May 26 (UPI) -- The largest Latin American air carrier, LATAM Airlines, has filed for Chapter 11 bankruptcy in the United States, the airline said early Tuesday, becoming the second major airline in May to go bankrupt due to the coronavirus pandemic.
In a statement on its website, LATAM said its board approved it filing for Chapter 11 protection as it will offer the company the ability to work with creditors and stakeholders to reduce debt and access new funding while it reorganizes its operations to the new aviation environment caused by the coronavirus pandemic.
"LATAM entered the COVID-19 pandemic as a healthy and profitable airline group, yet exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future," said LATAM CEO Roberto Alvo in a statement.
Alvo said the company has already implemented measures to mitigate the effects of the pandemic but filing for bankruptcy is the best way for it to prepare for where the aviation industry is heading next.
"We are looking ahead to a post-COVID-19 future and are focused on transforming our group to adapt to a new and evolving way of flying, with the health and safety of our passengers and employees being paramount," he said.
The company added that it, and its affiliates, are in talks with Chile, Brazil, Colombia and Peru to gain funding to protect jobs and to minimize service disruptions.
It will be continue operating passenger and cargo flights and will honor all current and future tickets, travel vouchers and frequent flyer miles and benefits, it said.
Earlier this month, Avianca, a Colombian airline, filed for Chapter 11 in the Southern District of New York in order to reorganize its business, it said.
It also attributed its filing to the pandemic, citing a global decrease in passenger traffic.
On Monday, Lufthansa Group, the biggest airline in Europe, announced it had received a $10 billion bailout from Germany in exchange for a 20 percent stake in the company and two seats on its board.
It said it had lost about $1.3 billion during the first quarter of 2020 due to COVID-19.
And in late March, U.S. President Donald signed a bailout bill that included billions of dollars to aid fledgling airlines.
The coronavirus, which first emerged in China in early December, has hit the aviation industry hard as countries closed borders and restricted internal movement. The drop in demand has eaten cash reserves to the point CAPA - Center for Aviation in March said that by the end of May most airlines will be bankrupt.