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LATAM Airlines Argentina ceases operations

LATAM subsidiary in Argentina, LATAM Argentina, is ceasing operations effective immediately. While the Argentinian subsidiary is suspending operations “for an indefinite period,” the South American airline group is already preparing for a post-COVID-19 future, according to the group’s CEO.

The move was done to respond to current market conditions, as the difficult situation in LATAM Argentina was “exacerbated by the impact of the COVID-19 pandemic,” in addition to the difficulty of negotiating with “local industry actors.” Thus, the parent company no longer saw “a viable and sustainable long-term project,” stated the press release, announcing the closure of the Buenos Aires-based company.

LATAM Argentina was established 15 years ago. It carried 3.1 million passengers throughout 2019, of which 2.5 million were in the domestic market. The Argentinian company operated a fleet of 13 Airbus A320 aircraft, with an additional five Boeing 767s that gradually left the company since June 2018. The last example (registered LV-IQW, now N544LA) left the fleet in December 2019.

“This is regrettable but inevitable news. Today, LATAM must focus on transforming the group to adapt to post-COVID-19 aviation,” stated the CEO of LATAM, Roberto Alvo.

“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.”

The company indicated that International flights to and from the country will continue, but domestic operations will not be replaced by LATAM’s other subsidiaries.

An inevitable move?

LATAM’s financial report from 2019 could have already indicated that it wanted to downsize its operations in Argentina.

“In Argentina, LATAM made a significant achievement in the year. The relevant authorities approved the interchange, which allowed the Group the shared use of fleet from Chile to make its operations in the former country more efficient,” stated the report.

Furthermore, the group‘s revenues from the country dropped significantly: from $989.8 million in 2018 to $584.9 million in 2019, becoming the third-lowest income-generating area in LATAM’s operations. LATAM Argentina itself finished the year with a net loss of $133.4 million, a worsening result from the year prior (net loss of $132.5 million).

While LATAM declared bankruptcy under Chapter 11 in the United States, the Argentine subsidiary was exempt from the filing, including subsidiaries in Brazil and Paraguay. The airline group noted that it has been in active discussions with the Brazilian government to obtain state aid, however, nothing was mentioned about the status of the now-dissolved subsidiary in Argentina or LATAM Paraguay.

 

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