Avianca, together with its subsidiaries and affiliated companies has filed a voluntary petition today under Chapter 11 of the United States Bankruptcy Law to seek protection and reorganization to Avianca ’s business. The pandemic caused a 90% drop in global passenger traffic and is expected to reduce global aviation industry revenue by $ 314 billion. Avianca ’s loyalty program LifeMiles TM is managed by another company and is not part of the submission in Chapter 11. The Chapter 11 process is a well-established legal process in the United States of America that is recognized by other countries around the world. The process is a temporary one that, according to U.S. law, allows a company to reorganize and complete a financial restructuring under the supervision of the U.S. court system, while continuing its operations under the oversight of its board of directors and management team.

According to the International Air Transport Association, the COVID-19 pandemic has unforeseen effects, so it is necessary for Avianca to submit this document. Since mid-March, Avianca ’s scheduled passenger business has been grounded, which has reduced its consolidated revenue by more than 80% and has put tremendous pressure on cash reserves.

Through this reorganisation process, Avianca stated in a press release that it intends to:

Protect and preserve operations so Avianca can continue to operate and serve customers with safe and reliable air travel, under the strictest biosafety protocols, as COVID-19 travel restrictions are gradually lifted;

Ensure connectivity and drive investment and tourism by continuing as Colombia’s flagship airline, serving over 50% of the domestic market in Colombia and providing essential non-stop service across South America, North America and European markets as well as continuing cargo operations, playing a key role in the economic recovery of Colombia and the Company’s other core markets following the COVID-19 pandemic;

Preserve jobs in Colombia and other markets where the Company operates, with Avianca directly responsible for more than 21,000 jobs throughout Latin America, including more than 14,000 in Colombia, and working with more than 3,000 vendors; and

Restructure the Company’s balance sheet and obligations to enable Avianca to navigate the effects of the COVID-19 pandemic as well as comprehensively address liabilities, leases, aircraft orders and other commitments.

“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the COVID-19 pandemic,” said Anko van der Werff, Chief Executive Officer of Avianca. “Despite the positive results yielded by our ‘Avianca 2021’ plan, we believe that, in the face of a complete grounding of our passenger fleet and a recovery that will be gradual, entering into this process is a necessary step to address our financial challenges.”

“When government-mandated air travel restrictions are lifted and we are able to gradually resume our passenger flights, we look forward to welcoming back our furloughed employees and playing a leading role in restarting the economy in Colombia and our other key markets. We greatly appreciate the dedication of our employees to Avianca and to serving the more than 30 million passengers that fly our airline each year. We remain committed to our purpose to connect people, families and businesses. Our customers can be confident that they can continue to depend on Avianca for safe, reliable and high-quality service, and our valued LifeMilesTM members can expect to accrue and redeem miles as normal, ”

Mr. Van der Werff

Avianca Airlines is seeking financial support from governments that provide basic essential services just like many other airlines in the world right now. Avianca continues discussions with the Colombian government as well as those from its ket markets, discussing that the financing structure will provide more liquidity through the Chapter 11 process and play an important rol...