Avianca Holdings exits Chapter 11 proceedings
Avianca Holdings has exited bankruptcy protection after successfully completing its financial restructuring process to emerge with significantly reduced debt, USD1.7 billion in fresh investments, and more than USD1 billion of liquidity, the company announced.
A notice confirming the substantial consummation of the restructuring plan and final deadlines for filing certain claims was submitted to the US Bankruptcy Court in the Southern District of New York on December 1, 2021. The company had entered bankruptcy protection on May 10, 2020.
As per the approved plan of reorganisation, the new shareholders will invest in Avianca Group International Limited, a new holding company, which will be domiciled in the United Kingdom and will consolidate the group’s investments in all of its subsidiaries (including its Colombian subsidiary Avianca Airlines and Avianca Airlines El Salvador, its Central American operation). The prior holding company, Avianca Holdings was domiciled in Panama.
As reported previously, the plan has seen certain lenders and noteholders including United Airlines and Kingsland Holdings – which is controlled by Salvadoran mogul Roberto Jose Kriete Avila and Citadel LLC – gain 72% equity in exchange for cancelling more than USD900 million of the airline group’s debt.
In a statement, Avianca disclosed key aspects of its revamped business model, including:
the doubling of its network to nearly 200 routes in Latin America and the world over the next three years. The majority of new routes would be point-to-point;
the network would be served by a fleet of more than 130 aircraft by the end of 2025 with reconfigured, lighter-weight new-generation seats, which would allow Avianca to reduce its carbon footprint and contribute to airport decongestion while increasing its efficiency;
it will invest more than USD200 million in the next year to renew A320 seats, including premium, plus, and economy;
it will continue to fly the B787 on long-haul flights;
Avianca Cargo would expand in Colombia and other strategic markets;
the airline will remain a Star Alliance member;
over the next year, the company plans to further revamp its digital channels and online customer service;
the company would provide more competitive pricing and allow customers to personalise their fare packages.
“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, all those who believed in us, and with the current leadership, this company will continue to grow while connecting Latin America,” commented board chairman Roberto Kriete.
“This is an important day for Avianca and all of our stakeholders. We look forward to continuing to execute on our new business vision and capitalising on the recovery in travel demand to drive our future success,” added Chief Financial Officer Rohit Philip.
President and Chief Executive Officer Adrian Neuhauser 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.”
Seabury Securities LLC served as investment banker and financial advisor to Avianca, and Milbank LLP served as legal advisor.