Avianca Files For Chapter 11

Colombian airline Avianca filed for Chapter 11 bankruptcy protection over the weekend, the result of the global collapse of air travel due to the COVID-19 pandemic. According to the company, “Avianca’s scheduled passenger operations have been grounded since mid-March, reducing its consolidated revenue by over 80% and placing significant pressure on its cash reserves.” Under the Chapter 11 protection, Avianca expects to continue flying and, the filing notes, the airline’s loyalty program, LifeMiles, is not part of the action filed on Sunday. It employs 21,000 throughout Latin America and 14,000 in Colombia alone.

“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 officer 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. We believe that a reorganization under Chapter 11 is the best path forward …” 

According to the filing, Avianca wants to “pay certain prepetition employee wages, compensation and benefit obligations owed from before the filing date, as well as a request to continue paying wages and honoring employee benefit programs in normal day-to-day operations. Avianca has also requested authority to honor various prepetition obligations owed to certain of its travel agency partners, vendors and suppliers from before the filing date. The Company intends to pay vendors and suppliers, as well as travel agency partners in the ordinary course for goods and services provided on or after the filing date during its Chapter 11 process.” Avianca’s fleet includes 14 Airbus A330/A330Fs, 15 A321s, 67 A320s, 25 A319s and 15 ATR-72s.