LATAM Airlines collapses on the Santiago Stock Exchange — MercoPress

LATAM Airlines collapses on the Santiago Stock Exchange

Latam CEO Roberto Alvo said Azul’s proposal was “inadequate”.

Shares of Latam Airlines plunge more than 80% in the Santiago market after a reform plan was announced, one that vaporized the value of current shares. The proposal still needs to be approved by creditors between January and February 2022.

The airline sank 83.9% early Monday after Friday’s filing of a restructuring plan, under Chapter 11 of the United States bankruptcy law, in a New York court.
Under the proposal, shareholders would lose 0.1%, which is why Santiago’s stock plunged early Monday, regardless of how it ends at the end of the business day.

The statement issued last week indicates that the company and its counterparts have agreed to inject US$8,190 million into the group through a combination of fresh capital, convertible bonds and debt, which will provide the group with the appropriate capitalization to support its new business plan. to be carried out .

In the same document, the company stated: “After going through the process, Latam is expected to have total debt of approximately US$7,260 million and liquidity of approximately US$2,670 million. The group has determined that this is a level of conservative indebtedness and sufficient liquidity in a period of ongoing uncertainty for global aviation, which will keep the group in a better position for future operations.

Latam’s move has buried the possibility of a takeover by Brazilian airline Azul. Latam Group CEO Roberto Alvo had already said Azul’s proposal was “inadequate and incomplete.” But according to press reports, the real reason behind the failure of this alternative was a matter of price.

Azul CEO John Rodgerson was quoted by Estadão as saying that Latam was too expensive to buy under current terms.

“If the world turns and we have a chance, we’ll see it. But under these circumstances, we wouldn’t make it [a new proposal]. It was very expensive and the essence of the company has not changed. Salary costs, for example, remain the same,’ explains Rodgerson.

Latam has historically paid the highest salaries for flight crews, which would have been a headache for Azul, who went through a similar situation when it bought TRIP, after which it had to increase the wages of its own employees.