Avianca emerges from Chapter 11

February 2022 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

February 2022 Issue

Following its Chapter 11 filing in May 2020, Colombian airline Avianca has successfully completed its financial restructuring process and emerged from bankruptcy as a more efficient and financially stronger airline, with significantly reduced debt and over $1bn of liquidity.

The beleaguered airline’s emergence from Chapter 11 bankruptcy comes a month after a US court approved its plan of reorganisation.

With its exit, Avianca has a new business model with a more flexible product tailored to each passenger’s needs and more accessible pricing while retaining Avianca’s leading network and frequencies, best-in-class loyalty programme and one of the largest cargo operations in the region.

Avianca is one of many airlines to have been hard hit by the coronavirus (COVID-19) pandemic, with Virgin Australia, Trans States Airlines, Compass Airlines, Miami Air International and RavnAir, South African Airways and Avianca’s main rival, Chile’s LATAM Airlines, among the litany of casualties.

“This is an important day for Avianca and all of our stakeholders,” said Rohit Philip, chief financial officer of Avianca. “We are pleased to be emerging successfully from this process, with Avianca in a stronger financial position to continue serving our customers and flying the skies for many years to come. We look forward to continuing to execute on our new business vision and capitalising on the recovery in travel demand to drive our future success.”

With one of the strongest networks in Latin America, over the next three years Avianca expects to nearly double its network, expanding to nearly 200 routes in Latin America and the world. The majority of the new routes will be point-to-point, providing greater convenience to its customers.

“We look forward to the Company’s future success as we continue building upon Avianca’s rich history across Latin America and internationally,” said Adrian Neuhauser, president and chief executive of Avianca. “We appreciate the support of our loyal customers, partners, and lenders throughout this process.

“I would also like to thank our dedicated employees for their commitment to providing uninterrupted service to our customers and whose hard work enabled us to complete this process efficiently,” he continued. “I am confident that we are well-positioned to be a highly competitive and successful carrier.”

Reaffirming its commitment to providing reliable and on-time service, Avianca has stated that its customers will be served by a fleet of more than 130 aircraft by the end of 2025 with reconfigured, lighter-weight new-generation seats, which will allow the airline to reduce the carbon footprint of its operations and contribute to airport decongestion while increasing its efficiency.

Seabury Securities LLC served as investment banker and financial adviser to Avianca, and Milbank LLP served as legal adviser throughout the Chapter 11 bankruptcy process.

“We are very proud of the work that the Avianca team has done that has led the company to emerge from Chapter 11 on schedule as a financially stronger organisation,” concluded Roberto Kriete, chairman of the board at Avianca. “While we are on the right path to recovery, we must remain cautious with the progress of the pandemic that has not yet ended and must stay focused on executing our new business plan.”

Fraser Tennant