Latam Airlines presents restructuring plan to exit bankruptcy

This Friday (26) ended the deadline for Latam to present a restructuring plan for its debt of 18 US$ billion. Latam Airlines is the holding that controls Latam Brasil and is headquartered in Chile.

The company entered chapter 11 – or chapter 11 – in May of last year, in US courts.

The process is very similar to the judicial recovery plan known in Brazil: when an indebted company enters chapter 11, it gains special conditions to negotiate its debts with creditors. It is an attempt to recover the company to prevent it from going bankrupt.

Attorney Felipe Bonsenso, a specialist in aeronautical law, explains that, by delivering the plan on Friday, Latam continues to fulfill the commitments provided for by chapter 11, reducing the chance of purchase offers.

It is noteworthy that Azul is the main company interested in buying Latam today.

With the current managers following the company’s recovery plan, there is no reason for creditors not to follow the prescribed rite and accept an outside proposal, according to Bonsenso.

The specialist also said that, with the plan presentation, Latam gains momentum with creditors and takes an important step towards its recovery, even in a very uncertain scenario and with this new variant of Covid-19 emerging.

For André Castelini, from the consulting firm Bain & Company, the market gains with TAM remaining independent and with a merger with Azul becoming more distant.

That’s because competition is greater with three major players in the market: TEM, Azul and Gol, he explains. Castelini also says that, despite chapter 11, Latam Brasil has sustained a good stopover here, good routes, so it is good for consumers that it follows the market.

But he considers that, if Latam had not been operating well, the purchase by Azul could be a solution for the company to become more efficient. He recalls that, in the years 2000 to 2010, the country experienced a duopoly between TAM and Gol, with the departure of some companies from the market, and even so it was one of the periods in which flights became more popular in Brazil.

But, of course, the more efficient players, the greater the competition and the better for the final consumer.

It is worth mentioning that Latam’s plan still needs to be approved by the American courts by January and by creditors by March 2022. So, there is still water to roll.

Posted by Ligia Tuon