Latam files Chapter 11 bankruptcy protection

BANGKOK — Latam Airlines, South America’s biggest carrier, sought U.S. bankruptcy protection Tuesday as it grapples with a sharp downturn in air travel sparked by the coronavirus pandemic.

The Chapter 11 bankruptcy filing underscores the severity of the financial challenges facing the travel industry as a result of the lockdowns, quarantines and other measures taken by governments the world over to stem the spread of the virus that causes COVID-19.

Passenger and cargo flights will continue to operate during the reorganization, and employees will still be paid, the Santiago, Chile-based airline said. Travelers with tickets and vouchers can still use them.

Chief Executive Roberto Alvo said Latam was profitable before the pandemic brought most of the world’s flights to a halt, but is now facing a “collapse in global demand.”

“We are looking ahead to a postCOVID-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,” he said.

Latam Airlines said that it and several of its affiliated companies launched the Chapter 11 reorganization effort in the United States in a bid to reduce its debt and find new financing sources.

Air travel has plunged to a fraction of the levels it was just months ago as the virus spread from China to countries around the globe, prompting growing alarm in the aviation industry. The International Air Transport Association last month predicted that airlines’ revenue from hauling passengers would drop $314 billion this year, meaning they could bring in less than half of what they did in 2019.

Latam’s move comes after another major Latin American airline, Avianca Holdings, filed for bankruptcy protection.