Latin American carrier Avianca filing for bankruptcy in the US

Avianca Holdings, the parent company of Latin American airline Avianca, has filed for a Chapter 11 with a New York court last May 10 to give it time to reorganize its business. The coronavirus crisis has caused a plummet in air travel demand where countries started imposing their own lockdowns, causing airlines to cut capacity by more than 90%.

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In a report from FlightGlobal, the filing was necessary given the “unpredictable impact” of the coronavirus crisis on its operations in order to preserve its business. This means that Avianca will continue to operate during this process, where it plans to continue operating services to South America, North America, and Europe.

Avianca says that it will restructure in a way that it can deal with the crisis and to manage aircraft orders, leases, and other responsibilities. The airline also notes that this procedure in not an insolvency or liquidation procedure, but more of a way to pay providers in a more timely manner for the goods and services provided.

The company adds that it is continuing to engage in discussions with the Colombian government over financing structures that would provide additional liquidity through the Chapter 11 process. It says it intends to exit the re-organisation as a “highly-competitive and successful” airline, the report said.