CAPA - Centre for Aviation logo

CAPA - Centre for Aviation

  • Type: Informa

COVID 19: Latin airline bankruptcies reflect lack of government aid

It is not a coincidence that just as IATA determined that Latin American airlines had received the lowest levels of government assistance worldwide, two of the region’s major airlines – Avianca and LATAM Airlines Group – have sought bankruptcy protection during the past couple of weeks. 

IATA and other organisations have been sounding the alarm that Latin American operators were in danger without some form of government assistance, and now those warnings have come to fruition.

Unlike AviancaLATAM was in better financial shape before the COVID-19 crisis and before entering Chapter 11, and appears to have supportive shareholders that are extending loans to the airline.

LATAM is not a brand that will disappear, but its bankruptcy filing shows how airlines have been blindsided by the pandemic. And it could be a wake-up call for more government support to materialise in the region. 

Summary:

  • Just as IATA highlights the strongest and weakest regions of the world for government aid to airlines, two of Latin America’s largest airlines – LATAM Airlines Group and Avianca – have been forced into Chapter 11 bankruptcy protection. 
  • LATAM’s reasonably solid financial position before the onset of COVID-19 was not quite strong enough to withstand the rapid deceleration of demand. 
  • It is uncertain whether Latin governments will opt to offer their airlines financial assistance; there are substantial challenges that have stemmed from the COVID-19 pandemic. 

View more here: https://centreforaviation.com/analysis/reports/covid-19-latin-airline-bankruptcies-reflect-lack-of-government-aid-526255