LATAM announces reorganization to ensure its sustainability

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https://en.travel2latam.com/nota/60326-latam-announces-reorganization-to-ensure-its-sustainability
LATAM announces reorganization to ensure its sustainability
Tue May 26, 2020

"We entered in the COVID-19 crisis as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in demand" said Roberto Alvo, CEO of the company


LATAM Airlines Group S.A. ("LATAM") (NYSE: LTM; SP IPSA: LTM) and its subsidiaries in Chile, Peru, Colombia, Ecuador and the United States today began a voluntary process of reorganization and restructuring of their debt under the protection of US Chapter 11 with the support of the Cueto and Amaro families, and Qatar Airways, two of the group's largest shareholders. In light of the unprecedented impact that COVID-19 has generated in the global aviation industry, this reorganization process provides LATAM with an opportunity to work with the group's creditors, and other stakeholders, to reduce its debt and obtain new sources of financing, giving them the tools to transform the group according to this new reality.
The Chapter 11 financial reorganization process is a legal framework under which LATAM and its subsidiaries will be able to resize their operations and adapt them to the new demand environment and reorganize their financial balances, allowing them to re-emerge as more agile, resilient and sustainable businesses. LATAM and its subsidiaries will continue to fly throughout the process.
"LATAM entered the COVID-19 crisis as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in demand and have not only stopped global aviation and its revenues, but have switched to industry into the future, ”said Roberto Alvo, CEO of LATAM. “We have implemented a number of difficult measures to mitigate the impact of this unprecedented disruption across the industry. But, ultimately, this path represents the best option to lay the right foundation for the future of our airline group. We have our sights set on a post-COVID-19 future and we are focused on transforming the group to adapt it to a new way of flying, where the health and safety of our passengers and collaborators are the primary objectives. ”
The group has secured financial support from its shareholders, including the Cueto and Amaro families, who have a long-standing relationship with the group and Qatar Airways, who will inject $ 900 million in additional financing under a debtor-in-possession (DIP, Debtor in Possession). These partners have a deep understanding of the industry, the group and its operational challenges. Your support demonstrates your trust in LATAM, its subsidiaries and its long-term sustainability. To the extent permitted by law, the group is ready to welcome shareholders interested in participating in this process to provide additional financing. Additionally, at the time of the request, the group had approximately $ 1.3 billion available.
LATAM and its subsidiaries are also holding conversations with the respective governments of Chile, Brazil, Colombia and Peru to seek support to access additional financing, protect jobs, whenever possible, and minimize disruption to their operations. LATAM and its subsidiaries thank its shareholders, employees, creditors and the communities they serve for supporting the group to ensure a better long-term future. The group is confident that this process will bring together the various stakeholders, in order to build a new LATAM that is better positioned for the challenges of the coming years.
“Given the greatest crisis that has occurred in the history of aviation, and having analyzed all the alternatives available to ensure the sustainability of the group, the board of directors has approved this path to the future. Just as we have adapted to new realities that have emerged in the past, we trust that LATAM will be able to be successful in the post-COVID-19 context, continue serving Latin America and connecting the region with the world, "said Ignacio Cueto, President of the LATAM Board of Directors.
The group will continue to adapt and respond to the COVID-19 pandemic, and is actively preparing to welcome its customers once travel restrictions are lifted and demand rises, ensuring the highest standards of passenger safety and crew that characterize LATAM.

Will continue to serve Latin America
The LATAM group is committed to preserving the continuity of its business while reorganizing. Particularly with respect to employees, customers, suppliers, business partners and the local communities where it operates.
LATAM Airlines Group S.A. and its subsidiaries will continue to operate passenger and cargo flights, subject to the demand for their services and travel restrictions.
All current and future tickets will be honored, as well as travel vouchers, frequent flyer miles and benefits, and flexibility policies.
Group employees will continue to receive their wages and benefits, as stipulated in the terms of their labor agreements.
Suppliers will receive their payments on time and in form for all goods and services delivered from May 26, 2020 onwards and throughout this process.
Travel agencies and other business partners will not be affected or disrupted in their interaction with the LATAM group.

The right option to strengthen the group
The LATAM group has shared its journey with the people of Latin America, they have prospered in times of growth and overcome adversity stages together. Like many, LATAM and its affiliates began 2020 with hopes of further progress, which COVID-19 cut short. In 2019, they launched 26 new routes and carried a record 74 million passengers, 5.4 million more than in 2018. Among the group's plans for 2020 were: to further improve the passenger experience through cabin renovations. and strengthen its strategic alliances to continue connecting Latin America with the world. Although the group will change throughout the Chapter 11 process, its culture, commitment to clients, a shared history, and its Latin American identity will remain.
Having carefully considered all options, LATAM is confident that the reorganization process under Chapter 11 is the best way forward to meet the group's objectives, while allowing its fleet administration and debt management, which it is mostly found in the United States. It should be noted that this process is completely different from the concept of bankruptcy, bankruptcy or liquidation. LATAM avails itself of the special protection of this process to pay its employees, fulfill its obligations, pay critical suppliers and carry out any other normal operation of its business, while the group works with the Court and its creditors to resolve their case. The group's management team will continue to lead LATAM through this process of reorganization and transformation, under the protection of Chapter 11.
These unique provisions of the Chapter 11 reorganization process will allow the group to minimize business disruption and protect stakeholder interests, while restructuring its financial balance to re-emerge as a more agile, resilient and sustainable group of airlines.
Although most of LATAM's subsidiaries are included in the reorganization process, some are not part of it due to the nature of its debt structure and its current financial situation. A complete listing of the entities included in the reorganization request is available at cases.primeclerk.com/LATAM. The following list summarizes the inclusion of these entities in the financial reorganization process under Chapter 11 and other procedures.

Entities included in the request:
Chile: LATAM Airlines Group S.A. and some other entities incorporated in Chile are included in the Chapter 11 request. They will also request a recognition process in Chilean courts to ensure that the process under Chapter 11 is duly accredited and implemented, which will provide even greater protection to the businesses of LATAM.

Colombia: LATAM Airlines Colombia and other entities incorporated in Colombia are included in the Chapter 11 request. They will also request a recognition process before the Colombian Superintendency of Companies to ensure that the process under Chapter 11 is duly accredited and implemented, which It will provide even more protection to LATAM's businesses.

Peru: LATAM Airlines Peru and other entities incorporated in Peru are included in the Chapter 11 request and will also be filing a request for a "Preventive Reorganization Process" with INDECOPI, to ensure that these businesses are even more protected from any action. adverse on the part of the creditors.

Ecuador: LATAM Airlines Ecuador is included in the Chapter 11 application.

United States: Group operating entities incorporated in the United States, excluding the LATAM group's special purpose vehicles, are included in the Chapter 11 application.

Entities not included in the application:

Argentina, Brazil and Paraguay: LATAM entities in Argentina, Brazil and Paraguay are not included in the Chapter 11 request. LATAM entities in Brazil are continuing discussions with the Brazilian government regarding the next steps, seeking financial support for the group operations in Brazil.

It is important to emphasize that, regardless of whether they are included in the application or not, all the companies in the group will continue to operate as far as travel and demand restrictions allow.

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