As the Colombian pilot strike passes the 10-day mark, it continues to take a toll the Avianca, costing the airline some $2.5 million USD in lost sales per day, according to an estimate by Bancolombia.
In a note to investors, the Medellin-based Bancolombia, the nation’s largest financial institution, stressed that its figures are something of a “back on the envelope calculation” although they are based upon “information provided by management.”
The bank’s analysts have classified the hit taken so far as “material but not critical” in the short term.
Moreover, the bank’s analysts have classified the hit taken so far as “material but not critical” in the short term and “not material for the long term” when it comes to the company’s annual results and beyond.
Before the Colombian Association of Civil Aviators (ACDAC), which represents some 700 of the Bogotá-based airline’s roughly 1,300 pilots, called a strike over its wage dispute with the carrier, Bancolombia had projected Avianca’s average daily sales during the third quarter to come in at $12.9 million USD. That means that an estimated drop of $2.5 million USD per day represents a 19.4% decrease, per Bancolombia’s calculations.
Weighing other factors — including Avianca’s variable and fixed operating costs — the bank estimates this shortfall equates to an overall net income loss of $1.5 million USD per day. And this figure does not even take into account “potential cost increases linked to ticket refunds, passenger transfers to other airlines, or costs related to planes sat idle at airports.”
A request for comment sent to Avianca to verify these financial figures was not immediately returned.
Avianca has continued to call the strike, which has led to the cancellation of around 2,000 flights and affected some 200,000 people, an illegal action. While employees generally have the right to go on strike in Colombia, a 1990s law deemed it illegal for unions and workers that provide an “essential public service.”
The Ministry of Transportation has continued to get the two sides to work toward an agreement. The possibility of an arbitration ruling now looms to end the stalemate as the nation’s air travel system continues to face dire stress with its largest player operating at less than half strength.
While the strike is aggravating public officials, air travelers, and rival airlines dealing with the complications from so many cancelled Avianca flights, the carrier is trying to accommodate one passionate segment of fliers: football fans.
The strike has hit at a particularly bad time for those looking to attend the World Cup qualifying game between Colombian and Paraguay in Barranquilla next week. While all matches played by the national team are highly anticipated affairs, this one is bigger than most. It will be the final qualifier played in the country, and a victory for “Los Cafeteros” will guarantee Colombia a spot in the World Cup competition next summer in Russia.
To deal with the increased demand for travel to Barranquilla, Avianca is reportedly operating 10 extra flights that will add 1,900 seats in the lead up to the game on Thursday, October 5. According to the local media outlet El Heraldo, nine of those flights will transport fans from Bogotá to Barranquilla and one has been added on the Medellín-to-Barranquilla route.
(Photo credit: Avianca)