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Declan Ryan, CEO of low-cost airline Viva Air Group, strongly criticized the Colombian government for showing special treatment towards Avianca Holdings, its competition, by offering the bankrupt airline a $ 370 million loan.
Viva Air operates 16 aircraft in Colombia. Ryan said the loan is excessive compared to the help being offered to other airlines, including Viva, which is negotiating a loan of 25 million dollars by virtue of government assistance to small and medium-sized enterprises.
“Viva Air should receive about $ 100 million if the deal is fair, he added.
(You may be interested in: Duque’s defense of the loan for Avianca)
The airline could evaluate legal options in the face of “unfair treatment,” he said in a telephone interview.
“We accept that Avianca is bigger than the rest of the airlines, including Viva, but there is no proportionality with the amount of money they are going to receive,” he added.
Air travel in Colombia returned this week, when the Government began lifting a travel ban that had been in effect since March and that forced airlines to immobilize their planes, for which Avianca had to file for Chapter 11 bankruptcy in Nueva York.
The administration of President Ivan Duque has offered Avianca the loan as part of the roughly $ 1.2 billion the airline is trying to raise from investors in so-called debtor-in-possession financing under bankruptcy proceedings. The government loan requires judicial approval.
(Also: ‘Loan means that we are going to pay’: Avianca)
High risk loans
The loan has also been criticized by Colombian legislators and politicians. Senator Rodrigo Lara has asked the Minister of Finance, Alberto Carrasquilla, to appear in hearings to answer, among other things, why the Government is providing high-risk loans to the airline using emergency funds, while spending for families of low income and small businesses has been reduced.
For her part, the mayor of Bogotá, Claudia López, indicated that millions of owners of small businesses and public transport systems have asked the government for help for months and have not received a response.
(Read also: New criticisms of Claudia López for financing Avianca)
The government decided to help the air sector, both passenger and cargo transport, calling it an “essential service” for the economy, the Finance Ministry wrote in an email in response to questions.
Other airlines that want to avail themselves of the type of credit Avianca received should enter into a restructuring process, “demonstrating the need to save the company through a loan and its viability under market conditions,” the ministry wrote.
An Avianca spokeswoman did not immediately respond to a request for comment. While Avianca is the largest airline in the country, it is cutting dramatically as it resumes flights.
The Government is in breach of a previous commitment not to show special treatment to any particular airline while distributing the aid
It plans to operate 57 planes by the end of the year, compared to the 147 it had planned before the Covid-19 pandemic began, according to a presentation by the company to investors.
Ryan said the government is in breach of an earlier commitment not to show special treatment to any particular airline while distributing the aid.
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