Colombian airline Avianca has submitted for Chapter 11 individual bankruptcy in the U.S. Southern District of New York citing a drop of additional than eighty% in consolidated earnings as flights keep on being grounded thanks to the COVID-19 pandemic.
In a assertion, the organization mentioned it would use the individual bankruptcy to harmony its sheet obligations to navigate the effects of COVID-19 and to deal with liabilities, leases, plane orders, and other commitments. The organization also mentioned it intends to wind-down its operations in Peru.
In a investigation report, analysts at the Centre for Aviation mentioned Avianca was in a “period of upheaval” even ahead of the world health and fitness crisis. In April 2019, CEO Hernan Rincon Lema declared he was leaving the organization just after 3 a long time in the purpose.
The organization also noticed a sequence of unfavorable credit rankings and a sudden change in board management. Previous yr, the organization declared the “Avianca 2021” approach beneath which it reprofiled its financial debt and lease obligations. It also elevated $375 million in new funding.
“Avianca is experiencing the most difficult crisis in our a hundred-yr record as we navigate the effects of the COVID-19 pandemic,” chief executive officer Anko van der Werff mentioned. “Despite the beneficial success yielded by our Avianca 2021 approach, we believe that, in the face of a entire grounding of our passenger fleet and a recovery that will be gradual, getting into into this approach is a essential action to deal with our economical difficulties.”
Avianca mentioned it has “limited visibility” on when vacation limitations would be lifted and it predicted the effects of the pandemic on vacation to be long-lasting.
Avianca, founded in 1919, was the 3rd-premier airline in Latin America based mostly on market share at the end of last yr, in accordance to Euromonitor.
Luiz Souza/NurPhoto by way of Getty Illustrations or photos
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