LATAM Airlines Group has sought chapter 11 bankruptcy protection in the United States as the company seeks to reorganise in the wake of the Covid-19 outbreak.

Affiliates in Chile, Peru, Colombia and Ecuador are all involved in the move.

Colombian carrier Avianca took a similar step earlier this month.

“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 Roberto Alvo, chief executive of LATAM.

“We have implemented a series of difficult measures to mitigate the impact of this unprecedented industry disruption, but ultimately this path represents the best option to lay the right foundation for the future of our airline group.

“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.”

LATAM laid off 1,800 employees out of over 40,000 in the lead-up to its bankruptcy filing.

The group said it had secured the financial support of shareholders, including the Cueto and Amaro families, and Qatar Airways, to provide up to $900 million in debtor-in-possession financing.

In addition, as of the filing for voluntary protection, the group had approximately US$$1.3 billion in cash on hand.

The chapter 11 financial reorganisation process is a legal framework under which LATAM, and its affiliates, will have the opportunity to resize operations to the new demand environment.

LATAM said it was also in discussions with the governments of Chile, Brazil, Colombia and Peru to assist in sourcing additional financing, protect jobs where possible and minimise disruption to its operations.

“Faced with the biggest crisis in the history of aviation, the Board has approved this path forward having analysed all the available alternatives to ensure the sustainability of the group.

“As we have adapted to new realities in the past, we are confident that LATAM will be able to succeed in the post-Covid-19 context and continue to serve Latin America, connecting the region with the world,” said Ignacio Cueto, chairman of LATAM board of directors.