The airline seeks to restructure its balance sheet in the United States after a loss of 80% of its revenues due to the health crisis
The Colombian airline Avianca has announced this Sunday that it voluntarily accepts the bankruptcy law of the United States “in order to preserve and reorganize the business” of the company. The news, which is one of the direct consequences of the crisis caused by the coronavirus, shakes several countries where the airline has a presence and generates thousands of jobs. Taking advantage of this process was necessary due to the unpredictable impact of the covid-19 pandemic, which has caused a 90% decrease in global passenger traffic and is expected to reduce worldwide industry revenues by $ 314 billion. , according to the International Air Transport Association (IATA), ”the company reported in a statement.
Minutes later, its president and CEO, Anko van der Werff, has said on Twitter that they will fly again when they are allowed to. “Today we officially announce our voluntary intention to reorganize in the United States,” he wrote on the social network. The decision implies that Avianca Holding and its subsidiaries and affiliates, except LifeMiles, are subject to the economic rescue contemplated in Chapter 11 of the Bankruptcy Court of the Southern District of New York. The company estimated its liabilities at $ 1 billion to $ 10 billion in a statement before this court. The process seeks “to restructure the balance sheet and the company’s obligations to face the effects of the covid-19 pandemic, as well as to manage its responsibilities, leases, aircraft orders and other commitments.”
Avianca Holding has around 30 million users annually and employs 21,000 people between direct and indirect jobs in Latin America, of which 14,000 are in Colombia. And in recent days, a debate has stirred in the Andean country over whether or not the Colombian government should save the airline amid criticism from its users for the high cost of tickets and what they consider a poor quality of service. The company has clarified that despite the request for economic rescue from the United States, “it continues its conversations with governments regarding financial support for the success of the process.”
In addition to the announcement of filing for bankruptcy, the company will initiate a reduction of its operations in Peru and focus on its main markets once the “court-supervised reorganization” is complete. “Avianca has operated for more than 100 years, making it the second airline in the world to achieve this milestone. We are confident that through this process we can continue executing our Avianca 2021 plan, optimize our capital structure and our aircraft fleet, and – with government support – emerge as a better and more efficient airline, “insisted its president. In August In 2019, a leaked audio to the press revealed that Roberto Kriete, Chairman of the Board of Directors of Avianca Holdings, had assured employees in El Salvador that the line was bankrupt and they were not paying their creditors. The company denied the information soon after. .
Avianca’s shares in Colombia have plummeted nearly 80% since February, currently trading at $ 1.03 per share. In the coming days, the New York court will have to decide on the company’s requests.