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The financial aid was approved today by the Management Committee of the Emergency Mitigation Fund (FOME).
Government The Colombian informed that it will participate in the restructuring of Avianca in order to preserve the air service of Colombians, air connectivity and general economic activity.
The loan for US $ 370 million is given within the process that the company follows under Chapter 11 of the Bankruptcy Code of the United States. This operation must be evaluated and authorized by the judge in charge of the case in the Southern District Court of New York..
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“The benefits for Colombia and its economy by allowing Avianca to advance in its restructuring and maintain its operation in the country are significant.. The impact on Avianca’s operation would have negative repercussions on the quality of air service, the economy and the country’s competitiveness”, Highlighted the Ministry of Finance.
Avianca is the largest airline in Colombia, with a 45.5% share of the total passengers transported in 2019, serving more than 75 destinations. In cargo transport, Avianca has 31.6% of the market share.
Likewise, Avianca contributes with approximately 500 thousand direct and indirect jobs and its operation represents approximately $ 14.6 billion a year for the Colombian economy (approximately 1.4% of GDP).
According to the Ministry of Finance, the decision 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.
“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 consideration. as well as the Territorial Entities ”, explained the government portfolio.
The Committee’s decision consists of authorizing the participation of the national government in financing through a loan of up to US $ 370 million maturing in November 2021. The transaction would take place under the figure of Debtor in Possession provided under Chapter 11 of the Bankruptcy Code of the United States.
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