Sunday, May 10, Avianca Airlines (NYSE: AVH, BVC, PFAVH) filed for chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of New York. The airline expects to continue to operate under protection from creditors as it seeks bailouts from the Colombian and other governments.
The airline already stopped paying debt and certain expenses and had warned that it did not have enough cash on hand to continue making payroll. Pilots in Peru have already initiated labor actions against the airline, and the carrier faces public opposition in Colombia to a direct government rescue.
Those with claims against Avianca may contact Avianca’s claims agent, Kurtzman Carson Consultants, at www.kccllc.net/avianca. Information is also available by calling (866) 967-1780 (U.S./Canada) or +1 (310) 751-2680 (International), as well as by email at www.kccllc.net/avianca/inquiry.
“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the COVID-19 pandemic,” said CEO Anko van der Werff. “Despite the positive results yielded by our ‘Avianca 2021’ plan, we believe that, in the face of a complete grounding of our passenger fleet and a recovery that will be gradual, entering into this process is a necessary step to address our financial challenges.”
The airline will abandon Peru
In a press release issued Sunday, Avianca revealed that “In parallel to its Chapter 11 filing in the U.S., Avianca intends to commence a wind-down of its operations in Peru pursuant to local laws. This decision supports essential right-sizing efforts and will allow Avianca to renew its focus on core markets upon emergence from its court-supervised reorganization.”
Avianca has filed motions with the US bankruptcy court to pay certain prepetition employee wages, compensation and benefit obligations owed from before the filing date, as well as a request to continue paying wages and honoring employee benefit programs in normal day-to-day operations. Avianca has also requested authority to honor various prepetition obligations owed to certain of its travel agency partners, vendors and suppliers from before the filing date. The airline says that it intends to pay vendors and suppliers, as well as travel agency partners in the ordinary course for goods and services provided on or after the filing date during its Chapter 11 process.
LifeMiles redemptions continue
Avianca states that passengers can expect to use tickets, vouchers and gift cards purchased before Avianca initiated this process. Avianca customers will continue to accrue miles when they fly with Avianca and can continue to redeem miles earned through LifeMiles to purchase tickets with Avianca during this process. Additional frequent flyer benefits remain active, including access to VIP Lounges, priority check-in, upgrades, and other benefits. Avianca also expects to continue to issue ticket refunds and honor travel coupons and payments or credits associated with baggage or service claims in adherence with its current policies. Lifemiles is a separate legal company from Avianca, and is not included in the bankruptcy filing.
Avianca has created an information site, aviancawillkeeponflying.com to provide the company’s position on the bankruptcy filing.