Latam Airlines term loan B could stumble in syndication on poor market conditions

By Sara Rosenberg

New York, Sept. 30 – Market sources are hearing that Latam Airlines’ term loan B may be having a hard time filling out by Monday’s commitment deadline as the airline sector in general is a tough sell in the current environment.

“Definitely struggling a lot to get close to book size. It’s a better story than Brightspring, but airlines at the start of a potential recession are hard to get through credit committees,” one source remarked.

“Airlines are viewed as very cyclical – both business and leisure travel. Less demand (in a recession) but the planes mostly still fly and the employees get paid, so revenue declines drop mostly to the cash flow line,” the source continued.

What does work in Latam’s favor is that the company is “simple airline recovering to 2019 levels story, and they have Delta coming in with an investment which seems like an endorsement of viability,” the source explained.

The source added that the recently pulled Brightspring deal was “overlevered speculation on massive CAPEX needs to convert very rural customers to fiber in a world of 5G towers and Starlink satellites with a sponsor that many do not like.”

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