LATAM Airlines Group said on Wednesday its Argentine subsidiary will cease operations indefinitely, canceling all domestic flights, its first major cutback since filing for bankruptcy protection, Reuters reported. The announcement fell short of saying the company, Latin America’s largest airline, will entirely wind down its subsidiary, although it is unclear if it will ever resume operations. A LATAM spokesman said the subsidiary will begin a government process in Argentina before it can lay off 1,715 employees.
Antonio Barbosa had hoped to find new employment when the bakery he worked at in São Paulo fell victim to Brazil’s prolonged economic slump, the Financial Times reported. Then the coronavirus pandemic struck, all but killing off the 41-year-old’s hopes of finding work and leaving him sleeping on the streets. “I fear things will not get better in this country, so I will never have a job again,” he said. His plight reflects the enormous challenges confronting Latin America’s largest economy.
Brazilian telecoms firm Oi SA announced late on Monday a proposed plan that, if approved by creditors, would allow the company to exit a long bankruptcy restructuring process that began in 2016, Reuters reported. Under the plan, Oi hopes to sell its mobile unit for at least 15 billion reais to refocus the company on its fiber network. Brazil’s largest fixed-line carrier had approximately 65 billion reais ($12.65 billion) of debt when it filed for bankruptcy protection.
Farmers are lobbying against the Argentine government’s proposal to sweeten an offer on its overseas debt with payments tied to agriculture exports, Bloomberg News reported. Economy Minister Martin Guzman, who’s leading talks to restructure $65 billion of foreign debt, has put the idea on the table, though some creditors favor coupons linked to economic growth.
Latin America’s No. 2 carrier Avianca Holdings reported a $121 million loss for the first quarter late on Monday, accounting for just two weeks of severe impact from the coronavirus crisis, Reuters reported. The airline was the first in the region to file for bankruptcy protection in the United States and spent a full three months grounded without operating any regular flights. It has since restarted some operations in Ecuador, but its hubs in Colombia, El Salvador and Peru remain closed.
Passenger revenue at Latin America’s No. 2 airline, Avianca Holdings, has fallen 51% for the year as of early June compared with a year ago, the carrier said, in a look into the dire financial toll that the coronavirus has taken on the company, Reuters reported. Colombia-based Avianca was the first airline in the region to file for bankruptcy protection, after the coronavirus added financial strain to the already weak carrier. The revenue figure shows just how bad second-quarter results are likely to be for Latin America’s airlines.
Investors holding debt protection for Argentina are set to share compensation of some $1.5 billion after the South American nation defaulted on its foreign debt for a ninth time last month, Bloomberg News reported. Firms holding the country’s credit-default swaps will receive about 68.5% of the amount covered by the instruments, according to the final results of an auction to settle the contracts on Friday. They get triggered when a borrower fails to pay its debt. Investors use the instruments to make negative bets on borrowers or as hedges for bond investments.
Argentine President Alberto Fernandez is facing resistance from the agriculture industry, businessmen and even pot-banging citizens after announcing a decision to seize one of the world’s largest soy meal and oil exporters, Vicentin SAIC, Bloomberg News reported. Argentines from Buenos Aires to the northern city of Avellaneda, where Vicentin is headquartered, protested against the expropriation. On Wednesday evening, the sound of banging pots and pans could be heard in the capital, a traditional form of protest.
Latin American countries should quicken steps for airlines to renew domestic flights no later than July before more companies are forced to declare bankruptcy or close, a high-ranking official of the International Air Transport Association (IATA) said on Thursday, Reuters reported. The trade group estimated losses for airlines in Latin America at $4 billion this year, with total losses for the industry expected to reach $84 billion globally. Latin America has imposed stricter travel restrictions than most regions to fight coronavirus.
A second wave of Covid-19 would deepen this year’s recession in Latin America’s three largest economies by more than 1 percentage point, according to the Organisation for Economic Co-operation and Development, Bloomberg News reported. Argentina and Brazil would suffer the biggest hits, shrinking by 10% and 9.1%, respectively, while Mexico would contract by 8.6%, Paris-based OECD said in a report published on Wednesday. A possible second wave of the virus could come between October and November following the easing of containment measures currently in place, the organization said.