Avianca, one of Latin America's largest airlines, goes bust
- A Monitor Desk Report 12 May, 2020 | 1075 Views|-+
Dhaka: Another major international airline, Avianca, has collapsed and filed for Chapter 11 bankruptcy in the US Southern District of New York on March 10, blaming its collapse on the "unforeseeable impact of the COVID-19 pandemic," according to a company statement.
The flag carrier of Colombia Avianca, which was founded in 1919, claims to be the world's second-oldest continuously running airline. As of the end of last year, it was the third-largest airline in Latin America based on market share, after Chile's LATAM Airlines (LTM) and Brazil's GOL Linhas Aéreas (GOL), according to reports.
The carrier is also part of the Star Alliance, the industry group that includes other big players such as Lufthansa (DLAKY) and Singapore Airlines.
Avianca is the latest major airline to fall prey to the loss of business from the pandemic, which has caused carriers to rip up their flight schedules, ground planes and put staff on unpaid leave.
The Colombian carrier said it was hit hard by lockdowns around the world as the pandemic worsened. Of the countries Avianca operates to, 88 per cent are under total or partial travel restrictions, according to the airline.
The decision to file for bankruptcy was made with the intention to "protect and preserve operations" as the outbreak continues, the airline added in a statment. Avianca directly employs 21,000 people throughout Latin America, including more than 14,000 in Colombia, where it serves as the country's national carrier.
In addition to pursuing bankruptcy protection, the airline plans to shut down its business in Peru to cut costs and "renew its focus on core markets".
"Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the COVID-19 pandemic," Anko van der Werff, CEO, Avianca said in a statement.
"We believe that a reorganisation under Chapter 11 is the best path forward to protect the essential air travel and air transport services that we provide across Colombia and other markets throughout Latin America."
The airline says it has 189 planes in its fleet, which conduct about 700 flights a day. However, this year, its passenger flights have been grounded since the middle of March, "reducing its consolidated revenue by over 80 per cent and placing significant pressure on its cash reserves," the airline said on May 11.