RIO DE JANEIRO, BRAZIL – Santiago-based LATAM is focused on exiting the receivership proceeding opened in the United States over a year ago, not a piecemeal sale of the business.
CEO Roberto Alvo, who is seeking to avert an offer by rival Azul, said the airline’s Brazilian operation is not for sale. Last week, the carrier denied reports that Azul plans to buy LATAM’s Brazilian subsidiary.
Although Alvo was emphatic that he is “absolutely not” selling the Brazilian unit to Azul, the rival is awaiting LATAM’s receivership exit plan and could make an offer directly to the company’s Latin American creditors, according to a source familiar with the matter.
Azul unsuccessfully presented the idea of buying the Brazilian network to LATAM executives, according to the source. Under the proposal, LATAM, Latin America’s largest airline, could focus on other parts of the region and retain access to the route network in Brazil, the source said.
“We are not considering, in any way, shape or form, the sale of any of our assets at this time,” Alvo said Wednesday. “We consider this another sign of worry by Azul, because they understand that we will be a very challenging competitor” after emerging from receivership, he said.
LATAM sought judicial protection from creditors in New York last year when the Covid-19 pandemic crippled global travel. Since then, the airline has raised US$2.45 billion in new financing, worked to restructure its aircraft fleet, and recently ended a codeshare agreement with Azul.
Azul said in a statement after the codeshare ended that it has hired advisors and is “actively exploring opportunities for industry consolidation in the region.”
Keeping Brazil in its network is a key part of LATAM’s strategy going forward, Alvo said. The country has “tremendous” growth potential, and LATAM “will be a very aggressive and effective competitor” once travel demand recovers, he said.
But first LATAM must exit receivership under Chapter 11 of U.S. bankruptcy law, an often complicated process that typically ends with shareholders leaving and new owners coming in. Investors have shown optimism over LATAM’s prospects in recent months: bonds tied to the company now trade at about 95 cents per dollar compared to only 16 cents last year.
LATAM expects to receive proposals from “supportive financiers” in the coming weeks as it draws up its plan to exit receivership, said Alvo, whose expectation is that this will materialize by the end of the year.