Colombian airline Avianca filed a request Chapter 11 bankruptcy in the Southern United States District of New York, citing a drop of more than 80% in consolidated revenue, with flights remaining stranded due to the COVID-19 pandemic.
In A declaration, the company said it would use bankruptcy to balance its balance sheet obligations to manage the effects of COVID-19 and to process liabilities, leases, aircraft orders and other commitments. The company also announced its intention to end its operations in Peru.
In a research report, analysts at the Center for Aviation noted Avianca was in a “period of upheaval” even before the global health crisis. In April 2019, CEO Hernan Rincon Lema announced he was leaving the company after three years in this role.
The company also experienced a series of negative credit ratings and a sudden change in control of the board of directors. Last year, the company announced the “Avianca 2021” plan in which it reshaped its debt and lease obligations. It also raised $ 375 million in new funding.
“Avianca is facing the most difficult crisis in our 100-year history as we manage the effects of the COVID-19 pandemic,” said Chief Executive Officer Anko van der Werff. “Despite the positive results of our Avianca 2021 plan, we believe that, faced with a complete shutdown of our passenger fleet and a recovery that will be gradual, embarking on this process is a necessary step to meet our financial challenges.”
Avianca said he had “limited visibility” on when travel restrictions would be lifted and that he expected the pandemic’s effects on travel to be long lasting.
Avianca, founded in 1919, was the third largest airline in Latin America in terms of market share at the end of last year, according to Euromonitor.
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