According to a company statement, Avianca’s scheduled passenger operations have been grounded since mid-March, reducing its consolidated revenue by over 80 percent and placing significant pressure on its cash reserves.
“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the Covid-19 pandemic,” said Anko van der Werff, Chief Executive Officer of Avianca, adding that filing for Chapter 11 was “a necessary step” to address the airline’s financial challenges.
Founded in 1919, Avianca is the commercial brand of umbrella company Avianca Holdings S.A. and had revenues of US$4.6 billion in 2019 and transported 30.5 million passengers. With a fleet of 158 aircraft, Avianca was serving 76 destinations in 27 countries within the Americas and Europe.
Through the Chapter 11 reorganization process, Avianca intends to “protect and preserve operations” so the airline can continue to operate and serve customers as Covid-19 travel restrictions are gradually lifted; and preserve jobs in Colombia and other markets where it operates.
Avianca is directly responsible for more than 21,000 jobs throughout Latin America, including more than 14,000 in Colombia, and working with more than 3,000 vendors.
“When government-mandated air travel restrictions are lifted and we are able to gradually resume our passenger flights, we look forward to welcoming back our furloughed employees and playing a leading role in restarting the economy in Colombia and our other key markets,” Van der Werff added.
The coronavirus pandelic has resulted in a 90 percent decline in global passenger traffic and is expected to reduce industry revenues worldwide by $314 billion, according to the International Air Transport Association (IATA).