AVIANCA AIRLINE FILED FOR BANKRUPTCY

One of the largest air carriers in Latin America, Avianca Holdings, filed for bankruptcy at the US court on May 10. The company is trying to restructure its financial condition after having lost about 80% of its revenue since February. The main reason of bankruptcy is the crisis, caused by the pandemic. In an officially published statement, the management points to a 90% reduction in global passenger traffic and a $ 314 billion reduction in the industry’s revenue.

Practically, immediately after the bankruptcy announcement on Twitter, an optimistic message from the Head of Avianca was posted, in which he stated that the company would continue flying as soon as possible. We should note that the airplanes have not been operating the flights since the end of March.

Financial manager Adrian Neuhauser explained at the online press conference that the appeal to the court was made so that the holding had the opportunity of economic salvation. The decision to turn to justice was made because it was considered to be “the most recognized legal procedure in the world”, which would allow to restrict the obligations under the supervision of the US judicial system.

Avianca Holding served around 30 million people annually.

The company directly or indirectly has 21 thousand employees, 14 thousand of whom work in Colombia. It is known that the carrier continues negotiations on the possibility of the financial support with the government of Colombia and other countries. However, the disputes on whether the government should help to save the airline have recently started to arise in Colombia. The reason for such disputes is the criticism of the company's activities by the customers because of the poor quality of service and high ticket prices.

The experts note that Avianca had been already filing for bankruptcy in early 2000s. What is more, last year the information, proving that the credit line was empty and that the enterprises, included in the holding did not pay their creditors, leaked to the media- it was a video of the chairman of the board of managers talking to the employees. However, the company hastened to refute the information that caused the scandal.

In a statement to the court, Avianca Holdings assessed its obligations to the creditors ranging from 1 to 10 billion dollars.

The company has also announced that it will reduce its activities in Peru - the process of liquidation of its subsidiary Avianca Peru, which amounted to about 5% of the business, has already begun. It is planned to focus the efforts on the main air transportation markets after the reorganization is completed.

The company notes that Avianca has been operating for over a hundred years and this is a chance for it to become even better and more efficient. We should note that in the next few days, the American court will have to make a decision on the statement.