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A LATAM 767-300 landing in Miami. (Photo: AirlineGeeks | William Derrickson)

LATAM Group Requests Return of 65 Aircraft to Its Lessors and Lenders

This week saw the second court hearing take place regarding the debt restructuring process under the protection of Chapter 11 of the United States Bankruptcy Law filed by LATAM Airlines Group. Judge James L. Garrity, from the Bankruptcy Court for the Southern District of New York agreed to the 25 motions made by LATAM.

According to La Tercera, the topics discussed in the court hearing were related to services, taxes and expenses, insurance, among others. Judge James L. Garrity authorized workers’ payment, administrative expenses for goods and services and fuel suppliers’ payment.

In addition, the holding requested authorization to pay settlements and pending payments with 2,000 former workers for $1.635 million. Of that amount, $500,000 corresponds to the payment for former employees in Chile, $550,000 in Uruguay, $550,000 in Peru, $20,000 in Colombia, and $15,000 in the U.S. and Spain.

LATAM Airlines Group also filed a request to get exonerated of various aircrafts leases contracts. The company stated that it has an excess of aircraft, which is why they are trying to reject and abandon lease agreements that are costly and do not provide benefits to the company.

The airline presented several agreements to the U.S. courts on Tuesday with aircraft lessors and lenders, including BNP Paribas from Brazil, Sumitomo Mitsui Banking Corporation, The Korea Development Bank, Banco Latinoamericano de Comercio Exterior de Panamá, J.P. Morgan Europe and Citibank Europe. In these briefs, the company defined a series of agreement conditions in which establishes a framework for the return of aircraft.

According to Diario Financiero, the agreement implicate the return of aircraft, engines and related equipment, and registration documents. Within the commitments, the company stipulates to maintain the equipment and the aircraft under a storage program approved by the aviation authority and with the recommendations of the manufacturers.

At the end of the court hearing, LATAM Airlines Group requested the return of 65 aircraft to their lessors and lenders. Judge James L. Garrity, from the Bankruptcy Court for the Southern District of New York, will take a month to analyze the request to cancel aircraft lease contracts.

LATAM’s objective is uncertain. It is unclear what will be its future strategy. Will the airline group prefer an operation with the latest generation, higher capacity aircraft, or maintaining older and lower capacity equipment? What is certain is that there will be a reduction in some domestic and international routes, and frequencies in other domestic and international routes will decrease.

Juan Pedro Sanchez Zamudio
Juan Pedro Sanchez Zamudio
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