LATAM Airlines is on track to exit Chapter 11

LATAM Airlines continues to advance in the process to exit the Chapter 11 process that it has been subjected to since 2020. Under its Reorganization Plan, LATAM proceeded to disclose protected information.

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In compliance with the above, LATAM Group informed that it updated its September 9, 2021 business plan. Specifically, the airline modified its 5-year financial projections and adjusted them to the new global macroeconomic context.

Among the highlights, the updated business plan reports an improvement in its cost structure. The group updated its cost savings estimate from US$900 million to more than US$1 billion annually. At the same time, the group implemented structural transformations. Among others, it is renegotiating its fleet, improving its relative costs, strengthening its network, and reducing its debt by approximately 36% compared to pre-pandemic levels.

Related content: LATAM secures financing to exit Chapter 11

In addition, the plan foresees that by the end of 2022 demand in the subsidiaries’ domestic markets will have recovered to 2019 levels. In relation to international traffic, LATAM estimates that the recovery will be slower, reaching 2019 levels by mid-2023. The airline notes that its international operations accounted for approximately 45% of 2019 revenues. Finally, regarding income, the plan aims for the group to surpass 2019 levels only in 2024, when it estimates profits close to US$11.5 billion.

The CEO of LATAM Airlines Group, Roberto Alvo, said about the new plan: «This roadmap shows how LATAM Group is better prepared to face future challenges. By exiting Chapter 11, LATAM will have a more competitive and flexible cost structure, a more complete offer, and a more sustainable operation».

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On June 18, the Bankruptcy Court for the Southern District of New York accepted the group’s reorganization plan to exit the Chapter 11 process, which is expected to occur in the last quarter of this year.