Avianca, 2nd largest airline in Latin America, files for bankruptcy

11.05.2020 at 19:10

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Colombia’s main airliner Avianca said Sunday it has filed for bankruptcy in the United States.

With its bankruptcy, the airliner becomes the largest employer in Colombia to fall victim to the economic effects of the pandemic.

The bankruptcy comes two weeks after Avianca CEO Anko van der Werff asked the Colombian government for financial support, claiming global lockdown measures left it without 90% of its income.

With bond payment deadline looming and the government of President Ivan Duque possibly in a difficult position to save the more than 100-year-old airliner, the airliner filed for bankruptcy at a Florida court.

The company had already stopped paying most of its more than 20,000 employees like many firms in Colombia that lack the liquidity to make payments while the country is on lockdown.

A company representative told British news agency Reuters that Avianca will continue to lobby for government support to prevent the end of its century-long history.

The airliner was already in a financially weak position before the pandemic, which drove it to bankruptcy.

Avianca is second in size only to Chile’s Latam in Latin America and is the second-oldest airline in the world behind Dutch carrier KLM. It began life in the Colombian city of Barranquilla in 1919, just 16 years after the Wright brothers’ historic first flight.

It carried over 30m passengers last year to 76 destinations in 27 countries in the Americas and Europe. It generated revenue of $4.6bn in 2019 and employed 21,000 people, most of whom have been furloughed due to coronavirus.

Avianca said its consolidated revenue has fallen by over 80 per cent since its flights were grounded in mid-March. The New York-listed airline has had financial problems for years, and survived bankruptcy proceedings in the early 2000s.

Last year, longtime owner and entrepreneur Germán Efromovich was pushed out in a boardroom coup and the company is now in the hands of Kingsland Holdings, in turn controlled by United Airlines.

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