LATAM Airlines has become the latest airline to file for bankruptcy during the COVID-19 travel shutdown, as the company embarks on a reorganisation of the business.
The circumstances of the LATAM bankruptcy are similar to those of Virgin Australia as well as Avianca, one of South America’s other major airlines. The airline has filed for Chapter 11 bankruptcy in the United States, which allows the company to continue operating and prevents creditors from seizing assets while the business is restructured.
LATAM Airlines says that it plans to continue operations as normal, despite the bankruptcy, as soon as travel restrictions in South America are lifted and demand returns. It is currently operating just 5% of its usual flights due to COVID-19.
The LATAM Airlines Group is made up of various affiliates based in different countries. LATAM’s entities in Chile, Colombia, Peru, Ecuador and the United States are included in the bankruptcy filing. But LATAM’s affiliates in Brazil, Argentina and Paraguay are not subject to the bankruptcy proceedings.
“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,” LATAM Airlines CEO Roberto Alvo said.
LATAM says that current and future bookings will continue to be honoured, and that travel vouchers and frequent flyer miles & benefits are safe. LATAM also says that travel agencies and commercial partners will not experience any disruptions, and that they will continue to issue vouchers for cancelled flights. But many LATAM customers have had difficulty getting a refund for flights cancelled due to COVID-19; this is unlikely to make it easier for customers to access refunds.
LATAM Airlines has set up a dedicated website with information for customers, employees, partners and suppliers about the business reorganisation.
Join the discussion on the Australian Frequent Flyer forum: Which Airlines may be next to Fold?