Avianca Holdings, the holding company of one of the largest airlines in Latin America, Avianca Airlines, has filed for bankruptcy due to the losses incurred by the COVID-19 pandemic.
The company announced in a statement issued on Sunday that it has filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code in a court in New York to “preserve and reorganize Avianca’s business.”
- See also:
Avianca Holdings claims that the necessity of this action was provoked by the “unforeseeable impact” of the coronavirus pandemic.
Passenger operations have been suspended since March, which has reduced its consolidated revenue by more than 80% while placing a substantial burden on its cash reserves.
By filing for Chapter 11 bankruptcy, Avianca Holdings plans to do the following:
- Safeguard and maintain operations so that the company can continue to function and provide customers with “safe and reliable air travel,” while implementing stringent health and safety protocols, as coronavirus-related travel restrictions are slowly lifted.
- Ensure connectivity and promote investment and tourism by carrying on as “Colombia’s flagship airline,” providing service to over half of Colombia’s domestic market, supplying essential non-stop service across South America, North America, and European markets. It also intends to continue cargo services, which play a critical function in Colombia’s economic recovery and the company’s other principal markets following the coronavirus pandemic.
- Protect jobs in Colombia and the other various markets that Avianca operates.
- Reorganize the company’s balance sheet and responsibilities to ensure that Avianca can navigate the adverse impacts of the coronavirus pandemic and “comprehensively address liabilities, leases, aircraft orders and other commitments.”
According to the statement, Avianca is directly responsible for over 21,000 jobs across Latin America, including over 14,000 positions in Colombia. It also works directly with over 3,000 vendors.
“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the COVID-19 pandemic,” stated Anko van der Werff, CEO of Avianca.
He continued that once government-instituted restrictions concerning air travel are lifted, and the company is gradually able to resume its passenger operations. It is also looking forward to welcoming furloughed employees back and play a leading role in the resurgence of Colombia’s economy.
Similar to many other airlines across the globe, Avianca is also seeking financial assistance from the governments of those countries in which it operates and provides service.
In the meantime, while the discussions play out, the company intends to employ the money it has, coupled with funds produced from its current operations (including cargo) to maintain the business during the “court-supervised reorganization process.”
“We believe that a reorganization under Chapter 11 is the best path forward to protect the essential air travel and air transport services that we provide across Colombia and other markets throughout Latin America,” van der Werff explained.