Brazilian carrier Azul Linhas Aéreas has withdrawn its offer to take over Latin American competitor LATAM Airlines Group (https://www.cargoforwarder.eu/2021/11/07/the-consolidation-wheel-keeps-turning-now-also-in-latin-america/). The announcement came right after LATAM filed a reorganization plan last Friday (26NOV21) in which it proposed a US$8.19 billion infusion of capital into the group in a bid to exit its Chapter 11 bankruptcy. This renders the takeover bid null and void, says Azul.
The intended merger is history. Latam remains independent and will not become part of Azul. However, what was joyfully welcomed by the Chilean airline’s employees was pure poison for the company's share price. Shortly after the announcement, the carrier’s share prices plummeted by up to 85% before recovering to settle the losses at -45%. Still, that's almost a halving of the carrier’s total value. In contrast, Azul shares rose 2.8% on the Sao Paulo stock exchange after saying in a filing late on Sunday it would consider potential partnerships instead, without providing specifics.
LATAM filed a reorganization plan on 26NOV21 in which it proposed a US$8.19 billion infusion of capital into the group through a mix of new equity, convertible notes, and debt, which will enable the group to exit Chapter 11. The Santiago, Chile-headquartered carrier is expected to have total debt of approximately US$7.26 billion and liquidity of approximately $2.67 billion. The group has determined that this is a conservative debt load and appropriate liquidity in a period of continued uncertainty for global aviation and will better position the group going forward. Prior to this, the management said it had received several offers to fund the exit from Chapter 11 bankruptcy, each of which was worth more than US$5 billion.
The hearing to approve the adequacy of the Chapter 11 Disclosure Statement and approve voting procedures is expected to be held in January 2022, with specific timing dependent on the Court’s calendar. If the Disclosure Statement is approved, the LATAM group will commence solicitation during which it will seek approval of the plan from creditors. The reorganization concept tabled last Friday and okayed by key stakeholders, paves the way for strengthening LATAM’s capital structure based on long-term sustainability, states the carrier in a release.
Azul sees this entirely different, as stressed in an immediate reaction. According to owner David Neeleman and the management team their non-binding proposal would have provided significant increased network growth and generated synergies estimated at more than $4 billion. Their statement concludes with the dire prediction that “the standalone plan presented by LATAM is, by definition, unable to generate synergies from a combination”.
Time will tell!
Swissport grows in Chile
Still in South America but on another matter, ground handling agent Swissport announces the addition of 6 Chilean airports to its international network. The provider of ground services and air cargo handling is now represented at a total of 8 Chilean airports, stretching from Arica (ARI) in the north to Punta Arenas (PUQ) in the south. In between are these airports: Temuco (ZCO), Concepcion (CCP, Copiapo (CPO), and Calama (CJC).
Only shortly before, Swissport had added Uruguay to the list of now 45 countries around the globe where the multinational company offers its handling services. In Uruguay, the airports of Montevideo (MVD) and - as of January 2022 - Punta del Este (PDP) are part of the Swissport network. In addition, since October, Swissport has been able to reopen three locations in Argentina (Mendoza, Jujuy and Cordoba) that had been closed during the pandemic, increasing the number to nine airport locations offered in the country. In total, Swissport serves 82 airline customers at 64 airports in ten countries across Latin America. The service portfolio ranges from check-in and gate to ramp services, aircraft cleaning and air cargo handling. A workforce of nearly 10,000 headcount stands on the agent’s payroll.
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