(image: Latam Airlines Group)

Chilean holding company Latam Airlines Group SA (LFL, LAN.SN) announced a $1 billion capital increase to finance its investment plan and strengthen its balance sheet, the company said in a regulatory filing late Tuesday.

Latam Airlines, Latin America’s largest airline by market value, plans to invest $4.85 billion in its fleet from 2013 to 2015, while it aims to reduce its debt levels, by increasing its cash position, to gain an investment-grade rating.

A higher rating helps companies can obtain less-expensive financing.

The company, formed last June from the merger of Chilean LAN Airlines and Brazilian carrier TAM, has been considering an increase to boost cash since LAN lost its investment-grade rating after the merger, due to TAM’s higher debt.

Regarding its fleet investment plan, Latam Airlines plans to add 83 new airplanes.

Latam Airlines’s board called for a June 11 shareholder meeting to vote on the increase.


Source: The Wall Street Journal