LATAM Argentina Grounded: Passenger & Cargo Operations Ceased Indefinitely

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Roughly three weeks after LATAM filed for Chapter 11 Bankruptcy protection and their assurance to upkeep operations at least one of their subsidiaries (LATAM Argentina) has been grounded.

LATAM Argentina has ceased all passenger and cargo traffic “for an indefinite period” which could be just the first of the Latam dominos to fall.

LATAM’s remaining group affiliates will continue to operate international services from Argentina for the time being according to a statement released by the company.

The company filed for bankruptcy protection on May 26th and since then their stock has moved significantly but since there are so many entities under the LATAM name each subsidiary is left to fight for itself and LATAM Argentina became the first victim that got grounded.

You can access the official press release regarding LATAM Argentina here.

LATAM Airlines Group informs that LATAM Airlines Argentina announced today that it will cease passenger and cargo operations for an indefinite period.

The announcement is a result of current market conditions, exacerbated by the impact of the COVID-19 pandemic and the difficulty of building structural agreements with local industry actors, which has made it impossible to foresee a viable and sustainable long-term project.

“This is regrettable but inevitable news. Today, LATAM must focus on transforming the group to adapt to post-COVID-19 aviation,” said Roberto Alvo, CEO of LATAM Airlines Group. “Argentina has always been a fundamental country for the group and will remain so, with LATAM’s other affiliates continuing to connect passengers from Argentina with Latin America and the world.”

LATAM Airlines Argentina will cease flights to/from 12 domestic destinations while international destinations in the United States, Brazil, Chile and Peru will continue to be served by other LATAM affiliates, once COVID-19-related travel restrictions are lifted by the authorities. Likewise, international cargo routes will continue to be served by the other group affiliates. LATAM Airlines Argentina is the only group affiliate that will cease operations.

LATAM Airlines Argentina will soon communicate, via its official channels, information and options for passengers who have purchased tickets, in line with the following commercial policies:

National routes

  • For tickets purchased by credit card, a full refund will be automatically provided to the original payment method within 30 to 45 days. For other payment methods, refunds must be requested via: latam.com/mytrips

International routes

  • Date changes can be made at no cost, without fare differences, subject to cabin availability and ticket validity (one year from the original outbound travel date).
  • Alternatively, customers can request a travel voucher to be used on any LATAM route until December 31, 2021.

Tickets bought with LATAM Pass miles to any destination

  • LATAM Pass members can request a mile refund to their account via latam.com. Taxes will be refunded according to the method of payment. 

The customers of LATAM Argentina are extremely fortunate that the airline as tied into this construct of LATAM group of companies and not a standalone airline otherwise they wouldn’t see a dime back for their existing tickets.

Apparently the company found that it’s impossible to find a path forward with the unions involved so their only way to salvage the situation for now was to pull the plus on the Argentina operations and let the subsidiary go bust. Yet another example where the employees ultimately lost out because their representatives wanted too much and were too difficult to deal with.

Conclusion

We’ve already seen a number of bankruptcies and Chapter 11 equivalent filings from airlines all around the globe and it’s likely that this will continue for some time to come.

The COVID-19 crisis in the aviation and hospitality market will brutally weed out the market and those companies that already operated an unsustainable business model won’t be able to survive any longer since cash flow stopped entirely. In the LATAM Argentina case you can pair it with the problem that the South American market is very difficult to begin with and the Argentinian Economy has been in shambles well before Covid.

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