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Avianca Holdings and some of its subsidiaries and affiliates today filed voluntary petitions with the Bankruptcy Court for the Southern District of New York in the United States in order to preserve and reorganize the airline’s business.
However, the LifeMiles loyalty program is administered by another company and is not part of the reorganization process.
The Chapter 11 process is a legal procedure established in the United States of America that is recognized by other countries in the world. It is a temporary process that, in accordance with the legislation of that country, allows a company to reorganize and complete a financial restructuring under the supervision of the United States judicial system, while continuing its operations under the leadership of its Board. Management and management team.
“Taking advantage of this process was necessary due to the unpredictable impact of the Covid-19 pandemic, which has caused a 90% decrease in global passenger traffic and is expected to reduce worldwide industry revenues by $ 314 billion, according to the International Air Transport Association (Iata), ”said Avianca.
Avianca’s regular passenger operations have been on the ground since mid-March, which has reduced its consolidated revenues by more than 80% and has put pressure on its liquidity.
Through the reorganization process, Avianca seeks protect and preserve operations to “continue serving customers with safe and reliable air travel, under the strictest biosecurity protocols, as the travel restrictions generated by Covid-19 are gradually lifted.”
The airline also intends to preserve jobs in Colombia and other markets in which the company operates.. Avianca is directly responsible for more than 21,000 direct and indirect jobs throughout Latin America, including more than 14,000 in Colombia, and working with more than 3,000 suppliers.
“We believe that the reorganization under Chapter 11 is the best way to go to protect the essential travel and air transportation services we provide in Colombia and in other markets throughout Latin America. Avianca has operated for more than 100 years, becoming the second airline in the world to achieve this milestone. We are confident that through this process we can continue executing our Avianca 2021 plan, optimize our capital structure and our aircraft fleet and – with government support – emerge as a better and more efficient airline that will operate for many more years, ”he said. Anko Van der Werff, CEO of Avianca.
As part of the process, Avianca has filed several requests with the Court to support its reorganization and the Company expects it to decide on these requests in the coming days. The holding company has requested authorization to fulfill labor commitments prior to the request, as well as to maintain the compensation scheme applicable to its employees. Avianca has also requested authorization to fulfill various pre-filing obligations that are owed to some of its travel agency partners and suppliers from before the filing date. The company intends to pay suppliers and partners of travel agencies according to their normal practices, in a timely manner for the goods and services provided as of the filing date and during the Chapter 11 process.
Avianca has also submitted requests to maintain its client programs throughout this process.
Parallel to the decision to file for Chapter 11, Avianca intends to initiate a reduction of its operations in Peru in accordance with local laws. This decision supports sizing efforts and will allow Avianca to focus on its core markets as it emerges from its court-supervised reorganization.
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