Avianca
Photograph ©2019 by Brian Cohen.
Brian Cohen·
Financial
··13 min read

Avianca Holdings Filed for Chapter 11 Bankruptcy Protection

Avianca Holdings Sociedad Anonima — which includes certain subsidiaries and affiliates of its operations — filed voluntary petitions for reorganization under Chapter 11 in the United States Bankruptcy Court for the Southern District of New York on Sunday, May 10, 2020 in an effort to both preserve its businesses for the future and ensure that it emerges from its court-supervised reorganization of its businesses as a highly competitive and successful carrier in South America and North America as it navigates its way through what could very well be a prolonged recovery for both the travel industry and the global economy overall.

Avianca Holdings Filed for Chapter 11 Bankruptcy Protection

The following paragraph was posted at the official Internet web site of Avianca Holdings Sociedad Anonima:

The filing was necessitated by the unforeseeable impact of the COVID-19 pandemic, which has resulted in a 90% decline in global passenger traffic and is expected to reduce industry revenues worldwide by $314 billion, according to the International Air Transport Association.

Despite the filing for voluntary petitions for reorganization under Chapter 11, the second largest airline in Latin America — as well as the largest airline in Colombia and El Salvador — will continue to operate as normal during the process, as Avianca intends to:

  • Protect and preserve operations so Avianca can continue to operate and serve customers with safe and reliable air travel and high-quality service, under the strictest biosafety protocols, as COVID-19 travel restrictions are gradually lifted;
  • Ensure connectivity and drive investment and tourism by continuing as Colombia’s flagship airline, serving over 50% of the domestic market in Colombia and providing essential non-stop service across South America, North America and European markets as well as continuing cargo operations, playing a key role in the economic recovery of Colombia and the Company’s other core markets following the COVID-19 pandemic;
  • Preserve jobs in Colombia and other markets where the Company operates, with Avianca directly responsible for more than 21,000 jobs throughout Latin America, including more than 14,000 in Colombia, and working with more than 3,000 vendors; and
  • Restructure the Company’s balance sheet and obligations to enable Avianca to navigate the effects of the COVID-19 pandemic as well as comprehensively address liabilities, leases, aircraft orders and other commitments.

Summary

Avianca continues to be engaged in discussions with the government of Colombia — as well as those of its other key markets — regarding financing structures that would provide additional liquidity through the Chapter 11 reorganization process.

What all of this means to you as a customer and as a member of the LifeMiles frequent flier loyalty program: nothing, as the airline will operate business as usual — for now, anyway.

This article is the latest in a series pertaining to the 2019 Novel Coronavirus — which is also known as COVID-19 or 2019-nCoV or SARS-CoV-2 or HCoV-19 or severe acute respiratory syndrome coronavirus 2 — pandemic in an effort to get the facts out with information derived from reliable sources…

See also

…as well as attempt to maintain a reasoned and sensible ongoing discussion towards how to resolve this pandemic.

Other articles at The Gate which pertain to the 2019 Novel Coronavirus include:

Photograph ©2019 by Brian Cohen.

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