families and Qatar Airways, two of the largest shareholders of LATAM, which have provided up to $900 million id debt financing.
The airline 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
“Travel agencies and other commercial partners will experience no disruption in their interactions with the LATAM group,” the carrier said.
The airline’s chef executive Roberto Alvo said: “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.
“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.”
Delta Air Lines paid $1.9 billion for a 20% stake in LATAM last year, becoming the second largest shareholder in the company.
Chief executive Ed Bastian said: “We remain firmly committed to our partnership with LATAM and believe that it will successfully emerge a stronger airline and Delta partner for the long term.”
LATAM chairman Ignacio Cueto said: “Faced with the biggest crisis in the history of aviation, the board has approved this path forward having analysed 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.”
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