Avianca can manage without government loan, it says

Avianca Holdings will continue with its restructuring “without the participation of the government of Colombia” in its debtor-in-possession (DIP) financing, it said in a statement on November 12. The Avianca Airlines (AV, Bogotá) parent has secured the support of “a large number” of investors and existing lenders to manage without it during its ongoing Chapter 11 restructuring process, it claimed. In early October, the US Bankruptcy Court for the Southern District of New York approved a proposed financing plan of over USD2 billion to help the company exit restructuring. The Colombian government also approved a loan of USD370 million, but this was suspended by the courts, a ruling that Avianca initially sought to appeal. However, it said in its statement: “With the support of a large number of external institutional investors and existing lenders in its DIP financing, Avianca has the financial flexibility during this stage to support its operations and continue to advance in its restructuring plan without the participation of the Colombian government in the DIP financing.” The government’s offer of a loan had provoked a hostile reaction from unions and opposition politicians. In mid-October, CFO Adrián Neuhauser told the Chilean newspaper La Tercera in an interview that the coronavirus pandemic would force Avianca Holdings to cut its workforce from 20,000 to 14,000 people. The company concluded its statement by thanking the government for its efforts in helping the country’s Covid-hit travel and tourism sector, and by assuring it would continue to focus on safely connecting individuals, families, and businesses throughout Latin America, both during and after the Chapter 11 process.