Restructuring of LATAM Airlines wins global turnaround award

15 September 2023 3 min. read

In 2020, LATAM Airlines, the Chilean flag carrier, filed for chapter 11 bankruptcy. Now three years on, after a remarkable recovery, the story of their mega-restructuring process has bagged a global turnaround award.

LATAM airlines just posted a third quarter net profit of $232 million. That marks an incredible recovery for a carrier that was only just recently still in deep trouble and in bankruptcy proceedings around this time last year.

The airline now operates in 22 countries, with 144 destinations, including 10 new destinations in Brazil, and is looking to resume a long-haul offering from Sao Paolo to Johannesburg, South Africa.

Restructuring of LATAM Airlines wins global turnaround award

In the past several years, the airline has undergone a significant restructuring process involving various measures to enhance its operational efficiency and financial stability. This $8 billion plan included fleet adjustments, route optimizations, cost-cutting initiatives, renegotiation of contracts, and seeking financial support.

The airline filed for Chapter 11 bankruptcy protection in the United States in 2020 to facilitate the restructuring process and manage its debt. With passenger traffic growing, a modernized fleet, and significant cost savings, the airline now boasts the most extensive network in South America and has largely surpassed estimates on the back of its notable turnaround.

“We are pleased that we have completed a significant transformation and emerged from our financial restructuring process with a strengthened financial position and a renewed commitment to operational excellence,” said Roberto Alvo, CEO of LATAM Airlines Group. “This marks an important milestone for LATAM and our stakeholders.”

The turnaround has received praise from the Chile government, staff, and now also an industry body that keeps an eye on key developments in the sector. At the Turnaround and Transaction of the Year Awards, hosted by the Turnaround Management Association (TMA), LATAM Airlines won the award for ‘Best International Company Turnaround/Transaction’.

The advisors working on the multi-year engagement, including investment bankers Evercore and UBS, management consultancies FTI Consulting and PJT Partners, and law firms Cleary Gottlieb Steen & Hamilton and Dechert, were lauded for their support and excellence in the process.

In this same period last year, LATAM recorded losses of around $296 million. Increased profits are expected to continue as planned expansion continues, including raising the total fleet to 341 by 2025. Revenue projections have also slightly been increased by the airline, as the overall outlook for travel improves.

“As a group with a dynamic team of 30,000 employees and an unrivaled connectivity network, we look forward to continuing to offer passengers the best alternative for travel to, from, and within South America and to contribute in the broader sense to the various countries in which we operate and their diverse interests,” said Alvo.

The full list of advisors that were recognised by TMA:

Allan Brilliant, Dechert
Gerard Catalanello, Alston & Bird
Lisa Schweitzer, Cleary Gottlieb Steen & Hamilton
Rich Cooper, Cleary Gottlieb Steen & Hamilton
Avinash D'Souza, Evercore
Brock Edgar, FTI Consulting
Devi Rajani, FTI Consulting
Ken Epstein, Kramer Levin
Jose Maria Eyzaguirre, Claro y Cia
Aurelio Garcia-Miro, Riveron Consulting
Marshall Huebner, Davis Polk & Wardwell
Brent Herlihy, PJT Partners
Ricky Mason, Wachtell
Rachael Ringer, Kramer Levin
Elizabeth Lapuma, (previously with UBS)