Avianca Holdings, Latin America’s second-largest airline, filed for bankruptcy on Sunday due to the “unforeseeable impact of the COVID-19 pandemic” according to a statement released on its website on Sunday.
The airline failed to meet a $65 million bond payment deadline and was unsuccessful in receiving aid from Colombia’s government. The decision to file for bankruptcy was made with the intention to “protect and preserve operations” during the pandemic. If it fails to come out of bankruptcy, Avianca will be one of the first major carriers to go under due to the pandemic.
According to the statement, Avianca directly employs 21,000 people throughout Latin America. Avianca has not flown a regular scheduled passenger flight since late March as 90% of the countries where Avianca flies is under total or partial travel restrictions.
“Avianca is facing the most challenging crisis in our 100-year history,” Avianca Chief Executive Anko van der Werff said in a news release.
Avianca, the second-oldest continually operating airline in the world after KLM (AIRF.PA), had $7.3 billion in debts in 2019. Avianca already went through bankruptcy in the early 2000s, from which it was rescued by a Bolivian-born oil businessman, German Efromovich. Last month, Avianca’s accounting firm, KPMG, said it had “substantial doubts” about the carrier’s ability to exist a year from now.
United stands to lose up to $700 million in loans related to Avianca.