LATAM Airlines Group SA aims to launch a capital increase at the end of the third quarter and its controllers intend to subscribe their respective proportional stakes in the operation, the company said during a conference call on Wednesday.
Latin America's largest carrier will ask shareholders on June 11 to approve the $1 billion increase aimed at helping to finance its spending plans over the coming years and regain its investment grade.
"Regarding the timing for the capital increase, we would target at this point definitely towards the end of the third quarter... it would be probably September-October this year," said Gisela Escobar, LATAM's head of investor relations.
The company is the fruit of Chilean airline LAN's takeover of Brazil's TAM in June. Following the takeover, Fitch Ratings lowered LATAM's ratings on global debt to "BB plus" from "BBB," citing the carrier's high debt levels and constrained cash holdings following the combination.
But the increase on its own will not be sufficient for the company to recoup its prized investment grade, chief financial officer Alejandro de la Fuente added, citing a need to improve liquidity.
"We will recover the rating only to the extent that we can show strong cash flow generation from our operations, which is something we are on track to achieve," he said.
Chile's Cueto family and Brazil's Amaro family control the airline.
The two families "have stated their intention to subscribe their proportional stakes in the rights offering," De la Fuente added.
LATAM's first-quarter net profit skidded to $42.7 million, or nearly half of a year earlier, on foreign exchange fluctuations, a drop in cargo revenue and the grounding of its three Dreamliners, it reported on Tuesday.
Shares of LATAM were down 1.09 percent in midday Wednesday trade, underpeforming a broadly steady Santiago blue-chip IPSA stock index.