Avianca Declares Bankruptcy

The Colombian-born airline, which operates in all Central American countries, voluntarily filed for bankruptcy in the United States following the company's economic losses due to the spread of covid-19 globally.

Monday, May 11, 2020

This process was necessary due to the unpredictable impact of the covid-19 pandemic, which has caused a 90% decrease in global passenger traffic and is expected to reduce industry revenues worldwide by US$314 billion, according to the International Air Transport Association (IATA), the company reported.

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From Avianca's statement:

Bogota, Colombia, May 10, 2020. Avianca Holdings SA (NYSE: AVH, BVC: PFAVH) (the "Company" or "Avianca") and certain of its subsidiaries and affiliates today filed for voluntary Chapter 11 relief under the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York to preserve and reorganize Avianca's business. LifeMiles™, the company that manages the program of the same name is not part of the Chapter 11 application. The filing was necessary due to the unpredictable impact of the COVID-19 pandemic, which has caused a 90% decrease in global passenger traffic and is expected to reduce industry revenues worldwide by $314 billion, according to the International Air Transport Association (IATA). Avianca's scheduled passenger operations have been on the ground since mid-March, reducing its consolidated revenues by more than 80% and putting significant pressure on its liquidity.
 
Through the Chapter 11 reorganization process, Avianca intends to:
-Protect and preserve operations to continue to serve customers with safe and reliable air travel, under the strictest biosecurity protocols, as the travel restrictions generated by COVID-19 are gradually lifted.

-Ensure connectivity and boost investment and tourism by continuing to be Colombia's leading airline, serving more than 50% of the country's domestic market and providing essential non-stop service throughout 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 major markets after the COVID-19 pandemic.

-Preserve jobs in Colombia and other markets where the Company operates, with Avianca directly responsible for more than 21,000 direct and indirect jobs throughout Latin America, including more than 14,000 in Colombia, and working with more than 3,000 suppliers.

-Restructure the company's balance sheet and obligations to address the effects of the COVID-19 pandemic, as well as managing its liabilities, leases, aircraft orders and other commitments.

"The effects of the COVID-19 pandemic have led us to face the most challenging crisis in our 100-year history as a company," said Anko van der Werff, CEO and President of Avianca Holdings. "Despite the positive results of our "Avianca 2021" plan, we believe that, given the total suspension of our passenger operations and a recovery that will be gradual, entering into this process is a necessary step to meet our financial challenges."



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