Latin America grabs world spotlight for airline bankruptcies
LATAM Airlines and Avianca Holdings survived the Great Depression, but just a few weeks of quarantines forced both companies into bankruptcy, marking Latin America as the world's top spot for airline financial ruin.
), whose untimely bets on the future of Latin American air travel could cost them billions.Hopes for a taxpayer rescue in the region are fading fast and the bankruptcies show that even Latin America’s two largest carriers are not immune to collapse, even as many airlines in the United States and Europe have received government aid.
Both LATAM and Avianca said they will continue flying as they restructure their debts in bankruptcy court.LATAM alone accounts for 40% of passengers traveling within Latin America and its bankruptcy startled many investors while dealing a fresh blow to Airbus (
AIR.PA), which counts LATAM and Avianca as top clients.“The air travel sector will not survive without government help,” Jerome Cadier, LATAM’s Brazil CEO, told Reuters.He has been in bailout talks for two months and counting, while much of Latin America’s air space remains subject to heavy travel restrictions, even as other parts of the world reopen. headtopics.com
Latin America was already the world’s least profitable region for carriers before the crisis, hurt by volatile currencies, high taxes and a crippling recession in its biggest economy, Brazil.Still, it has long been viewed as a region of great potential, enough so to tempt Delta and United into spending mightily to unseat American Airlines (
) as the top U.S. carrier for travel to Latin America.‘STRATEGIC COMPANY’Delta bought 20% of LATAM in December while United struck a partnership with Avianca in 2018, but only after agreeing to finance the personal business interests of its Bolivian-born owner.
Three billion dollars later, both U.S. carriers still lack clearance to coordinate flights with their partners. At today’s prices, Delta could buy LATAM almost four over with the money it spent on its small stake. United could buy Avianca over 20 times.
If you had invested $100 in Avianca at the beginning of this year, you would have $6.50 today. At its height LATAM boasted of being the world’s second airline by market value.Partly due to LATAM’s size, analysts say, the company’s shares did not fall as much in the leadup to the bankruptcy as those of its peers. headtopics.com
“These were speculators betting on a bailout,” said Cristian Araya of Chilean brokerage Vantrust Capital.Chile, where millions collectively own 15% of LATAM through retirement funds, this week declared it a “strategic company” but stopped short of rescuing it. Colombia has made no such noises about Avianca.
Combined, LATAM and Avianca still employ over 60,000 people, although most of them are either earning half their usual paycheck or none at all.EMERGENCY MEETINGSOn Monday, LATAM’s board sat for its 10th emergency meeting since April to formalize the bankruptcy decision.
The announcement stunned many, with shares of the airline falling more than 60% since Tuesday.Earlier this week, Raymond James analysts still had an “outperform” rating on the stock, predicting LATAM’s shares would double and calling its debt “manageable.”
But LATAM’s cash crunch and debt crisis were more severe than previously known, according to its bankruptcy filing.The airline had missed debt payments, scaring banks and aircraft lessors. It had already spent its emergency credit line back in April. Shareholders had overruled LATAM’s board to pay themselves dividends the airline could not afford. headtopics.com
Without a bankruptcy filing, LATAM would have had to pay some $200 million in expenses by next week, almost a third of the total cash held by the airline’s subsidiaries participating in the bankruptcy.At the same time, Delta abandoned a prior agreement to buy four Airbus A350 planes that LATAM did not want, paying a fee worth only a fraction of the aircraft’s price. LATAM wants to immediately return 15 Airbus planes, Avianca another 8.
“In hindsight I think what we missed is that (LATAM) really needs to become a much smaller airline,” Savanthi Syth, an analyst at Raymond James, said in an interview.Cadier told Reuters he expects LATAM to shrink by up to 40%, which will include layoffs.
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No one is able to do anything. We playing with fire 🔥 & when it finished we have to conclude & review before resume economic development. Banks could also in line of bankruptcies.
Virus could push 14 million into hunger in Latin America - UNSigns of mounting hunger are already being felt around the region, where desperate citizens are violating quarantines to go out in search of money and food and hanging red and white flags from their homes in a cry for aid. Take back your jobs, take back your rights. The virus is a hoax.
UN: Virus could push 14 million into hunger in Latin AmericaThe U.N. World Food Program warns that upward of at least 14 million people could go hungry in Latin America as the coronavirus pandemic rages on, shuttering people in their homes, drying up work and crippling the economy. they should be like china and take my advice. build the skyscraper greenhouses. Congress doesn't act, America's hunger problem may be worse. either die from covid or starvation
Latin America is now the 'epicenter of the outbreak,' says health officialLatin America has surpassed Europe and the US in the daily number of reported Covid-19 infections, according to the director of the Pan American Health Organization. The region 'has become the epicenter of the Covid pandemic,' Dr. Carissa Etienne said. That is what happens when leaders take their cues from the likes of realDonaldTrump Hmm. Latin America have more population than Europe and US
Billboard Latin (@billboardlatin) • Instagram photos and videos.Banda_MS will be joining billboardlatin for a BillboardLive Q&A today! Tune in to the session here at 3:45pm ET/ 12:45pm PT: BANDA_MS latin Who BANDA_MS latin
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