Avianca Submits Reorganization Plan to US Bankruptcy Court | New


Colombian airline Avianca has submitted a reorganization plan to a US bankruptcy court.

The Bogota-based airline’s plan, submitted to New York’s Southern District bankruptcy court on August 10, outlines its obligations to creditors and settling claims. He says a new strategy will help him streamline operations and position Avianca to thrive in the Latin American market.

“Avianca expects to build on its main strengths, including strong operational performance, increased capacity, brand recognition, leadership position in the dynamic Latin American airline market, its option with more point-to-point routes, its membership in Star Alliance and the strength of its LifeMiles program, while becoming a more profitable airline, in order to emerge from these Chapter 11 cases as an elite competitor for years to come ”, indicates the airline in the file.

Avianca and her Latin American counterparts Aeromexico and LATAM Airlines declared bankruptcy last year after the coronavirus decimated global demand for air travel. Airlines have downsized their networks, pulled and stocked planes, and laid off staff in an attempt to save money.

In documents submitted to court this week, Avianca outlines a new fleet plan and says she expects to exit proceedings with 109 planes, up from 158 she operated before 2020. She has also worked with aircraft manufacturers and donors to restructure the future. aircraft deliveries.

The airline has 66 planes in service and 29 in storage, according to data from Cirium fleets.

“Since the start of Covid-19, Avianca has taken further steps to streamline the profile of its fleet and reduce the number of future deliveries. As for future deliveries… Avianca is currently entering into negotiations with Airbus and Boeing to assume and modify or reject these purchase agreements. Avianca could also reject the aircraft leases of the 10 new A320neo which would have been leased to BOC Aviation from 2023. “

By 2029, the airline says it will take two new 787s and 88 A320neos. He concluded “around 58 new leases, with deliveries between 2021 and 2023”. These are in addition to the 15 leases which have a “simplified lease structure and better economic conditions”.

In addition, the airline is adding more seats to the A320s, increasing their capacity by 24% to better compete with low-cost carriers pushing across the region.

“The penetration of these low-cost carriers into Avianca’s domestic markets has resulted in significant and lasting downward pressure on fares, which, combined with changing passenger preferences, has forced Avianca to further adjust its business model, ”the airline said on the record. “The company believes that the execution of this strategy, coupled with the execution of over 300 cost reduction initiatives, will allow Avianca to achieve a world-class cost structure. “

The next step in the process is a court hearing scheduled for September 14.

The company said it hopes to exit Chapter 11 proceedings by the end of the year.

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