LATAM just filed for bankruptcy

[camberiu]

Latam Air Files Chapter 11 Bankruptcy, Stymied by Lockdowns

 

[on the brink]

HERTZ car rental also filed for bankrupcy

 

[antipodean]

Since Argentina, Peru and Colombia (where LATAM have major international and domestic ops) remain grounded until SEP and now Brazilians and those who have been to Brazil in past 14 days are banned from the USA... this move was about the only option.

For LATAM passengers it means nothing much - they will keep on flying, FFP points will still be valid... for companies doing business with LATAM however they will not be able to pay you right away. Under a chapter 11 a US court needs to approve each and every payment to a creditor, which means businesses that have contracts with LATAM will be waiting a long while to get paid. This may affect any travellers wanting refunds instead of rebooking or credits due to flight cancellations. Same situation as Avianca, however unlike Avianca, LATAM only has significant private financial backing while Avianca will depend on state aid which LATAM does not have. Let's see.

 

[Somewhereinba]

Its alright Aerolineas Argentina are doing great with Government support.

 

[Jeremias]

The prices of air travel, worldwide, will become impossible, un-affordable for middle-class tourists, with half of the global competency going broke. Well done, ecologists are happy. Middle class tourists shall be less happy, but hey, they'll still be able to go on holiday at the cheap trailer camping camp twenty kilometers from their city apartment. Nice.

 

[dilmah]

Quote from this article:

Latam also has about $1.3 billion in cash on hand.

How does one file for bankruptcy with such an amount of cash on hand??

 

[toongeorges]

The prices of air travel, worldwide, will become impossible, un-affordable for middle-class tourists, with half of the global competency going broke. Well done, ecologists are happy. Middle class tourists shall be less happy, but hey, they'll still be able to go on holiday at the cheap trailer camping camp twenty kilometers from their city apartment. Nice.

I am not sure how the price of air travel will evolve. It actually rather think it will become cheaper to travel. For sure airlines would want to charge more, but air travel is a low margin business, meaning that companies do not have the power to set the price. All the aircraft that are out there will not disappear and if people change their behaviour by travelling less, there will be too many planes. Operators of planes will then prefer to use their planes at a loss instead of not using them at a greater loss even if they know that once the plane has to be decomissioned in 10 or 20 years, they will not be able to replace it (as happens with ships).

It is maybe not the time to invest in Boeing or Airbus...

 

[jblaze5779]

I am not sure how the price of air travel will evolve. It actually rather think it will become cheaper to travel. For sure airlines would want to charge more, but air travel is a low margin business, meaning that companies do not have the power to set the price. All the aircraft that are out there will not disappear and if people change their behaviour by travelling less, there will be too many planes. Operators of planes will then prefer to use their planes at a loss instead of not using them at a greater loss even if they know that once the plane has to be decomissioned in 10 or 20 years, they will not be able to replace it (as happens with ships).

It is maybe not the time to invest in Boeing or Airbus...

Once these covid regulations come out you'll only be able to fit half the people on the plane. To assist in distancing, I anticipate one level of accommodation on the plane and less staged tiers of service. Previously, the coach flier were barely contributing to the cost of the flight where the 1st class and business people were doing most of the lifting. The coach is really a filler to bridge the gap between the higher tier demand and space in the plane. Basically airlines monitor the demand for business class and adjust the number of seats based on how many they think they can consistently fill. If airlines could have it their way the plane would be full of business class seats (of course). I can see a fare somewhere between the current business and coach fares.

This sounds cheaper but when you consider the BA to Houston UA coach is lowest price $2300 and the business can be $15k or $16k the final price for the flat rate seat at the new spacing will be somewhere in the 6k to 7k range (I guess). This is way too much for the average tourist... I glad I came up in times where you could get to Europe, Aisa, and South America for under 1k crammed in the back of a plane.

I don't think there will be a decreased desire for air travel. People want to fly places. There will be fewer flights and less nonstops around the world requiring more vacation time to be used by the average traveler. I do think there will be an increase in domestic ground travel due to increased air costs.

Also look for an increase in sales of RV and travel trailers as an alternative to family holiday air travel.

 

[dilmah]

Time to finally build that Darien Gap highway

 

[antipodean]

Social distancing on planes won’t last 5 minutes. In Europe many airlines like Lufthansa are already flying and filling all seats (The few daily FRA-MUC and MUC-MXP flights are full or overbooked this week.) Frankly speaking airlines see social distancing and hazmat suits as a marketing opportunity while it lasts. Others realize that those with money will pay more for premium cabin seats for personal breathing space.

There will be a period where capacity contracts and prices skyrocket, but then they will come down again in some years as demand picks up. By then there will be less airlines flying and more barriers to entry, meaning prices might not ever go back to $280 transatlantic flights but you might still get flights for $600. Low oil prices may mitigate this a little in the short-term and facilitate special sales to stimulate the market, but we can’t avoid the trigger of this being the enormous financial losses to the middle class and businesses who will cut back on travel as a result.

Unfortunately many airlines are permanently retiring / scrapping their larger planes as they move to planes that seat less people and are more efficient. Air France have permanently removed all A380s from their fleet Delta chopped their 777s. LH halved their 380 fleet. This is what will drive the capacity decrease and fare increase in the mid-term. It is also why Airbus on Boeing shares have perked up significantly in this past week or so as they know airlines will be out shopping for smaller fitting 321NEOs and 787s - the planes the airlines already have are the airlines’ problem not the manufacturers.