Latam Airlines Group, Latin America’s largest airline, sought bankruptcy court protection in New York after the Covid-19 pandemic grounded flights across the region. The Chapter 11 petition allows Latam to keep operating while the Chilean airline works out a plan to pay creditors and turn around the business. Latam, whose shareholders include Chile’s Cueto family and Delta Air Lines, continues to operate on a reduced schedule and it has commitments for a bankruptcy loan of up to $900 million (Dh3.3 billion). The money is coming from shareholders including the Cuetos, the Amaro family and Qatar Airways, according to the company. Latam also has about $1.3bn in cash on hand. Airlines the world over – and those in Latin America in particular – have been hit hard by the coronavirus outbreak, which triggered travel bans and made people reluctant to fly. Avianca Holdings, the largest airline in Colombia, filed for Chapter 11 bankruptcy earlier in May, burdened by the sharp drop in flyers and its own onerous debt load. Latam’s affiliates in Brazil, Paraguay and Argentina are not part of the bankruptcy case, which was filed in the Southern District of New York. Still, the impact will be felt widely, with Santiago-based Latam previously serving more than 70 million passengers a year on more than 300 aircraft. It also carried more than $7bn in debt. Latam has already eliminated more than 1,850 jobs in Chile, Colombia, Ecuador and Peru in recent weeks from its global workforce of about 40,000 people, after cutting 95 per cent of its passenger operations. In some bankruptcy scenarios, an airline can reject aircraft leases, and Latam has more than 20 jetliners on order from Airbus SE and half a dozen from Boeing. “Exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future,” chief executive Roberto Alvo said. Latam listed assets of more than $21bn and total liabilities of almost $18bn in its bankruptcy petition. So far, Latam hasn’t had access to government bailout packages designed help offset virus-related distress. Talks are under way with governments in Chile, Brazil, Colombia and Peru about additional financing and assistance, the airline said. The task was made more urgent this past weekend by US President Donald Trump’s order to restrict non-US citizens arriving from Brazil to slow the spread of the coronavirus. Brazil accounts for about a third of Latam’s revenue. Latam traces its roots to Lan Airlines, founded in Chile in 1929 and privatised in 1989 during the last years of the Pinochet dictatorship. Latam was born in 2012 after Lan announced plans to merge with Tam for about $3.3bn two years earlier. The Cueto family, which is Latam’s largest shareholder and holds two seats on its board of directors, acquired a stake in 1992 and control of the business in 1994. At that time, another major shareholder was current Chilean president Sebastian Pinera, who sold his own 26 per cent stake early in his first term as president in 2010. Last year, Latam signed a $2.25bn pact to sell a stake to Delta Air Lines, expanding Delta’s footprint in South America. The Chilean airline has been planning to gradually increase flights over the next two months, with the goal of reaching 18 per cent of pre-crisis capacity in July. Latam retained Cleary Gottlieb Steen & Hamilton as legal counsel, FTI Consulting as financial adviser and PJT Partners as investment banker. The case is Latam Airlines Group SA, 20-11254, US Bankruptcy Court for the Southern District of New York (Manhattan).