Without a doubt the airline industry is among the worst hit by coronavirus pandemic across entire world. In the past few weeks multiple airlines including major ones have made headlines by adopting measures to help them survive the hard economic times.
Well, world’s second oldest and South America’s largest airline Avianca Holdings (AVT) has filed for bankruptcy citing the pandemic as the main reason behind the move.
The airline filed for chapter 11 New York, further stating it would continue with operations as it also continues restricting its debts. Nonetheless this is not the first time the airline is doing this, in early 2000s Avianca went through the same and billionaire German Efromovich bailed out the company.
Avianca is the second oldest airline in the world after Dutch based KLM (AIRF).
This comes at a time when the airline has failed to honor a bond deadline payment period. Sources revealed pleads by the airline to get any form of bailout from the Columbia’s government went unfruitful.
The airline claims it has not flown any way near its normal schedule since March, a situation which has forced the airline’s employees totaling to over 20,000 survive without pay during the pandemic time.
According to the airlines Chief executive Officer, Anko van der Werff, the Airline is facing its toughest time in a century and there is a lot to be done if the company is to come out of bankruptcy.
“Avianca is facing the most challenging crisis in our 100-year history,” said the CEO in a press statement.
On the other hand, chief economist at Casa de Bolsa– a brokerage company in Columbia Juan David Ballen, believes the airline was on its death line long before coronavirus. Ballen says such a scenario was more than expected since the company has been in a financial distress before outbreak of the deadly virus.
“This isn’t a surprise at all. The company was heavily indebted despite the fact it tried to restructure its debt last year,” said Ballen.
In a situation where the airline never comes out of bankruptcy, United States stands to lose up to $700 million in terms of loans and other debts.