Avianca Holdings Files for Chapter 11 Bankruptcy Reorganization in New York
On Sunday, Colombian carrier Avianca became the latest airline to file for Chapter 11 Bankruptcy reorganization as a result of the global COVID-19 pandemic. The court supervised process is intended to allow the airline to continue operations while restructuring.
Yesterday (May 10, 2020), Colombia’s Avianca Holdings S.A. (NYSE: AVH), parent company of Avianca Airlines filed Chapter 11 Bankruptcy in New York. The court supervised reorganization is intended to allow the carrier to continue operations, preserve jobs and maintain connectivity for the airline’s 30 million annual passengers. Avianca is in continuing discussions with the Colombian and other governments regarding financial support for a successful reorganization process. The bankruptcy filing was the result of the 90 percent decline in global passenger traffic due to the COVID-19 pandemic. Grounded since mid-March, Avianca has experienced a revenue decline of 80 percent and significant pressure on their cash reserves. In Sunday’s announcement, Avianca’s Chief Executive Officer, Anko van der Werff said in part,
“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the COVID-19 pandemic. Despite the positive results yielded by our ‘Avianca 2021’ plan, we believe that, in the face of the 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. We greatly appreciate the dedication of our employees to Avianca and to serving more than 30 million passengers that fly our airline each year. We remain committed to our purpose to connect people, families and businesses. Our customers can be confident that they can continue to depend on Avianca for safe, reliable and high-quality service, and our LifeMiles members can expect to accrue and redeem miles as normal.”
Source: Avianca Airlines