Avianca Exits Chapter 11 Restructuring With Reduced Debt and Over $1.0 Billion in Liquidity
Avianca has completed their financial restructuring process and emerged from Chapter 11 with substantially reduced debt and over $1.0 billion in liquidity. Over the last 18 months, the company revamped their business model to become more efficient and sustainable airline.
On Wednesday (December 1st, 2021), Avianca announced that the company has successfully completed their restructuring process, emerging from Chapter 11 as a more efficient and financially stronger airline with substantially reduced debt and over $1.0 billion in liquidity. The company entered Chapter 11 on May 10, 2020, and after 18 months has now revamped their business model to become significantly more efficient, while reaffirming their commitment to providing reliable on-time service. The new business model combines the best attributes of low-cost airlines with key differentiators that will make Avianca the most convenient travel alternative for millions of passengers across Latin America and the world.
In Wednesday’s announcement, Avianca’s Chief Financial Officer, Rohit Philip, said,
“This is an important day for Avianca and all of our stakeholders. 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 capitalizing on the recovery in travel demand to drive our future success.”
Also commenting on the carrier’s milestone achievement, Avianca’s President and Chief Executive Officer, Adrian Neuhauser, said,
“We look forward to the Company’s future success as we continue building upon Avianca’s rich history across Latin America and internationally. 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. I am confident that we are well-positioned to be a highly competitive and successful carrier.”
Avianca’s Chairman of the Board, Roberto Kriete, added,
“We are very proud of the work that the Avianca team has done that has led the company to emerge from C11 on schedule as a financially stronger organization. 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. I have all the confidence that with the support of our investors, of all those who believed in us and with the current administration, this company will grow to continue connecting Latin America.”
As Avianca faces a new and promising future, the airline will focus on offering competitive prices and one of the strongest networks in Latin America. Over the next three years, the airline expects to nearly double their network to 200 routes, the majority of which will be point-to-point. By the and of 2025, Avianca will have a fleet of over 130 aircraft, which will be reconfigured with lighter weight next generation seats. Over the next year, the carrier will invest over $200 million in renewing their Airbus A320 cabins, including Premium, Plus and Economy Class seating. Avianca will also continue to fly the comfortable and efficient Boeing 787 Dreamliner on long-haul flights.
Additionally, the company will continue to grow Avianca Cargo by maintaining their leadership position in Colombia and expanding in other strategic markets. The airline remains committed to their LifeMiles frequent flyer program as well as Avianca’s VIP Lounges. Avianca has also strengthened their online customer service and digital channels, and remains focused on punctuality. According to Cirium, Avianca was one of the leading Latin American airlines for on-time performance in 2021.
Under the reorganization plan, the new shareholders will invest in Avianca Group International Limited, a new holding company which will be domiciled in the UK, and will consolidate investments in the company’s subsidiaries including Aerovias del Continente Americano (their Colombian subsidiary), and TACA International (their Central American operation). Prior to the restructuring, the company’s holding company, Avianca Holdings, was domiciled in Panama.