Santander alerted US regulator to credit exposure at Latam Arlines

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The financial institution indicated that the airline’s situation “may have a significant adverse effect on our business

Diario Financiero – Santiago

Santander Spain reported last Friday to the Security Exchange Commission (SEC), the US financial regulator, that a probable bankruptcy of Latam Airlines “may have a significant adverse effect on our business.”

This, due to the exposure of US $ 549 million that it maintains in the airline, which is in a process of reorganization under Chapter 11 of the Bankruptcy Law of the United States.

According to the financial institution’s report to the SECOn May 26 of this year, the bank was identified as one of the holders of the 40 largest unsecured claims in Latam. The Spanish capital entity recognized that this claim corresponds to the loyalty program that it has together with the airline, Santander Latam Pass, an alliance that this 2020 is 25 years old.

“This claim is for the frequent flyer miles program that we and Latam operate, through which holders of our co-branded credit card with Latam accumulate airline miles with every expense on their credit card. Latam valued this claim not guaranteed in its bankruptcy declarations at US $ 549 million ($ 459,000 million using the peso-US dollar exchange rate as of April 30, 2020), “the bank told the US regulator.

“Our balance sheet as of May 31, 2020 included a prepaid expense for miles purchased under this program and a sign-in bonus with exclusivity rights valued together at $ 425 billion in Other Assets,” he adds.

From Santander they told the SEC that in the initial hearings held on May 28, 2020 under the Chapter 11 restructuring process, Latam’s motion was approved to continue honoring its mileage program.

“As of the date hereof, we do not see the need to revalue or recognize an impairment of this prepaid expense. However, such assets may be affected in the future as a result of bankruptcy procedures and we cannot assure that at a future date the Latam Airlines’ restructuring process will not have a material adverse effect on our business, “they said.


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