Avianca, World’s Second-Oldest Airline, Files for Bankruptcy Amidst the Coronavirus Pandemic

By Kurt Stolz on 10 May 2020
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Avianca Clase Ejecutiva Business Class cabin, Airbus A330

Colombian carrier Avianca Holdings filed for Chapter 11 bankruptcy on Sunday. The move came as the airline was unable to make a bond payment that was due and after failing to gain emergency aid from the Colombian government amidst the coronavirus pandemic.

The airline listed liabilities between $1 billion to $10 billion in a filing with the U.S. Bankruptcy Court for the Southern District of New York.

The airline’s frequent-flyer program, LifeMiles, is a separate company and not affected by the filing at this time.

Avianca was forced to end regularly scheduled passenger operations in late March after its primary hubs in Colombia, El Salvador, and Peru were closed amidst the pandemic. Most of its 20,000 employees not been paid since.

“Avianca is facing the most challenging crisis in our 100-year history,” said the company’s CEO, Anko van der Werff, in a statement.

The company hopes to preserve jobs and operations so it can continue to operate as current pandemic-related restrictions are lifted.  It said it plans to emerge “as a highly competitive and successful carrier in the America” following a reorganization under Chapter 11.

Founded in 1919, Avianca is world’s second-oldest continually operated airline after KLM. It is headquartered in Bogotá and its primary hub is at El Dorado International Airport. It is the largest airline in Colombia and the second largest in Latin America.

The airline went through bankruptcy proceedings in the early 2000s and was acquired by Germán Efromovich for $2 billion plus an assumption of $220 million in debt and leasing liabilities.  In the years that followed, Efromovich saddled the airline with additional debt as he grew the airline. He was removed from the airline’s board last year after BRW Aviation, a company controlled by Efromovich, defaulted on a $456 million loan from United.

Avianca became a member of Star Alliance in 2010 and began a code-sharing agreement with United Airlines shortly thereafter.

(Photo: Accura Media Group)

Accura News

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