Avianca is the latest major airline to succumb to the loss of business from the pandemic, which has caused carriers to rip up their flight schedules, ground planes and put staff on unpaid leave.
The Colombian carrier said it was hit hard by lockdowns around the world as the pandemic worsened. Of the countries where Avianca currently operates, 88% are under total or partial travel restrictions, according to the company.
The decision to file for bankruptcy was made with the intention to “protect and preserve operations” as the outbreak continues, it said. Avianca directly employs 21,000 people throughout Latin America, including more than 14,000 in Colombia, where it serves as the country’s national carrier.
In addition to pursuing bankruptcy protection, the company plans to shut down its business in Peru to cut costs and “renew its focus on core markets.”
“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the Covid-19 pandemic,” CEO Anko van der Werff said in a statement. “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.”
The airline says it usually has 189 planes in its fleet, which conduct about 700 flights a day. But this year, its passenger flights have been grounded since the middle of March, “reducing its consolidated revenue by over 80% and placing significant pressure on its cash reserves,” it added on Monday.
The company was “fighting negative credit ratings, undergoing a sudden change in board control and naming a new CEO after its previous chief executive abruptly left the airline,” they added.