South American mega-carrier LATAM, which recently left oneworld and entered a joint venture with Delta, has filed for Chapter 11 bankruptcy in the Southern District of New York. This follows a similar move by Avianca.
The bankruptcy filing includes LATAM Chile, Peru, Ecauador and Columbia but does not include Brazil, Argentina or Paraguay. Debtor-in-possession financing totaling $900 million is provided by existing owners the Amaro and Cueto families and by 10% owner Qatar Airways. The carrier is currently in talks with the governments of Argentina, Brazil, Chile and Peru about potential subsidies.
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There’s no mention of Delta’s role in the announcement. Delta isn’t in a position to provide debtor-in-possession financing or otherwise protect its position during the bankruptcy restructuring unless perhaps there’s a debt component to its assumption of 10 Airbus A350 delivery positions it took over in April. Update: Delta will pay $61 million to cancel its purchase of 4 A350s LATAM already has possession of, and LATAM will re-affirm its joint venture with the U.S. carrier.
The carrier, which is the largest in South America, will continue to fly through its Chapter 11 proceedings. I would expect it to restructure successfully and exit bankruptcy. I do not have concerns over the safety of LATAM Pass miles. They promise “you will see no changes to our frequent flyer program or change in your frequent flyer status during this time.”