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The chief executives of American Airlines, United Airlines and Southwest Airlines will testify on Dec. 15 at an oversight hearing before the Senate Commerce Committee on the impact of $54 billion in COVID-19 government payroll support for U.S. airlines, Reuters reported. The hearing will look at "the effect on the airline industry’s workforce, and the effect of airline operational performance on American consumers," according to a committee statement. American CEO Doug Parker and Southwest CEO Gary Kelly, who are both stepping down in early 2022, will testify, as will United CEO Scott Kirby. Delta Air Lines Chief Operating Officer John Laughter also will testify, as will Sara Nelson, president of the Association of Flight Attendants-CWA. Lawmakers are expected to quiz executives about how carriers used pandemic-related federal aid, staffing issues and other matters. U.S. airlines and carriers around the world were hard hit by reduced business and tourist travel during the COVID-19 pandemic. Starting in March 2020, Congress approved three rounds of taxpayer bailouts totaling $54 billion to cover much of U.S. airline payroll costs through Sept. 30 of this year as a result of the pandemic.

Avianca, one of Latin America’s largest airlines, is emerging from bankruptcy protection after winning court approval for its reorganization plan a year and a half after the COVID-19 pandemic decimated the region’s air carriers, Bloomberg News reported. Avianca, which is headquartered in Bogota, said it is exiting the restructuring process after raising fresh investments of $1.7 billion. It also comes out of bankruptcy with “significantly” reduced debt and more than $1 billion of liquidity, the company said in a regulatory filing. Over the next three years, the 102-year-old company expects to expand to almost 200 routes in Latin America and the world. By 2025, it plans to have a fleet of more than 130 aircraft “with reconfigured, lighter-weight new-generation seats, which will allow Avianca to reduce the carbon footprint of its operations,” according to the statement. Avianca filed for chapter 11 protection in May 2020, after Colombia and other Latin American governments sealed borders and restricted flights in an attempt to control the spread of the coronavirus. Within weeks, two other major carriers in the region, Latam Airlines and Grupo Aeromexico, also filed for court protection.

Grupo Aeroméxico SA B de CV is roiling some of its creditors with a restructuring plan that sets aside an ownership stake for its partner and part-owner Delta Air Lines Inc. while paying a fraction of some of its debts, WSJ Pro Bankruptcy reported. Creditors including Invictus Global Management LLC, Hein Park Capital Group LLC and Livello Capital Management LP are criticizing a restructuring proposal from Aeromexico, which filed for chapter 11 last year, that would allocate less than 15 cents on the dollar to some unsecured debts while offering similar creditors and other third parties a stake in the reorganized airline. Invictus said in a letter to Delta, Aeromexico’s largest shareholder, on Tuesday that the restructuring “could be on the verge of devolving into protracted litigation because value is not currently being distributed in a lawful manner.” If approved in the U.S. Bankruptcy Court in New York, Aeromexico’s restructuring proposal would lock in commitments from financial institutions to supply money the company needs to exit chapter 11. Aeromexico filed for bankruptcy protection in the early months of Covid-19’s global spread, one of three major Latin American carriers to seek U.S. bankruptcy protection during the pandemic. The company’s current restructuring plan depends on raising $1.4 billion in exit financing that would position Delta, Aeromexico’s largest shareholder, to retain a roughly 20% stake, court records show.

Latam Airlines Group SA’s bankruptcy-exit plan has divided the airline’s creditors, some of which said a proposed $5.44 billion equity sale would drive too much value to shareholders and other capital providers, WSJ Pro Bankruptcy reported. Latam’s restructuring plan, filed last week, revolves around an equity-capital raise from certain unsecured creditors and a majority of current shareholders, including Delta Air Lines Inc., Qatar Airways Group Q.C.S.C. and the Cueto family. Unsecured creditors that aren’t signed up for the equity raise said in a court hearing Tuesday that Latam allocated too much value to the big creditors and shareholders making capital contributions, leaving too little for those on the outside. The stock-buying program would put Latam’s largest creditor group in control of the business, while retaining stakes for its existing shareholders, despite the bankruptcy. “General creditors who are not members of that group get unreasonably low recoveries,” said Allan Brilliant, a lawyer for the official committee of Latam’s unsecured creditors. The terms of the financing deal aren’t yet up for approval in the U.S. Bankruptcy Court in New York, where Latam sought chapter 11 protection in the early months of the COVID-19 pandemic. But lawyers for nonparticipating creditors took the opportunity yesterday to preview possible arguments against the proposed restructuring, which is subject to continuing negotiations and could change.

Brazilian airline Azul SA confirmed on Monday that it made an offer earlier this month to combine with Chile’s LATAM Airlines Group, which is in bankruptcy proceedings, but said it had since decided to focus on its own operations, Retuers reported. In an exchange filing published late on Sunday, Azul said that it would consider potential partnerships only in the future. The Brazilian airline said its non-binding proposal submitted on Nov. 11 had included around $5 billion in equity financing and was backed by some creditors of LATAM. Azul added however that LATAM’s valuation under its bankruptcy process had become higher than it believes to be acceptable, citing ongoing uncertainty in the aviation industry amid the COVID-19 pandemic, especially in long-haul markets. “As a result, Azul will continue to focus on its exclusive competitive advantages provided by its unique network and fleet flexibility... and to evaluate future partnerships and consolidation opportunities available in the market,” Azul said. LATAM filed a reorganization plan on Friday in which it proposed an $8.19 billion infusion of capital into the group in a bid to exit its chapter 11 bankruptcy.

Airlines are scrambling to limit the impact of the latest coronavirus variant on their networks, while delays in bookings are threatening an already-fragile recovery for global tourism, Reuters reported. Shares in airlines bounced back with the rest of the market on Monday after a sharp sell-off on Friday when the discovery of a new coronavirus mutation took a heavy toll on stocks. The latest outbreak, first reported in southern Africa, dealt a blow to the industry just as it had recovery in its sights, especially following the easing of U.S.-bound travel. Multiple countries including Japan, the United States, Britain and Israel have imposed travel curbs in order to slow the spread of the Omicron coronavirus variant. "The hope for U.S. and European carriers had been that opening the Atlantic would allow them to operate long-haul routes on a cash-positive basis, but border restrictions make it even harder to get the demand in," said James Halstead, managing partner at consultancy Aviation Strategy. A pickup in long-haul traffic is seen critical for many carriers, which have been left with severely strained balance sheets following the plunge in air travel last year. Southern Africa accounts for only a tiny portion of the world's international travel, but sudden border restrictions and route suspensions have left some carriers with an uncertain future.

Chile's LATAM Airlines Group SA said on Friday that it has filed a reorganization plan, proposing an $8.19 billion infusion of capital into the group, in a bid to exit its chapter 11 protection, Reuters reported. The financing proposal will include a mix of new equity, convertible notes and debt, the group said in a statement, adding that it intends to launch an $800 million equity rights offering to shareholders, upon confirmation of the plan. "While our process is not yet over, we have reached a critical milestone in the path to a stronger financial future," said Roberto Alvo, chief executive of the largest airline in Latin America. Recently, LATAM said it received several offers to fund the exit from Chapter 11 bankruptcy, each of which are worth more than $5 billion. The group filed for chapter 11 bankruptcy protection in New York in May 2020 as world travel came to a halt amid the COVID-19 pandemic. Upon emerging from chapter 11, LATAM expects to have total debt of about $7.26 billion and liquidity of about $2.67 billion, the company said in the statement. The Santiago-based company reported losses of some $692 million in the third quarter, as the indebted company was still battling challenges from the pandemic. The restructuring plan is accompanied by a support agreement with creditor group Parent Ad Hoc Group and some LATAM shareholders.

Large U.S. airlines are carrying about $20 more debt per passenger than before the pandemic, according to the chief executive officer of Frontier Group Holdings Inc., who predicts the carriers will start addressing those obligations with higher fares, Bloomberg News reported. “How long can that last?” asked Barry Biffle, CEO of ultra-low-cost Frontier Airlines. “They either have to raise their leisure fares or you reduce capacity so you can raise prices.” U.S. carriers amassed roughly $60 billion in new debt last year to contend with the collapse in business from the pandemic. Their interest expense is likely to reach $20.7 billion through 2025, according to the trade group Airlines for America. Frontier’s debt rose about $1 billion, or $1 a passenger, by the same accounting, according to the company. U.S. airlines also face higher costs now and into next year from crew training, pricier jet fuel, and rising airport and aircraft-maintenance expenses. “Cost issues remain topical and continue to run hot with our view that pressures will be more elevated into 2022 than Street estimates suggest,” MKM Partners analyst Conor Cunningham wrote in a Nov. 18 note to clients.