In bankruptcy, a debtor-in-possession’s chief goal is to get its plan of reorganization confirmed by the bankruptcy court. [1] Among other things, the Bankruptcy Code requires that at least one class of impaired creditors vote to accept the plan — i.e., that at least two-thirds in amount and one-half in number of the allowed claims in such class accept the plan.
The U.S. Commerce Department yesterday unveiled a new strategy aimed at boosting international tourism hit hard by COVID-19 and government travel restrictions by streamlining the entry process and promoting more diverse destinations, Reuters reported. The "National Travel and Tourism Strategy" sets a goal of 90 million international visitors by 2027 who will spend an estimated $279 billion annually, topping pre-pandemic levels, the department told Reuters. "There are a lot of industries that are well past COVID — travel and tourism is not," U.S. Commerce Secretary Gina Raimondo said. The federal government must do more to support the resurgence of travel and tourism to ensure the industry rebuilds to be "more resilient, sustainable and equitable," according to the draft strategy document seen by Reuters. In 2019, the United States had 79.4 million international visitors, a figure that plummeted to 19.2 million in 2020 as the pandemic hit and rose to just 22.1 million in 2021. International visitors spent $239.4 billion in 2019, but just $81 billion in 2019, the Commerce Department said. Before COVID, tourism supported 9.5 million U.S. jobs and generated $1.9 trillion in economic output.
Lessor Nordic Aviation Capital (NAC) has emerged from chapter 11, having eliminated nearly $4.1 billion of debt, Aerotime Hub reported. As part of its restructuring process, the lessor increased its liquidity with access to $537 million in additional capital to fund operations. In December 2021, NAC filed for chapter 11 bankruptcy proceedings. In April 2022, NAC received approval for its restructuring plan from the bankruptcy court. The NAC restructuring plan focused on four initiatives, including balance-sheet stabilization, organizational change, financial growth and portfolio stabilization. As part of the restructuring plan, NAC has appointed a new board of directors. Currently, the new board is led by Norman Liu and Klaus Heinemann.
LATAM Airlines Group SA, the largest air transport group in Latin America, said on Wednesday that it garnered support from almost all of its creditors for a reorganization plan that the company is taking before a U.S. court, Reuters reported. The airline said that the agreement was presented to a Manhattan bankruptcy court that is handling its chapter 11 bankruptcy case, which it filed for in May 2020 due to the impact of the COVID-19 pandemic on its operations. The agreement includes bondholders in Chile, the Official Committee of Valista Creditors (UCC), the Ad Hoc group of LATAM creditors (led by Sixth Street, Strategic Value Partners and Sculptor Capital) and the main shareholders, the company said in a statement. "The agreement will allow the creditors who choose to receive the Class A Convertible Bonds or the Class C Convertible Bonds contemplated in the Reorganization Plan, to improve their recovery through an additional cash payment," it said. The firm had presented the plan, diluting shares, in November last year. The hearing is scheduled for May 17 at which LATAM’s lawyers will ask U.S. Bankruptcy Judge James Garrity to approve the proposal. The plan proposes an $8.19 billion infusion through a mix of new equity, convertible notes and debt.
After two years of pandemic-related travel restrictions, a wave of re-openings has spurred a surge in demand for plane travel. But consumers rushing to plan their summer vacations are facing ticket prices that are more expensive than ever, YahooFinance.com reported. Airline fares soared 18.6% in April, according to the Bureau of Labor Statistics' latest read on the Consumer Price Index (CPI) out Wednesday. The jump marks the largest increase since the inception of the series as a component of the public transportation index in December 1963 and further builds on March's 10.7% monthly rise in airfares. On an annual basis, airline fares logged a 33.3% increase from the same time last year, the largest 12-month rise since the period ending December 1980. Higher prices for air travel come amid a surge in fuel prices and pent-up demand for travel as COVID restrictions ease, also standing high amid broader inflationary pressures that have hit consumers at the grocery store, gas station, and housing market.
Chile's LATAM Airlines received backing by a majority of its unsecured creditors in its chapter 11 bankruptcy exit plan, the airline said on Friday, Reuters reported. LATAM, which filed for bankruptcy in the United States in 2020 after being hit by the coronavirus-related travel downturn, said around 65% of its low-ranking creditors had backed the plan, which it said was "fair and considered all stakeholders." A committee representing junior creditors filed an objection to the restructuring plan in court Monday, calling it "fundamentally flawed" and alleging it would improperly benefit shareholders such as Delta Airlines at their expense. LATAM Airlines, created in 2012 following the merger of Chile's LAN with Brazilian rival TAM and with operating units in Chile, Brazil, Colombia and Peru, still has to bring dissenting stakeholders on board. The plan, in which LATAM hopes to raise $5.4 billion, has also received objections from a Chilean bank representing local bondholders and the U.S. Department of Justice's bankruptcy watchdog. The airline's lawyers will ask a New York judge to approve its proposal in court May 17.
Airlines face a slew of growing costs in the coming year including higher insurance, fuel, labour and lease rates, the chief executive of major aircraft lessor SMBC Aviation Capital said on Thursday, Reuters reported. Managing those will be the industry's biggest challenge in the next 12-24 months despite a rebound in demand, Peter Barrett told the Airfinance Journal conference in Dublin. "If I had to pick one topic that's going to be a challenge for the industry over the next 24 months, it will be the cost base and how elastic will demand be relative to that," Barrett said. After years in which airlines enjoyed growth helped by low interest rates, Barrett said it was inevitable the rising cost of money would eventually be passed on through to the rates charged to airlines for leasing jets. The U.S. Federal Reserve raised interest rates by 50 basis points on Wednesday — the biggest hike in a single day since 2000 — in a bid to control surging prices. While demand for medium-haul air travel and narrowbody jets is bouncing back after the COVID pandemic, growing costs loom over back-to-back aircraft finance gatherings in Dublin. Lessors, including the industry’s No. 3 player SMBC, own over half of the world's fleet of commercial passenger jets.
Junior creditors of LATAM Airlines Group SA are challenging its proposed reorganization plan, saying it improperly benefits the carrier's existing shareholders, such as Delta Air Lines, at their expense, Reuters reported. Objections were filed on Monday in Manhattan bankruptcy court ahead of a May 17 hearing at which LATAM’s lawyers will ask U.S. Bankruptcy Judge James Garrity to approve the proposal. The airline is seeking to raise $5.4 billion through its plan to exit chapter 11, which it filed two years ago as world travel halted amid the COVID-19 pandemic. If approved, the plan would put a group of creditors including Sixth Street Partners in control of the company. The committee representing unsecured creditors in the case has long opposed the airline’s restructuring strategy and has frequently urged it to consider alternative sources of financing. In an objection filed on Monday, the committee accused LATAM of conducting “a fundamentally flawed process” that violates bankruptcy law by elevating the rights of shareholders. It argued that the plan offers shareholders, including Delta and Qatar Airways, overly beneficial treatment in the form of discounted equity options and an "outsized role" in LATAM's corporate governance.
United Airlines, while announcing a big first-quarter loss, said Wednesday that it expected record revenue in the coming months, suggesting it had reached a pandemic turning point, the New York Times reported. “The demand environment is the strongest it’s been in my 30 years in the industry,” the airline’s chief executive, Scott Kirby, said in a statement. “We’re now seeing clear evidence that the second quarter will be an historic inflection point for our business.” The airline reported a nearly $1.4 billion loss for the first three months of the year. But it said it expected to collect 17 percent more revenue on a per-seat, per-mile basis from April to June than it did in the same period in 2019. The company also said it expected a healthy profit in the second quarter, despite high fuel prices. United’s outlook, which it described as “bullish,” drove the airline’s shares up more than 7 percent in after-hours trading. The airline cited a handful of reasons for its rosy projection, including strong consumer demand, operating margins that are nearly back to 2019 levels, rapidly rebounding business travel and the carrier’s expectation of a similar upturn in international travel. United said it expected a profit not only in the second quarter but for the full year.