LATAM Bankruptcy Has Initial $2.2 Billion Debt Just From 61 Aircraft

Latin America’s largest airline LATAM filed for Chapter 11 bankruptcy in New York with aircraft related debt at $2.2 billion as of April 30 from its five largest secured creditors. An updated and full creditor list will be disclosed in coming weeks. LATAM ended 2019 with debt of $18 billion and assets of $21b.

LATAM plans to continue flying across all its national units, only some of which are in the filing. It plans to pay suppliers “in a timely fashion” for goods and services delivered from May 26.

Aircraft and engines top its largest secured claims as of April 30. Five companies were owed $2.2b.

61 aircraft and 56 engines are securitized, comprising 20 A321s, nine 767s, four 787s, two A350s as well as 26 undisclosed aircraft.

The secured claims on the 61 aircraft and 56 engines are from Wilmington Trust ($778m), Citibank ($603m), Credit Agricole ($274m), Wells Fargo WFC ($277m), and Natixis ($243m) based on April 30 values, according to a court filing.

LATAM owns two-thirds of its 342 aircraft as of December 31, 2019. Most leased aircraft are narrowbodies, which comprise a greater portion of its fleet.

Ownership mix varies among LATAM’s 80 passenger widebody aircraft. Overall it only leases 29 passenger widebodies, but this includes the majority of A350s, 777s and 787s. Balancing this higher lease share is LATAM owning 29 of its 31 767s.

There are also 12 767 freighters, all but one owned.

LATAM unsecured trade claims include Boeing BA , aircraft lessors, the OneWorld Alliance, catering, fuel and air navigation providers.

The 40 largest unsecured claims as of April 30 amount to $3.4b. Most unsecured claims are financial but the trade debts have likely grown. Some may have since been paid in part or total.

Fuel companies BP, Repsol and World Fuel were due $80m. LATAM owed $21m to Argentina and Chile for navigation charges while lessors AerCap, Avolon and BBAM were due $20m.

Boeing was owed $16m, Etihad Engineering $14m, and Gate Gourmet $14m.

LATAM, which before COVID-19 planned to leave OneWorld on May 1, owed the alliance $15m. It owed $9m to the European Commission’s competition arm.

Smaller debts were due to other suppliers, including $7m to engine manufacturer CFM, $5m to Collins, and $5m to CAE.

Two banks had a $716m contingent claim relating to LATAM frequent flyer miles: $549m from Banco Santander Chile and $167m from Banco de Credito del Perú.