The Government of Colombia granted Avianca a loan for 370 million dollars

The Colombian Government will participate in the financial restructuring of the Avianca airline to which it granted a loan of 370 million dollars in order to preserve the national air service, reported this Saturday the Ministry of Finance.

Avianca filed for bankruptcy in the United States last May to initiate a reorganization process due to the impact of the COVID-19 crisis that at the end of March forced the country’s airlines to leave their planes on the ground.

The management committee of the Emergency Mitigation Fund (FOME) that manages the resources to face the pandemic, authorized this Saturday “the participation of the nation in the restructuring of Avianca, by financing up to 370 million dollars within the process that the company follows under Chapter 11 of the US Bankruptcy Code, ”the Treasury portfolio said in a statement.

The information adds that “this operation must be evaluated and authorized by the judge who is in charge of the case in the Southern District Court of New York.” The transaction will feature new contributions from existing investors, as well as contributions from new participants under market conditions.

The measure comes after a process of analysis and study of alternatives to the participation of the Government that began in March of this year, when the company had a first approach to seek financing.

ECONOMIC WEIGHT OF THE COMPANY

To grant the loan, the Colombian Government took into account that Avianca is the largest airline in the country with a 45.5% share of the transported passenger market in 2019, serving more than 75 destinations in the country and abroad.

“In this decision process, the potential adverse effects of a permanent cessation of services provided by Avianca in terms of economic activity, air transport capacity, job destruction and loss of income, both for the nation, were taken into account. as well as the territorial entities, ”the statement added.

The airline has a 31.6% participation in the country’s cargo transport and its operation represents approximately 14.6 billion pesos (about 3,899 million dollars) per year for the Colombian economy, equivalent to 1.4% of the Product Gross Domestic (GDP).

The airline’s operations are integrated into Avianca Holdings, formed by the airlines Avianca and Tampa Cargo (Colombia), Aerogal (Ecuador) and the companies of the Taca Internacional Airlines Group based in Central America and Peru.

Avianca Holdings generates more than 21,000 direct and indirect jobs in Latin America, of which more than 14,000 are in Colombia, and works with a network of more than 3,000 suppliers.

The company has been with its planes on the ground since March 23 due to the flight ban ordered by the Government to cut the expansion of the coronavirus pandemic in the country.

Avianca, the world’s second longest-running airline, turned 100 last December and had just successfully completed a financial restructuring when the coronavirus crisis struck.

With information from EFE

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