Colombian airline Avianca declares bankruptcy due to the COVID-19 crisis

Colombian airline Avianca and some of its subsidiaries have voluntarily filed for Chapter 11 protection under the U.S. Bankruptcy Code in New York courts on Sunday, according to a press release issued by the company and available on its website. The company has been on the ground since March 23 due to flight restrictions ordered by the government because of the COVID-19 pandemic and says it needs to start a re-organisation process due to the strong impact of the health crisis.

The airline's consolidated revenues have fallen by more than 80% and it is facing a very significant reduction in its liquidity. Global air traffic has suffered a 90% decrease in passengers and IATA (International Air Transport Association) estimates that the industry's losses worldwide will reach $314 billion.  

The company, which celebrated its 100th anniversary in December last year, is at the most sensitive point in its history. "The effects of the COVID-19 pandemic have led us to face the most challenging crisis in our 100-year history as a company," said Anko van der Werff, Avianca's CEO in the press release.  

Van der Werff stressed that, despite the successful debt restructuring carried out by Avianca last year, the application of the bankruptcy law is a necessary step to face the new financial challenges, as the recovery of the sector over the next few months will be very gradual.  

"When the governments' restrictions on air travel are lifted and we can gradually resume passenger flights, we hope to contribute to the reactivation of the Colombian economy and our other key markets and to reincorporate our employees," said the company's CEO. "When government restrictions on air travel are lifted and we are able to gradually resume passenger flights, we hope to contribute to the reactivation of the economy in Colombia and our other key markets and to reincorporate our employees," said Van der Werff.  

Avianca, like many other airlines in the world, is seeking financial support from the governments from the countries in which it provides essential services. The company is in discussions with the Colombian government and also with other executives in key markets to find liquidity.  

The company assures that by using the bankruptcy law it seeks to protect and preserve operations and continue with its services later. The company is also committed to ensuring connectivity and boosting investment and tourism by continuing to be Colombia's leading airline, serving over 50% of the country's domestic market and providing essential non-stop service in South and North America and European markets.  

Avianca generates more than 21,000 direct and indirect jobs throughout Latin America, of which more than 14,000 are in Colombia, and works with a network of more than 3,000 suppliers, the company reports in its press release. The conglomerate is made up of the airlines Avianca and Tampa Cargo (Colombia), Aerogal (Ecuador) and the companies of the Taca Internacional Airlines Group based in Central America and Peru.