Published on Tuesday, May 12, 2020

Avianca files for bankruptcy

The Covid-19 pandemic may have just claimed another major casualty in aviation.

Avianca, Latin America's second-largest airline, and the second oldest carrier in existence, filed for bankruptcy protection.

Bogota-based Avianca sees no other alternative as a bailout from the Colombian government hasn't materialized.

"Avianca is facing the most challenging crisis in our 100-year history," Avianca CEO Anko van der Werff said.

All flights have been grounded for weeks and most employees have been without pay for nearly two months.

The airline was already struggling financially before the pandemic with up to $10 billion of debt.

It filed for Chapter 11 protection in New York and hopes to continue operating while the business is being restructured.

United Airlines could be badly burnt by Avianca's troubles.

It could lose up to $700 million in loans to Avianca.

It is a big blow to the Colombian air market as Avianca had a 50% market share.

Last year separate regional units Avianca Brasil and Avianca Argentina close down due to unsustainable debts.

It is also closing down operations in Peru.

"We believe that a reorganization under Chapter 11 is the best path forward to protect the essential air travel and air transport services that we provide across Colombia and other markets throughout Latin America," van der Werff added.

He added the airline is still in talks with the government for financial aid.

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