LATAM Airlines Group Explores Refinancing Options for Debt

LATAM Airlines Group has announced plans to refinance its USD 450 million 13.375% Senior Secured Notes due in 2027, as well as its USD 1.1 billion existing term loan agreement. The airline will begin discussions with interested parties to explore refinancing options.

The debt in question was issued in October 2022, marking the airline’s emergence from Chapter 11 bankruptcy proceedings. This refinancing effort comes as LATAM seeks to optimize its financial structure and enhance liquidity.

To facilitate this process, LATAM Airlines (LA, Santiago de Chile) has engaged a team of financial institutions. Citigroup will serve as the lead left bookrunner, with Santander, JP Morgan, and Deutsche Bank Securities also acting as bookrunners. Additional bookrunners include Barclays and Goldman Sachs, while BNP Paribas, MUFG, and Natixis will serve as co-managers. The airline’s leadership team will be represented in these discussions by Ramiro Alfonsín, the chief financial officer; Andrés del Valle, vice-president of corporate finance; and Tori Creighton, head of investor relations.

“If these meetings are successful, we may issue new senior secured bonds worth USD 1.2 billion denominated in USD,” LATAM stated. This potential issuance will adhere to the rules set forth by the US Securities Exchange Commission and is expected to have a scheduled maturity of five years.

In addition to the refinancing plans, LATAM Airlines also holds a second set of 13.375% senior secured notes due in 2029, valued at USD 700 million. This existing debt reflects the airline’s commitment to managing its financial obligations effectively while planning for future growth.

LATAM Airlines Group has shown promising financial performance in recent months, reporting total operating revenue of USD 6.35 billion during the first half of 2024. The airline also posted a net profit of USD 390 million, marking increases of 15.9% in revenue and 30.8% in net profit compared to the same period in the previous year.

As LATAM navigates its refinancing strategy, the airline aims to strengthen its financial position and support ongoing recovery efforts in the post-pandemic aviation market. This proactive approach to managing debt will be crucial as LATAM seeks to enhance its competitive edge in the South American aviation sector.

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com