Shares of LATAM Airlines, the largest airline in Latin America, plunged 51% mid-day on Tuesday on the Santiago Stock Exchange, after the firm launched a call for bankruptcy in the United States.
The securities were trading at 989 pesos at 12 (local time, 16 GMT), when they started trading after being suspended during the morning.
On Wall Street, where the company is also listed, the shares were paralyzed. At the beginning of the year, the share value was above $ 10 in Manhattan. At the close of Friday, before the long holiday, the value was at $ 2.58, but the movements of the premarket on Wall Street yielded a value of $ 1.55, which marks a drop of close to 40%, minutes before the opening of the stock market in Manhattan. However, the action did not move due to the process started.
LATAM, the largest airline in Latin America, took the measure due to the drastic drop in activity caused by the new coronavirus pandemic. "On May 26, 2020, the LATAM Airlines Group filed to reorganize under the protection of Chapter 11" of the US bankruptcy law, the Latam statement said. The company's decision, which includes subsidiaries in Chile, Peru, Ecuador and Colombia, will not have an immediate impact on passenger or cargo flights, the message clarified.
Before the pandemic, LATAM flew to 145 destinations in 26 countries and made around 1,400 daily flights. This is a new blow to the commercial aviation sector severely hit by the new coronavirus pandemic, which has caused the closure of borders and the confinement of billions of people.
"Given the impact that the crisis generated by Covid-19 has had on the aviation industry, LATAM has been forced to make a series of extremely difficult decisions in recent months," said the CEO of the company, Roberto Alvo. , in a video.
The Chapter 11 allows a company that is unable to pay its debts to restructure without the pressure of creditors. “The financial reorganization process of Chapter 11 of the United States offers a clear and guided opportunity to work with our creditors and other stakeholders to reduce our debt"The president of the company said in the statement.
It also allows "addressing the commercial challenges that we, like others in our industry, face," added Alvo.
Last month, the Chilean-Brazilian company said it had reduced its operations by 95% due to the global health crisis and in early May announced hundreds of layoffs.
Last September, Delta Air Lines announced that it reached an agreement to buy a 20% stake in LATAM Airlines Group, with a value of about USD 1.9 billion.
Sebastián Piñera, President of Chile (2018-2022), was the main shareholder of LAN, which is part of LATAM, until in 2010 he began to sell his stake in the airline after assuming command of the country in its first stage (2010 -2014).
(With information from Reuters and AFP)
MORE ABOUT THIS TOPIC:
Latam airline called bankruptcy in the United States