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Sao Paulo. Financial auditors at Colombian airline Avianca Holdings concluded that there are “substantial doubts” regarding the company’s ability to continue in business due to the coronavirus crisis, the operator said.
The disclosure was made this Thursday in a securities presentation to the United States Securities and Exchange Commission where it was explained why the company could not present its 2019 annual report in time.
Avianca announced that it will present the report in June and hopes to reveal the conclusion made by the accounting firm KPMG that there were serious doubts about the “ability of the airline to continue as a going concern.”
Avianca, the second largest airline in Latin America, suspended all its passenger flights since March due to the coronavirus crisis, after Colombia, El Salvador, Ecuador and Peru, where their main hubs are, closed traffic aerial.
It also sent about half of its workforce on unpaid vacations and is actively seeking government help, while deferring payments on aircraft leases and loans.
“As a result, we are currently in default on certain outstanding debts,” the airline said in the securities filing.
“If our operations remain suspended for an extended period, we may have to take more steps to preserve our business.”
The airline was already in a weak position before the COVID-19 crisis hit it and required an emergency loan from United Airlines Holdings in 2019 to cover its debts.
Roberto Kriete, chairman of Avianca’s board of directors, said last year in a meeting with employees that the airline was “bankrupt.”
Kriete was named in May last year when United Airlines ousted former Avianca chairman and controlling shareholder Germán Efromovich after he defaulted on a $ 450 million loan he owed United.
That loan has yet to be repaid and is guaranteed by the value of Avianca, whose New York-listed shares have fallen 77% this year.
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