BY Richard Summerfield
Avianca Holdings, the second largest airline in Latin America, has filed for Chapter 11 bankruptcy protection after failing to meet a bond payment deadline, while its pleas for COVID-19 aid from Colombia’s government have so far been unsuccessful.
The company filed for bankruptcy in a court in New York on Sunday as the coronavirus outbreak continues to impact the aviation industry. Global air travel has fallen by 90 percent since the outbreak, according to the International Air Transport Association. The body predicts Latin American airlines will lose $15bn in revenues this year – the biggest drop in the industry’s history.
“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the COVID-19 pandemic,” said Anko van der Werff, chief executive of Avianca. “Despite the positive results yielded by our ‘Avianca 2021’ plan, we believe that, in the face of a complete grounding of our passenger fleet and a recovery that will be gradual, entering into this process is a necessary step to address our financial challenges.
“When government-mandated air travel restrictions are lifted and we are able to gradually resume our passenger flights, we look forward to welcoming back our furloughed employees and playing a leading role in restarting the economy in Colombia and our other key markets,” he continued. “We greatly appreciate the dedication of our employees to Avianca and to serving the more than 30 million passengers that fly our airline each year. We remain committed to our purpose to connect people, families and businesses.”
Undoubtedly, the COVID-19 crisis has not helped matters. Avianca has not flown a regularly scheduled passenger flight since late March and most of its 20,000 employees have gone without pay through the crisis. Furthermore, the pandemic has cut more than 80 percent of Avianca’s income, and the company has been struggling with high fixed costs. It had debts of $7.3bn in 2019.
Avianca previously filed for bankruptcy in the early 2000s and was rescued by a deal with Bolivian oil tycoon German Efromovich.
News: World's second-oldest airline, Avianca, driven to bankruptcy by coronavirus