Avianca reaches an agreement to apply its restructuring plan

The company indicated that this would make it more stable and economically viable.

This Tuesday the Avianca airline indicated that a court in the Southern District of New York, the United States, confirmed the reorganization plan presented by the company to be able to stabilize financially.

One of the most hit industries by the Coronavirus pandemic is aviation, which seeks to reactivate with decreased percentages of occupation.

Transform or disappear. That is the slogan that plans in Latin American airlines, forced by the pandemic to a process of change that includes route reduction, alliances signing, liquidity recovery and tireless search for the fidelity of its customers.

Among the airlines in trouble are several Latin Americans such as Avianca -one of the largest in the region -, which was forced to request help through chapter 11 of the United States Banking Code. But why do they do it in this country? The end is to protect themselves while wearing a plan to overcome this crisis. Both did it before the middle of last year, in the worst of the Coronavirus pandemic.

Now “with the departure of Avianca from Chapter 11, the company will have a solid balance, with significantly less debt and more than USD1 billion liquidity. The restructuring will allow it to continue repositioning and simplifying its business, restoring Avianca as the first option for its clients with more competitive, new and modern seat Its aircraft and obtaining the financing of its long -term obligations.

Chapter 11 offers financial relief and reorganization of debts without the company being liquidated or operations are paralyzed. Reason why in the past many large companies from different areas - from banks to automotive - have done the same to save themselves from closing and being liquidated by their creditors. When the application of a company is accepted, its economic operations and reorganization are supervised by a court in the United States. Aviation giants such as American Airlines, Delta and United also accepted this process before.

This option can be requested by companies that operate and are domiciled in the United States and that are not in a position to fulfill their obligations. Justice designates one or more committees to represent creditors, shareholders and the company to put together a plan that allows them to stabilize their finances. In the end, the plan must be approved by the same creditors, shareholders, bond holders and by the court that carries the case. If there is no agreement, it goes to a liquidation under chapter 7, but this does not happen so often.

According to Avianca, the new business plan will allow you: to be a stable and economically viable airline, have a more robust route of routes with a fleet of passengers of more than 130 aircraft to serve 2025 more than 200 point -to -point routes in Latin America, as the demand for trips is completely recovered; Strengthen a smaller cost structure and grow in new markets, boost the continuous growth of loading businesses and its Lifemile loyalty program in the markets where it already operates.

Avianca is the second oldest airline in the world that is kept in operation.