Latin American airline Avianca will look to increase the number of passengers it can fit into a plane without enlarging its fleet as part of its efforts to overcome ongoing financial problems, its chief executive said on Thursday, Reuters reported. A video was released on social media this week showing president of the board Roberto Kriete telling employees that the airline was “broke.” The airline said the video was obtained illegally and denied that it was in a bankruptcy or insolvency process.
Avianca Holdings SA plunged to a record low after the Colombia-based airline’s chairman was seen in a leaked internal video telling employees that the company is “bankrupt,” Bloomberg News reported. The stock dropped as much as 15% in Bogota trading before paring losses. Kriete was trying to reiterate to employees the urgency of getting back to profitability, said Carlos Enrique Rodriguez, head of equity research at Bogota-based brokerage Ultraserfinco.
Avianca was a failing airline with 37 outdated planes when German Efromovich purchased it out of bankruptcy in 2004. Over 15 years the Bolivian businessman built it into a regional powerhouse as Latin America’s second-largest carrier. But for all its success, the Bogota-based company is now back on a rocky foundation, Bloomberg News reported. Its stock price is down by almost 75% since it went public in 2011 and its bonds are trading in distressed territory amid concerns it will struggle to refinance debt. Avianca’s first-quarter loss was the biggest since 2015.
Colombia's Avianca Holdings SA said on Monday it is experiencing "reputational harm" from its association with Avianca Brasil, an air carrier that licenses its name and has canceled over 1,000 flights amid a bankruptcy restructuring, the International New York Times reported on a Reuters story. Both Aviancas belong to the same family-owned business group, led by brothers German and Jose Efromovich, but are maintained as separate companies.