LATAM Airlines secures $1.3 funding boost to aid Chapter 11 restructure

23/07/2020

Carrier awaits court approval on additional financing and files for protection for its Brazil business as Covid-19 bites

LATAM Airlines Group has announced a $1.3billion funding injection as part of its debt restructuring process under Chapter 11 bankruptcy protection in the US Courts.

The move came as LATAM Airlines announced that it had added its Brazil business operation to the Chapter 11 voluntary reorganisation process.

The additional funding from Oaktree Capital Management and its affiliates combined with a $900m boost raised in May meant the Latin region’s largest airline was primed to meet the financial challenges of Covid-19, the group said.

Roberto Alvo, CEO of LATAM Airlines Group said: “Today, LATAM has taken a significant step in ensuring its operational continuity by securing the commitment of Oaktree Capital Management and its affiliates for the total financing of Tranche A. We hope that, together with Tranche C, it will be approved by the court in the coming weeks.”

Tranche C corresponds to the $900m raised earlier this year from shareholders at Qatar Airways and the Cueto/Amaro families (part owners of LATAM Airlines Group).

Alvo added: "The support of two of our principal shareholders has been essential, sparking an interest and commitment from investors that we did not have a month ago. This show of confidence in the group's future has enabled us to secure all the resources that are required to continue operating during the crisis and as demand recovers, to successfully complete the Chapter 11 process.”

The additional funding meant LATAM Airlines would not be dependent on government aid in the region to ride out the pandemic, the carrier stated. However, LATAM Airlines Brazil will continue negotiations with Brazil’s National Bank for Economic and Social Development, the group added.

The decision to enter LATAM Airline Brazil for Chapter 11 offered the most effective route to raise the necessary financing to meet the challenges created by the coronavirus pandemic while maintaining operations, LATAM Airlines Group said.