Latin America's second-largest airline Aviance Holdings, the parent company of Avianca has filed for bankruptcy on Sunday, after failing to receive any deadline for bond payment.
The carriers plea for financial aid from Colombia's government to sustain this corona virus pandemic have been unsuccessful so far.
This bankruptcy proceeding will protect Avianca's creditors and also allow the company to reorganize. It will also provide more time to pay its debt or sell parts of its business.
The bankruptcy filed by Avainca on 10th of May was for Chapter 11 of the US Bankruptcy Code in the Southern District of New York.
If Avianca fails to come out of this bankruptcy, Avianca will be the first major airline to go under due to this corona virus pandemic.
The carrier has majority market share of over 50% in Colombia alone. It also flies a large number of long-haul services.
The Bogota-based Avianca was forces to file this bankruptcy due to huge effect of the widespread corona virus pandemic. This pandemic has limited the airline's operations due to closure of borders and travel restrictions.
Avianca reported that the pandemic had cut more than 80% of its revenue and hence, it was struggling will high operational cost.
Avianca has not flown regular scheduled passenger flight since late March and majority of its 21,000 employees have gone without pay during this time of crisis. However, this proceedings will be able to preserve some of these jobs in South America.
More than 140 of Avianca's aircraft have been grounded since Colombian President Ivan Duque closed the country's airspace back in March.
"Avianca is facing the most challenging crisis in our 100-year history," said Avianca Chief Executive Officer Anko van der Werff in a news release.
He added that this move was needed to ensure the airline will emerge as a "better, more efficient airline that operates for many more years."
"This isn't a surprise at all," said Juan David Ballen, a chief economist in Bogota. "The company eas heavily indebted despite the fact it tried to restructure its debt last year."
The second-largest continually operating airline in the world after KLM, had a total of $7.3 billion in debts in 2019.
Avianca already went through bankruptcy in the early 2000s, from which the airline was rescued by a Bolivian-born oil businessman, German Efromovich.
As reported by Reuters, Efromovich disagreed with the decision to file for bankruptcy and that he was not involved in making it.
Since, global air traffic has fallen by 90%, the International Air Transport Association (IATA) has predicted that Latin American Airlines will lose $15 billion in revenues this year.
What do you think about Avianca's future? Do you think Efromovich will rescue it again? Let us know in the comments below:.
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| Avianca has filed for bankruptcy in the United States Photo: Reuters |
The carriers plea for financial aid from Colombia's government to sustain this corona virus pandemic have been unsuccessful so far.
This bankruptcy proceeding will protect Avianca's creditors and also allow the company to reorganize. It will also provide more time to pay its debt or sell parts of its business.
The bankruptcy filed by Avainca on 10th of May was for Chapter 11 of the US Bankruptcy Code in the Southern District of New York.
 |
| Global travel restrictions has severely affected Avianca's operation Photo: Boeing |
If Avianca fails to come out of this bankruptcy, Avianca will be the first major airline to go under due to this corona virus pandemic.
The carrier has majority market share of over 50% in Colombia alone. It also flies a large number of long-haul services.
The Bogota-based Avianca was forces to file this bankruptcy due to huge effect of the widespread corona virus pandemic. This pandemic has limited the airline's operations due to closure of borders and travel restrictions.
 |
| Avianca wants to continue its cargo operation Photo:Â |
Avianca reported that the pandemic had cut more than 80% of its revenue and hence, it was struggling will high operational cost.
Avianca has not flown regular scheduled passenger flight since late March and majority of its 21,000 employees have gone without pay during this time of crisis. However, this proceedings will be able to preserve some of these jobs in South America.
 |
| Majority of Avianca's employees are on unpaid leave Photo: Boeing |
More than 140 of Avianca's aircraft have been grounded since Colombian President Ivan Duque closed the country's airspace back in March.
"Avianca is facing the most challenging crisis in our 100-year history," said Avianca Chief Executive Officer Anko van der Werff in a news release.
 |
| Avianca is the largest airline to file bankruptcy Photo: Getty |
He added that this move was needed to ensure the airline will emerge as a "better, more efficient airline that operates for many more years."
"This isn't a surprise at all," said Juan David Ballen, a chief economist in Bogota. "The company eas heavily indebted despite the fact it tried to restructure its debt last year."
 |
| Avainca already went bankruptcy in 2000s Photo: Avianca |
The second-largest continually operating airline in the world after KLM, had a total of $7.3 billion in debts in 2019.
Avianca already went through bankruptcy in the early 2000s, from which the airline was rescued by a Bolivian-born oil businessman, German Efromovich.
As reported by Reuters, Efromovich disagreed with the decision to file for bankruptcy and that he was not involved in making it.
 |
| Avianca has over $7 billion in debts Photo:Â @PUJAirport |
Since, global air traffic has fallen by 90%, the International Air Transport Association (IATA) has predicted that Latin American Airlines will lose $15 billion in revenues this year.
What do you think about Avianca's future? Do you think Efromovich will rescue it again? Let us know in the comments below:.
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