{"id":3210,"date":"2020-05-11T16:19:34","date_gmt":"2020-05-11T09:19:34","guid":{"rendered":"https:\/\/illume-emag.com\/?p=3210"},"modified":"2020-05-11T16:19:34","modified_gmt":"2020-05-11T09:19:34","slug":"worlds-second-oldest-airline-avianca-driven-bankruptcy-coronavirus","status":"publish","type":"post","link":"https:\/\/lavyon.com\/en\/worlds-second-oldest-airline-avianca-driven-bankruptcy-coronavirus\/","title":{"rendered":"World’s second-oldest airline, Avianca, driven to bankruptcy by coronavirus"},"content":{"rendered":"

Avianca Holdings, Latin America\u2019s second-largest airline, filed for bankruptcy on Sunday, after failing to meet a bond payment deadline, while its pleas for coronavirus aid from Colombia\u2019s government have so far been unsuccessful.<\/strong><\/p>\n

\"\"<\/p>\n

An aerial view shows Colombian airline Avianca’s planes parked at El Dorado International Airport amid the coronavirus disease (COVID-19) outbreak in Bogota, Colombia April 7, 2020. Photo: Reuters<\/em><\/p>\n

If it fails to come out of bankruptcy, Bogota-based Avianca would be one of the first major carriers worldwide to go under as a result of the pandemic, which has crippled world travel.<\/p>\n

Avianca has not flown a regularly scheduled passenger flight since late March and most of its 20,000 employees have gone without pay through the crisis.<\/p>\n

\u201cAvianca is facing the most challenging crisis in our 100-year history,\u201d Avianca Chief Executive Anko van der Werff said in a news release.<\/p>\n

While Avianca was already weak before the coronavirus outbreak, its bankruptcy filing highlights the challenges for airlines that cannot count on state rescues or on such rescues coming fast enough.<\/p>\n

Avianca is still hoping for a government bailout.<\/p>\n

\u201cThis isn\u2019t a surprise at all,\u201d said Juan David Ballen, chief economist at Casa de Bolsa brokerage in Bogota.<\/p>\n

\u201cThe company was heavily indebted despite the fact it tried to restructure its debt last year.\u201d<\/p>\n

Avianca, the second-oldest continually operating airline in the world after KLM, had $7.3 billion in debts in 2019.<\/p>\n

The airline filed for Chapter 11 bankruptcy in New York and said it would continue operations while it restructured its debts.<\/p>\n

The Colombian Association of Civil Aviators (ACDAC), a union representing many Avianca employees, said it supported the move.<\/p>\n

Avianca already went through bankruptcy in the early 2000s, from which it was rescued by a Bolivian-born oil businessman, German Efromovich.<\/p>\n

Efromovich grew Avianca aggressively but also saddled the carrier with significant debt until he was ousted from the airline last year in a boardroom coup led by United Airlines Holdings Inc.<\/p>\n

He still owns a majority stake in the carrier.<\/p>\n

United stands to lose up to $700 million in loans related to Avianca.<\/p>\n

Efromovich told\u00a0Reuters\u00a0<\/em>on Sunday that he disagreed with the decision to file for bankruptcy and that he was not involved in making it.<\/p>\n

Lead-up to bankruptcy<\/strong><\/p>\n

The management that took over after Efromovich\u2019s ousting was already focused on a cost-cutting reorganization dubbed \u201cAvianca 2021\u201d before this year\u2019s crisis.<\/p>\n

Warnings about its fragile finances abounded. Roberto Kriete, president of Avianca\u2019s board, said last year in a meeting with employees that the airline was \u201cbroke.\u201d<\/p>\n

Last month, Avianca\u2019s accounting firm, KPMG, said it had \u201csubstantial doubts\u201d about the carrier\u2019s ability to exist a year from now.<\/p>\n

Avianca\u2019s shares closed at 88 cents on Friday in New York, from a high of more than $18 in 2014.<\/p>\n

Most pressingly, Avianca was facing a $65 million bond payment due on Sunday that analysts did not think the airline was in a position to meet. S&P downgraded the airline to CCC- status in the days leading up to that payment.<\/p>\n

Airline executives confirmed in a press call on Sunday night that they had not made the payment.<\/p>\n

Van der Werff had mounted a public relations campaign in recent weeks to secure emergency aid from Colombia\u2019s government, but none had materialized as of Sunday.<\/p>\n

Avianca has no certain date to resume operations, as its main hubs \u2014 Colombia, El Salvador and Peru \u2014 have all shut down air traffic to fight the coronavirus.<\/p>\n

The carrier faced backlash after it sold plane tickets for late May only to have to cancel them when Colombia extended its coronavirus lockdown.<\/p>\n

Avianca will also shut down its operations in Peru, which represents five percent\u00a0of the airline\u2019s revenue, and will lay off hundreds of employees within the next ten\u00a0days.<\/p>\n

\u201cIn this time, we do not have liquidity to sustain a loss-making operation,\u201d Silvia Mosquera, Avianca\u2019s chief commercial officer, told reporters regarding Avianca Peru.<\/p>\n

Colombia\u2019s Avianca is the third of Efromovich\u2019s airlines to go through bankruptcy or out of business in recent years.<\/p>\n

Airlines Avianca Brasil and Avianca Argentina ceased to exist last year because of economic troubles in their markets.<\/p>\n

Source Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"

Avianca Holdings, Latin America\u2019s second-largest airline, filed for bankruptcy on Sunday, after failing to meet a bond payment deadline, while its pleas for coronavirus aid from Colombia\u2019s government have so far been unsuccessful. An aerial view shows Colombian airline Avianca’s planes parked at El Dorado International Airport amid the coronavirus disease (COVID-19) outbreak in Bogota, […]<\/p>\n","protected":false},"author":2,"featured_media":3211,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[761],"tags":[1087,1123],"class_list":{"0":"post-3210","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-celebrity-buzz","8":"tag-coronavirus","9":"tag-covid-19"},"_links":{"self":[{"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/posts\/3210","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/comments?post=3210"}],"version-history":[{"count":0,"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/posts\/3210\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/media\/3211"}],"wp:attachment":[{"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/media?parent=3210"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/categories?post=3210"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lavyon.com\/en\/wp-json\/wp\/v2\/tags?post=3210"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}