Category Archives: LATAM Airlines Group

LATAM Airlines Group projects operation of 69% for December

LATAM Airlines Group’s operational passenger projection for December 2021 is estimated to reach 69% (measured in available seat kilometers – ASK) of 2019 levels, and a pre-pandemic context.

The increases in the operational projection for Colombia (+14 pp) and Brazil (+10 pp) stand out, compared to the November projection for this year. In Brazil, the increase is accompanied by new domestic routes to Jericoacoara and Vitória da Conquista, in addition to the reactivation of flights to Milan and London from São Paulo / Guarulhos. The seasonal routes Santiago-Florianópolis, São Paulo/Guarulhos-Punta del Este and Santiago-Punta del Este have also returned. With these announcements, the group maintains its expectation of closing the year with operations of over 65% of 2019 capacity levels.

LATAM plans to operate approximately 1,212 daily domestic and international flights during December, connecting 129 destinations in 18 countries. The cargo business has 1,150 flights scheduled on cargo freighters with an average utilization level that is 20% higher than the same period in 2019. These projections are subject to the evolution of the pandemic and the travel restrictions in the countries where LATAM Airlines Group operates.

In November 2021, passenger traffic (measured in revenue passenger-kilometers – RPK) was 62.3% in relation to the same period in 2019, based on an operation measured in ASK (available seat-kilometers) of 62.8% compared to November 2019. The load factor decreased 0.6 percentage points, reaching 82.0%. With regard to cargo operations, the load factor was 59.4%, which corresponds to an increase of 2.1 percentage points compared to November 2019.

LATAM Airlines Group files plan of reorganization

LATAM Airlines Group S.A. and its affiliates in Brazil, Chile, Colombia, Ecuador, Peru, and the United States today announced the filing of a Plan of Reorganization, which reflects the path forward for the group to exit Chapter 11 in compliance with both U.S. and Chilean law.

The Plan is accompanied by a Restructuring Support Agreement (the “RSA”) with the Parent Ad Hoc Group, which is the largest unsecured creditor group in these Chapter 11 cases, and certain of LATAM’s shareholders. The RSA documents the agreement between LATAM, the aforementioned holders of more than 70% of parent unsecured claims and holders of approximately 48% of 2024 and 2026 U.S. Notes, and certain shareholders holding more than 50% of common equity, subject to the execution of definitive documentation by the parties and the obtaining of corporate approvals by those shareholders. As they have throughout the process, all of the companies in the group are continuing to operate as travel conditions and demand permit.

Plan Overview

The Plan proposes the infusion of $8.19 billion into the group through a mix of new equity, convertible notes, and debt, which will enable the group to exit Chapter 11 with appropriate capitalization to effectuate its business plan. Upon emergence, LATAM is expected to have total debt of approximately $7.26 billion¹ and liquidity of approximately $2.67 billion. The group has determined that this is a conservative debt load and appropriate liquidity in a period of continued uncertainty for global aviation and will better position the group going forward.

Specifically, the Plan outlines that:

Upon confirmation of the Plan, the group intends to launch an $800 million common equity rights offering, open to all shareholders of LATAM in accordance with their preemptive rights under applicable Chilean law, and fully backstopped by the parties participating in the RSA, subject to the execution of definitive documentation and, with respect to the backstopping shareholders, receipt of corporate approvals;
Three distinct classes of convertible notes will be issued by LATAM, all of which will be preemptively offered to shareholders of LATAM. To the extent not subscribed by LATAM’s shareholders during the respective preemptive rights period:
- Convertible Notes Class A will be provided to certain general unsecured creditors of LATAM parent in settlement (dación en pago) of their allowed claims under the Plan;
- Convertible Notes Class B will be subscribed and purchased by the above referenced shareholders; and
- Convertible Notes Class C will be provided to certain general unsecured creditors in exchange for a combination of new money to LATAM and the settlement of their claims, subject to certain limitations and holdbacks by backstopping parties.
The convertible notes belonging to the Convertible Classes B and C will therefore be provided, totally or partially, in consideration of a new money contribution for the aggregate amount of approximately $4.64 billion fully backstopped by the parties to the RSA, subject to receipt by the backstopping shareholders of corporate approvals;
LATAM will raise a $500 million new revolving credit facility and approximately $2.25 billion in total new money debt financing, consisting of either a new term loan or new bonds; and
The group also used and intends to use the Chapter 11 process to refinance or amend the group’s pre-petition leases, revolving credit facility, and spare engine facility.

LATAM reports revenue was up 47.8% in the third quarter but reported a net loss of $691.9 million

LATAM Group issued this statement:

Alongside the publication of its results for the third quarter of the year, the LATAM group reported that it noted a continued improvement in its revenues during the period, reaching US$1,314 million, which represents an increase of 47.8% compared to the second quarter of 2021 and 156.1% compared to the third quarter of 2020. Despite this improved performance, total revenues for the third quarter are 50.7% below 2019 as a result of the ongoing effects of the pandemic.

Cargo revenues recorded an increase of 43.6% compared to 2019, reaching US$361.4 million.

Roberto Alvo, CEO of LATAM Airlines Group, said that “our operation continues to recover, which translates to a substantial revenue improvement during the third quarter. We are already seeing the fruits of our efficiency initiatives, which will allow us to position ourselves as a highly competitive group once our Chapter 11 process is finalized.”

Regarding the operations, the LATAM group showed significant advances in the third quarter, reaching 49.7% of 2019 levels of capacity (measured in ASK), driven by a strong recovery in its domestic operations, and a capacity increase of 75% compared to the second quarter of 2021. The group expects to end the year operating more than 65% of consolidated capacity (measured in ASK) versus 2019 levels.

Total costs amounted to US$1,793 million in the period, representing a decrease of 25.2% compared to the third quarter of 2019. The group’s unit cost (cost per ASK, excluding fuel) decreased 18.3% versus the second quarter of this year, despite higher maintenance costs and a slower recovery of international operation. This result is a reflection of the efficiencies achieved by the group during the last months, which will translate into savings of more than US$900 million annually.

Operating loss in the third quarter of the year totaled US$479.2 million, while the net loss was US$691.9 million, impacted by the effects of maintenance costs, restructuring expenses and other non-recurring expenses.

Sustainability

During the third quarter, LATAM continued to make progress in the creation of regional alliances within the context of the Solidarity Airplane program, making its connectivity, infrastructure, experience, capacity and speed available to foundations and organizations free of charge. Partnerships include Peru’s Food Bank, Operation Smile, ANIQUEM and ALINEN in Peru; SOLCA – HOPE, INDOT, Red Cross and Operation Smile in Ecuador; and Operation Smile, América Solidaria and the National Institute of Health, Panthera Colombia and the Schooner Bight Ethnic Association in Colombia, among others. It should be noted that Solidarity Airplane also has alliances in Brazil and Chile.

Since the beginning of the pandemic, the group has transported more than 160 million COVID-19 vaccines for free within Brazil, Chile, Ecuador and Peru as part of the same program.

Also, related to the climate change pillar of LATAM’s sustainability strategy, the group recently announced the CO2BIO project, an alliance that represents the first conservation project in the Orinoquia region of Colombia by the Cataruben Foundation, leveraged by the United States Agency for International Development (USAID) and with the participation of Panthera Colombia. CO2BIO includes the conservation of forest, wetland and grassland and the development of sustainable productive activities, and is the group’s first iconic ecosystem conservation project to contribute to the goal of carbon neutrality by 2050.

Top Copyright Photo: LATAM Airlines (Chile) Airbus A321-211 WL CC-BEO (msn 7298) PMC (Robbie Shaw). Image: 955835.

LATAM Airlines (Chile) aircraft slide show:

LATAM Airlines (Chile) aircraft photo gallery:

LATAM announces plans to conserve South America’s iconic ecosystems

LATAM Group made this announcement:

The alliance with the CO2BIO conservation project in the Colombian Orinoquía will protect 200,000 hectares of flooded savanna, home to more than 2,200 species.
During the next few months, LATAM expects to announce new projects for the conservation of iconic ecosystems in Brazil, Chile, Ecuador and Peru.

LATAM Group announced its first alliance with a project dedicated to the conservation and restoration of an iconic ecosystem in South America. The project, called CO2BIO, is located in the Colombian Orinoquía and covers more than 200,000 hectares of flooded savanna. Over the next few months, the group hopes to unveil new alliances in the countries where it operates in the region.

CO2BIO has been promoted by the Cataruben Foundation and has the support of the Natural Wealth Program of the United States Agency for International Development (USAID) and Panthera Colombia. This is the first project in LATAM Group’s portfolio that supports the challenge of offsetting 50% of its domestic routes by 2030 and achieving carbon neutrality by 2050.

The CO2BIO project includes activities for the conservation of forests, wetlands and grasslands, in addition to promoting the development of sustainable production activities in the departments of Casanare, Vichada, Arauca and Meta. One hundred and ninety-one families live in the area, which form part of the conservation project of the 200,000 hectares of flooded savanna, home to more than 2,000 species.

Through conservation and rehabilitation actions, this initiative will capture 1 million tons of CO2 during the 2021-2023 period, and has the potential to capture up to an additional 2.8 million tons by 2025, if progress is made in new stages of the project. During the next few months, LATAM expects to announce new projects for the conservation of iconic ecosystems in Brazil, Chile, Ecuador and Peru.

It should be remembered that LATAM Group launched its sustainability strategy in May 2021, which commits to eliminate single-use plastics by 2023, generate zero waste to landfill by 2027, offset 50% of domestic emissions by 2030 and be carbon neutral by 2050.

LATAM ends the second quarter with US$2.3 billion of liquidity and projects improved operational prospects for the rest of the year

LATAM issued this statement:

As part of the delivery of the results for the second quarter of the year, LATAM Group reported that it foresees better operational prospects for the next six months, despite the profound impact of the pandemic in Latin America since the start of the year. As a result, the group plans to reach a capacity greater than 50% (measured in ASK and compared to 2019 levels) by the end of the third quarter of 2021, which would represent LATAM Group’s highest level of operation since the pandemic began.

In turn, the group reported that it ended the quarter with US $2.3 billion of available liquidity, US $1.5 billion in cash and US $800 million in undrawn, committed DIP financing.

Roberto Alvo, CEO of LATAM Airlines Group, said that “the new waves of the pandemic in the region generated a complex semester, which did not allow us to continue recovering our operation as we expected. However, progress in our restructuring plan was positive. In addition, we maintained our global leadership in punctuality, accelerated our cost reduction, launched our sustainability and inclusion plans, and ensured that our passengers flew comfortably and safely. We look forward to a more active second semester, always thinking of strengthening the group and taking care of our clients.”

In the second quarter, total revenues amounted to US $888.7 million, a 62.5% decrease compared to the same period in 2019. Passenger revenues fell 77.4%, though partially offset by an increase of 37.5% in cargo revenues, both compared to the same period of 2019. Cargo operations continue to stand out for their contribution to the group, reaching revenues of US $370.2 million during the quarter, mainly driven by the cargo freighters, which reached historic utilization levels after a strong import and export scenario.

For their part, costs decreased 46.5% in relation to the same period of 2019, reaching US $1.2 billion, reflecting the notable effort made by the group to reduce and vary its fixed costs.

Operating income recorded losses of US $357.7 million in the analyzed quarter.

Sustainability

A notable event of this period, and which is related to the projection of the LATAM Group in the long term, was the launch of its sustainability strategy, which is based on four pillars of action: climate change, environmental management, circular economy and shared value – measures with which the Group will seek to offset 50% of its domestic emissions by 2030, establishing a path to be carbon neutral by 2050.

In May, the group resumed its recycling activities, which were temporarily suspended due to the pandemic, including the restart of the LATAM Airlines Chile “Recycle Your Trip” program and the “Second Flight” uniform recycling program of LATAM Airlines Peru. These will be extended to other subsidiaries of the group during 2021. Additionally, the group recently announced the formalization of alliances between its Solidarity Plane program and various foundations and organizations in both Chile and Brazil. In the first case, LATAM is working with DKMS, Coaniquem, América Solidaria, TECHO, Minsal and Fundación Fútbol Más. In Brazil, the group has new alliances with the Brazilian Association for the Defense of Women, Children and Youth (Asbrad), Burning Support Institute (IAQ), National Civil Defense and the Brazilian Institute for the Environment and Renewable Natural Resources (Ibama).

LATAM seeks court approval for 70 Airbus A320neo aircraft

LATAM Airlines Group issued this statement:

LATAM Airlines Group presented for approval before the Court in the United States an agreement with Airbus for the purchase of 28 new aircraft, in addition to the 42 narrow body aircraft already agreed upon, as part of the modernization and efficiency of its fleet for the coming years.

This order, which totals 70 aircraft, maintains the LATAM Airlines Group’s fleet as the largest in Latin America, with greater range and capacity. The integration of aircraft of the A320neo family implies more efficient engines, aerodynamic improvements and the latest technologies that provide 20% more efficiency in fuel consumption, therefore, lower CO2 emissions, together with a 50% reduction in oxide emissions nitrogen and 50% of the acoustic footprint.

With the signing of this agreement, the group aims to strengthen its operations in all its subsidiaries at the regional level with a modern fleet and maximum efficiency in environmental matters, one of the pillars of its sustainability strategy. In turn, it seeks to consolidate the longest range of destinations in and from Latin America and the Caribbean, hand in hand with the connectivity agreements with Delta, currently under review by various regulatory authorities in the countries where the group operates.

LATAM projects an operation of 46% in July, the highest since the beginning of the pandemic

LATAM Group has issued this statement:

LATAM’s passenger operation for July 2021 is estimated to reach 46% (measured in available seat kilometers – ASK) compared to the same month in 2019, in a pre-pandemic context. This figure represents the largest operation projected since the beginning of the health crisis caused by SARS-CoV-2 and a significant increase from June’s operation of 36.9%. The challenge going forward, however, is the reactivation of markets like Chile and Ecuador, which register the lowest operational recovery of all of the countries in which the group operates. LATAM estimates approximately 880 domestic and international flights daily during July, connecting 116 destinations in 16 countries. Meanwhile, the Cargo division has scheduled 1,030 cargo freighter flights during the period, 20% more than in the same month of 2019. All of these projections are subject to the evolution of the pandemic, as well as travel restrictions in the countries where LATAM operates. During June 2021, passenger traffic (measured in revenue passenger-kilometers – RPK) was 32.1% compared to the same period of 2019, based on an operation measured in ASK (available seat-kilometers) of 36.9% compared to June 2019. Therefore, the load factor decreased 10.8 percentage points, reaching 72.2%. With regard to the cargo operations, the load factor was 62.8%, which corresponds to an increase of 7.7 percentage points compared to June 2019.

LATAM Group Operational Estimate – July 2021 (measured in ASK)

Brazil ● 48% projected operation (versus July 2019) ○ 75% domestic and 20% international ● Total July destinations: 44 domestic (equivalent to 418 daily flights on average) and 13 international. ○ Updates: ■ Domestic: 10 new routes: Río/Santos Dumont-Recife, Río/Santos Dumont-Maceió, Río/Santos Dumont-Natal, São Paulo/Congonhas-Fortaleza, São Paulo/Congonhas-Maceió, São Paulo/Congonhas-Natal, São Paulo/Congonhas-Recife, Fortaleza-Belém, Fortaleza-Manaus, Fortaleza-Teresina. ■ International: Restart routes São Paulo/Guarulhos-Paris and São Paulo/Guarulhos-Bogotá.

Chile ● 35% projected operation (versus July 2019) ○ 68% domestic and 21% international ● Total July destinations: 15 domestic (equivalent to 122 daily flights on average) and 14 international. ○ Updates: Restart route Santiago-New York (direct)

Colombia ● 76% projected operation (versus July 2019) ○ 98% domestic and 50% international ● Total July destinations: 15 domestic (equivalent to 136 daily flights on average) and 4 international. ○ Updates: ■ Domestic: New route Medellín-Cúcuta. ■ International: Restart route Bogotá-São Paulo/Guarulhos.

Ecuador ● 23% projected operation (versus July 2019) ○ 82% domestic and 7% international ● Total July destinations: 7 domestic (equivalent to 22 daily flights on average) and 2 international.

Peru ● 45% projected operation (versus July 2019) ○ 66% domestic and 38% international ● Total July destinations: 19 domestic (equivalent to 126 daily flights on average) and 17 international. ○ Updates: ■ Domestic: New route Arequipa-Cusco. ■ International: Restart Lima-Madrid and Lima-Orlando operations.

Cargo ● 75% projected operation (versus July 2019) ○ 63% domestic belly and 50% international belly* ○ 126% dedicated cargo * Belly: merchandise transported in the cargo hold (lower deck) of the aircraft

LATAM Group launches a pilot health passport from Lima and Santiago

The LATAM Group, through its subsidiaries in Chile and Peru, together with the International Air Transport Association (IATA) have come together to carry out the pilot of the IATA Travel Pass digital application, allowing passengers to organize and manage travel requirements complying with what is required by the authorities on international flights more efficiently and expeditiously.

IATA Travel Pass works based on the biometric information of the passenger’s passport, the results of laboratories in agreement and the joint information of the governments.

The pilot phase, which is voluntary for the passenger, is expected to take place between June 14 and July 2 on the following routes:

Lima-Miami
Lima-Santiago de Chile
Santiago de Chile-Lima
Santiago de Chile-Miami

LATAM Group shows signs of recovery, projecting an operation of 36% in June

LATAM Airlines Group said on Wednesday that it had sought to extend until September the deadline to present its restructuring plan as part of the bankruptcy protection process initiated in 2020 according to Reuters.

LATAM Group issued this statement:

LATAM’s passenger operation for June 2021 is estimated to reach 36% (measured in available seats-kilometers – ASK) relative to the same month in 2019, in a pre-pandemic context. The forecast operation is higher than that of last May (30.8%, measured in ASK), as all markets show higher projections than those of the previous month, largely attributed to the progress of the vaccination rollout in the countries where LATAM operates and the resulting increase in demand.

LATAM estimates approximately 691 daily domestic and international flights in the sixth month of the year, connecting 114 destinations in 14 countries. Meanwhile, the Cargo division has scheduled more than 1,000 cargo freighter flights for June, 20% more than in June 2019. All of these projections are subject to the evolution of the pandemic, as well as travel restrictions in the countries where LATAM operates.

During May 2021, passenger traffic (measured in revenue passenger-kilometers – RPK) was 25.6% compared to the same period of 2019, based on an operation, measured in ASK (available seat-kilometers), of 30.8% relative to May 2019. This implies that the load factor decreased 14.1 percentage points, reaching 69.6%.

In cargo, the load factor was 69.8%, which corresponds to an increase of 13.4 percentage points relative to May 2019.

LATAM Group Operational Estimate – June 2021

(Measured in ASK)

Brazil	● 38% projected operation (versus June 2019) ○ 62% domestic and 15% international ● Total June destinations: 44 domestic (equivalent to 310 daily flights on average) and 11 international ○ Updates: New Sao Paulo / Guarulhos-Cancun route, with 2 weekly frequencies
Chile	● 23% projected operation (versus June 2019) ○ 68% domestic and 6% international ● Total June destinations: 15 domestic (equivalent to 97 daily flights on average) and 11 international ○ Updates: Restart operation Antofagasta-La Serena (2 weekly frequencies) and Santiago-Osorno (3 weekly frequencies)
Colombia	● 59% projected operation (versus June 2019) ○ 94% domestic and 23% international ● Total June destinations: 15 domestic (equivalent to 118 daily flights on average) and 3 international ○ Updates: New Bogotá-Miami route, with 3 weekly frequencies, in addition to Bogotá-Armenia (7 weekly frequencies)
Ecuador	● 39% projected operation (versus June 2019) ○ 58% domestic and 5% international ● Total June destinations: 7 domestic (equivalent to 18 daily flights on average) and 2 international
Peru	● 38% projected operation (versus June 2019) ○ 64% domestic and 28% international ● Total June destinations: 19 domestic (equivalent to 113 daily flights on average) and 14 international ○ Updates: Increase in weekly frequencies to the United States, reaching 30 in total (16 frequencies to Miami, 7 to New York and 7 to Los Angeles)
Cargo	● 68% projected operation (versus June 2019) ○ 52% domestic belly and 35% international belly* ○ 128% dedicated freighter

*Belly: merchandise transported in the cargo hold (lower deck) of the aircraft.

LATAM Group to expand its Boeing 767-300F freighters fleet by 2023

LATAM Group announced the expansion of its freighter fleet growth under which it now plans to add 10 Boeing 767-300 Boeing Converted Freighters over the next three years. This will bring the fleet size to up to 21 freighters by 2023. The first aircraft will be expected to begin operations in December 2021.

The Group’s freighter fleet growth plan initially included four firm conversion orders with Boeing and another four conversion options. Two months after the initial announcement, LATAM has exercised the four options, eight planes, and the conversion of two additional Boeing 767-300ERs. This means that the freighter fleet will be comprised of up to 21 aircraft by the end of 2023. Upon completion of the plan the Group will have almost doubled its freighter capacity as well as reduced the average fleet age from 17 to 14 years.

Growing from 11 to 21 freighter planes will enable the LATAM Group’s cargo subsidiaries to expand and reinforce their capacity to, from and within South America, and positioning the Group as the main freighter operator group in the region. The first eight airplanes have been allocated to markets that are critical for key customer segments.

“In general terms, the majority of the plan focuses on improving connectivity between North and South America. In particular, capacity from Colombia and Ecuador will be strengthened to support the flower export industry. Additional flights to support Chilean salmon exports as well as import traffic into the country will also be reinforced. Capacity to and from Brazil will also go up as we add routes from North America and Europe, boosting both the export and import markets”, said Kamal Hadad, LATAM Cargo’s Network and Alliances Director.

Hadad added that the freighter fleet flexibility will help LATAM assess a range of options. “For example, the two additional conversions could be used to refresh the current fleet or to begin new growth projects. The Group still has time to make the relevant decisions,” he concluded.

LATAM also announced that it will use some of the 767-300ERs that are awaiting conversion under a hybrid format to benefit customers in the short term. The seats will be completely removed from three planes for this purpose in order to have a payload of up to 46 tons per flight. Two of these planes are already operational. The third one is expected to be available in the second quarter of 2021.

Furthermore, LATAM is optimizing commonality across their fleet of 767-300 production and converted freighters to maximize capacity, including the ability to transport delicate goods.

Top Copyright Photo: LATAM Airlines Cargo (Chile) Boeing 767-316F ER WL N534LA (msn 32572) AMS (Ton Jochems). Image: 941889.

LATAM (Chile) aircraft slide show: