Due to the Impact of COVID-19... Avianca, the Second Largest Airline in Latin America, Files for Bankruptcy Protection

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Due to the spread of the novel coronavirus infection (COVID-19), Avianca Airlines, Colombia's second-largest airline in Latin America, announced on the 10th (local time) that it has filed for bankruptcy protection.

According to major foreign media, Avianca Airlines filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code at the Southern District of New York Federal Bankruptcy Court on the same day. Avianca Airlines, established in 1919, is Colombia's largest airline and the second-largest airline in Latin America after Chile's LATAM Airlines.

Anko van der Werff, CEO of Avianca, said, "Avianca is facing the toughest crisis in its 100-year history amid the impact of the COVID-19 pandemic." He added, "Passenger flights have completely stopped, and recovery is expected to be gradual, so entering this (bankruptcy protection) process is a necessary step to address our financial crisis."

Due to the impact of COVID-19, air travel demand has plummeted, and passenger flights have not operated since the end of March. The airline's 20,000 employees are currently on unpaid leave. Avianca Airlines requested emergency financial support from the Colombian government and others, but a smooth resolution has not yet been achieved.

As of the end of last year, Avianca Airlines holds short- and long-term debt totaling $4.9 billion. The airline's stock price was above $18 in 2014 but fell to 88 cents on the 8th. Recently, after failing to repay bonds, credit rating agency S&P downgraded the airline's credit rating to CCC-.

The airline industry has been the hardest hit by the COVID-19 impact. Worldwide flights have decreased by more than 90%, causing airlines in various countries to struggle with securing cash. Earlier, Virgin Australia, Australia's second-largest airline, also entered corporate restructuring procedures last month amid the COVID-19 shock.

This content was produced with the assistance of AI translation services.