Avianca has exited Chapter 11 bankruptcy protection after reaching agreements with its creditors, raising fresh investments of $1.7 billion, and obtaining approval for its plan of reorganization, emerging with a solid balance sheet, significantly reduced debt and over $1 billion in liquidity.
After advancing through the Chapter 11 process in 18 months, Avianca has revamped its business model to be “more significantly more efficient, reaffirming its commitment to providing reliable and on-time service, combining a value proposition that includes the best attributes of low-cost airlines, while retaining key differentiators that allow it to be the most convenient travel alternative for millions of passengers in Latin America and the world”.
Rohit Philip, Chief Financial Officer of Avianca, said: “This is an important day for Avianca and all of our stakeholders. We are pleased to be emerging successfully from this process, with Avianca in a stronger financial position to continue serving our customers and flying the skies for many years to come. We look forward to continuing to execute on our new business vision and capitalizing on the recovery in travel demand to drive our future success.”
Adrian Neuhauser, President and Chief Executive Officer of Avianca, said: “We look forward to the Company’s future success as we continue building upon Avianca’s rich history across Latin America and internationally… I am confident that we are well-positioned to be a highly competitive and successful carrier.”
Over the next three years, Avianca expects to nearly double its network, expanding to nearly 200 routes in Latin America and the world. The majority of the new routes will be point-to-point, served by a fleet of more than 130 aircraft by the end of 2025.
Avianca is committed to invest over US$200 million in the next year renewing its seats, including three new types - Premium, Plus and Economy - of its A320 fleet. The airline will continue to fly the 787, and expand its cargo business, Avianca Cargo.
Roberto Kriete, Chairman of the Board, stated: “We are very proud of the work that the Avianca team has done that has led the company to emerge from C11 on schedule as a financially stronger organization. While we are on the right path to recovery, we must remain cautious with the progress of the pandemic that has not yet ended and must stay focused on executing our new business plan. I have all the confidence that with the support of our investors, of all those who believed in us and with the current administration, this company will grow to continue connecting Latin America”.
As per the approved reorganisation plan, the new shareholders will invest in Avianca Group International, a new holding company, domiciled in the UK and will consolidate the group’s investments in all of its subsidiaries (including Aerovias del Continente Americano, its Colombian subsidiary, and TACA International its Central American operation). The prior holding company, Avianca was domiciled in Panama.
Seabury Securities served as investment banker and financial advisor to Avianca, and Milbank served as legal advisor.