LATAM Airlines loses $890 million due to coronavirus restrictions

imageEconomy1 hour ago (Aug 18, 2020 10:15PM ET)

(C) Reuters. FILE PHOTO: Passengers wait to check in for their flights at the departure area of Latam airlines inside of the Commodore Arturo Merino Benitez International Airport in Santiago

By Fabian Cambero and Marcelo Rochabrun

SANTIAGO/SAO PAULO (Reuters) – LATAM Airlines (OTC:LTMAQ), South America’s largest carrier, on Tuesday said it had laid off 12,600 employees since March – or almost 30% of its pre-coronavirus workforce – due to the pandemic that has upended the global travel industry.

The carrier went from employing almost 43,000 people across Latin America and the United States to 29,957 as of Tuesday, the company said.

LATAM reported a net loss of $890 million for the second quarter, slammed by the pandemic that drove the company into a Chapter 11 bankruptcy filing in May.

“COVID-19 has had a very significant impact, which is reflected in the company’s numbers,” LATAM CFO Ramiro Alfonsin told journalists.

While employees already had their salaries cut by half in late March when the pandemic led to widespread travel restrictions in the region, it said its remaining employees are now facing cuts of 20% through September.

LATAM and its rivals are struggling to preserve cash while operating just a small fraction of their usual flights. The airline has said it will need to be a smaller carrier for years to come, and it is unclear whether there will be more job cuts in the future. Cutting down its workforce has helped preserve some liquidity.

The carrier posted a 75% drop in revenue between April and June due to widespread travel restrictions around Latin America.

LATAM’s Chapter 11 filing has allowed it to raise more than $1.3 billion in cash from investors, although it still needs the approval from a bankruptcy judge before it can access the money.

Alfonsin said the airline had operated during the quarter at 6% of its normal capacity and that demand in Brazil, its largest market, was showing some signs of recovery.

He added LATAM ended the quarter with a total cash position of $1.4 billion.

LATAM Airlines has laid off 12,600 employees since March amid coronavirus crisis

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