All is not well in the world of Avianca, as the holding group – Avianca Holdings – files for Bankruptcy Protection.
Avianca Boeing 787 – Image, Avianca
The move was made on the 10th May by Avianca Holdings S.A. (along with some of its subsidiaries and affiliates), where it submitted for Chapter 11 Bankruptcy protection
The group made the filing due to COVID-19, which has resulted in a 90% decline in global passenger traffic.
During the period the group is in bankruptcy protection, the airline will continue to operate – however limited it may be.
Throughout the court-supervised process, Avianca Holdings intends to protect and preserve operations as COVID-19 travel restrictions are gradually lifted, ensure connectivity, preserve connectivity, jobs and attempt to rebalance the balance sheet.
So far, the group has been en engaged in discussions with the government of Colombia, as well as those of its other key markets to provide fiscal assistance. So far – this has been not forthcoming.
Currently, the airline has no certain dates to restart services out of its main hubs of Colombia, El Salvador and Peru, with the airline not flying regularly since late March.
In Quotes
Avianca CEO Anko van der Werff said:
“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 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.
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.”
A Shaky Future
With shaky finances in place as reported by Reuters, these are dark times for the airline. With the debt load the airline is under, combined with COVID-19 and with no regular services – it doesn’t bode well for the carrier.
And About LifeMiles
If you have any LifeMiles, you should be safe for now – as LifeMiles was spun off into a separate company, which according to them is “remains well capitalized and is insulated from Avianca’s reorganization process“.
However, I wouldn’t be rushing to buying miles at this point of the game until the travel situation becomes a lot clearer.
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