Columbia’s Avianca Holdings SA, South America’s second-largest airline, has filed for Chapter 11 bankruptcy. The carrier had a looming bond payment deadline and had been unable to secure any financial aid from the government to help it through the pandemic.
In the filing lodged with the U.S. Bankruptcy Court for the Southern District of New York, Avianca estimates its liabilities lie somewhere between US$1 billion and US$10 billion. In a press release, CEO Anko van der Werff confirmed that: “Avianca is facing the most challenging crisis in our 100-year history.”
The airline has not flown a regular, scheduled flight since March, and if it fails to pull itself out of bankruptcy, it will become the first major carrier, worldwide, to fold as a result of the COVID-19 pandemic. It is one of the world’s oldest airlines and was previously rescued from bankruptcy back in the early 2000s by German Efromovich, the Bolivian-born oil magnate.
More recently, Avianca had laid off most of its 20,000 employees without pay and had no definite plans when it intended to restart. The South American carrier was already struggling prior to the outbreak of the pandemic, with Roberto Kriete, president of Avianca’s board, saying last year in a meeting with employees that the airline was “broke.” In relation to Sunday’s repayment of a US$65 million bond, most analysts felt that Avianca was unlikely to be able to pay it, while as a result of filing for bankruptcy, U.S. carrier United Airlines, which had invested heavily in Avianca, stands to lose anything up to US$700 million in loans.Email Post to a Friend