LATAM Airlines has filed for Chapter 11 bankruptcy as the company continues to hemorrhage money due to the reduced demand for air travel caused by the coronavirus outbreak, according to The Associated Press.
During the bankruptcy case, LATAM Airlines will continue operating passenger and cargo flights as the carrier as it undergoes the reorganization process. Employees working during the financial overhaul will still be paid and all existing tickets will be honored.
LATAM Airlines CEO Roberto Alvo said the bankruptcy filing in the United States allows the South American carrier to reduce its debt and find new financing sources. While the company was profitable before the pandemic, it is now facing a “collapse in global demand.”
“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,” Alvo told The AP.
Last week, another major Latin American airline, Avianca Holdings, also filed for bankruptcy in the U.S., while Australia’s second-largest carrier, Virgin Australia, filed for protection last month.
According to the International Air Transport Association (IATA), revenue generated by passenger flights would drop $314 billion in 2020, costing the airline industry almost 50 percent of the income generated last year.
