Transantiago operator Alsacia files for bankruptcy

Inversiones Alsacia, one of the operators of Chilean capital Santiago's mass transit system Transantiago, filed for Chapter 11 bankruptcy protection in a court in New York.

The firm said more fare evasion and fewer people using the transit system made it impossible to meet its financial obligations. Alsacia's debt surpasses US$1bn, it said in a statement.

The move wraps up a period of financial uncertainty. Earlier this week, creditors backed the company's proposed restructuring of 2018 senior secured notes for US$464mn. In August it missed a payment on those bonds.

Alsacia also blamed the decline in business on new contracts that took effect in 2012, which stipulated that 70% of the operators' income will be paid according to the number of passengers transported. Under the old contracts, 65% of income was paid by the government based on a 2005 study on projected demand.

Transantiago was introduced in 2007 to improve public transportation, but implementation was rushed. The system has cost Chileans over US$10bn in subsidies and has been heavily criticized.

Alsacia transports 1.15mn passengers a day in Santiago.