Latam CEO Roberto Alvo said Azul's proposal was “insufficient”Latam Airlines stock plunges over 80% at the Santiago market after a reshaping plan was announced, one which evaporated the value of current shares. The proposal is yet to be voted on by creditors between January and February 2022.
The airline sank 83.9% early Monday following the submission Friday of a reorganization plan, under Chapter 11 of the Bankruptcy Law in the United States, before a New York Court.
According to the proposal, shareholders would lose 0.1% and that is why the Santiago stock has plummetted early Monday, regardless of how it ends up closing at the end of the business day.
The statement issued last week indicates that the company and its counterparts agreed to inject US $ 8,190 million into the group through a combination of fresh capital, convertible bonds and debt, which will allow the group to have the appropriate capitalization to execute its new business plan.
In the same document, the company detailed: “After exiting the process, Latam is expected to have a total debt of approximately US $ 7,260 million and a liquidity of approximately US $ 2,670 million. The group has determined that this is a level of conservative indebtedness and adequate liquidity in a period of continued uncertainty for global aviation, which will leave the group in a better position for future operations.”
Latam's move has buried the possibility of a buyover by Brazilian carrier Azul. Latam Group CEO Roberto Alvo had already said that Azul's proposal was “insufficient and incomplete.” But according to press reports, the real reason behind the failure of this alternative was a matter of price.
Azul CEO John Rodgerson was quoted by Estadão as saying that Latam was too expensive to buy under the current terms and conditions.
“If the world turns and we have a chance, we will see it. But, under these conditions, we would not make [a new proposal]. It was very expensive and the essence of the company has not changed. Salary costs, for example, remain the same,” Rodgerson explained.
Latam has historically paid the highest salaries for flight crews, which would have been a headache for Azul, which went through a similar situation when it bought over TRIP, after which it had to increase wages among its own workers.
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November 30, 2021 at 02:18AM
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