Airline Avianca Holdings came under broad criticism in Colombia for paying its top two executives $6 million in bonuses in May, at a time when the carrier had furloughed most of its employees without pay and was preparing a bankruptcy filing, Reuters reported. According to bankruptcy court documents submitted by Avianca itself, the airline paid Chief Executive Anco van der Werff $3.7 million and paid Chief Financial Officer Adrian Neuhauser $2.8 million on May 6. Five days later, the airline filed for Chapter 11 bankruptcy protection in the U.S.
Avianca Holdings SA, one of Latin America’s largest airlines, lined up a $2 billion bankruptcy-loan package to finance its stay in chapter 11 from a group of investors and lenders including United Airlines Inc. and Chairman Roberto Kriete, The Wall Street Journal reported. Since filing for bankruptcy in May after the coronavirus pandemic curtailed flying, Avianca has been working to raise capital to stay in business as air travel remains deeply depressed world-wide.
Avianca Holdings on Tuesday said it had appealed a court order that last week banned Colombia’s government from providing the troubled airline with a $370 million loan to finance part of its bankruptcy restructuring, Reuters reported. The airline, which filed for bankruptcy in May due to the coronavirus pandemic’s effect on travel, said that without the loan, keeping the company afloat would become “untenable.” The loan is part of a $2 billion financing package that is key to the carrier exiting bankruptcy protection.
A Colombian court temporarily blocked a $370 million government loan to Avianca Holdings SA after a citizen expressed concern about a lack of guarantees, Bloomberg News reported. The Cundinamarca Administrative Tribunal granted an injunction to suspend disbursement after a motion filed by a citizen against the Finance Ministry, the presidency and the airline said the loan, part of its debtor-in-possession financing, may become a “threat” to collective rights and public worth, according to a copy of the ruling sent by court.
Colombia’s disaster fund will lend as much as $370 million to Avianca Holdings SA to help with its restructuring after a halt in travel during the Covid-19 pandemic forced the company into bankruptcy, the country’s finance ministry said in a statement, Bloomberg News reported. The emergency mitigation fund’s committee approved the government-backed loan, due November 2021, under the framework of debtor-in-possession financing the company is seeking in its U.S. bankruptcy court case, the ministry said in a statement on Friday.
Colombian businesses on Monday asked the government to secure a loan from the central bank for between 30 trillion and 50 trillion pesos ($7.84 billion to $13.1 billion) to bail out companies at risk of collapse due to the impact of coronavirus, Reuters reported. Proposals include a rescue package in which companies could issue bonds for future conversion to shares, as well as a capitalization program under which the government would take part ownership of businesses, Colombian Business Association President Bruce Mac Master said.
Colombian airline Avianca, currently in Chapter 11 bankruptcy reorganization proceedings in US Federal Court has announced that it has been working with its advisors, led by investment bank Seabury Securities LLC to put in place a DIP (Debtor In Possession) financing structure, Finance Colombia reported.
The fiscal fallout of the coronavirus pandemic and low oil prices could affect Colombia for several years, Richard Francis, director of sovereign ratings at ratings agency Fitch, said on Tuesday, Reuters reported. Colombia’s government predicts the usually healthy economy will contract 5.5% this year. The country has suspended its fiscal deficit limits for 2020 and 2021 and issued billions in bonds as unemployment rises and businesses close during a months-long quarantine.
Latin America’s No. 2 carrier Avianca Holdings reported a $121 million loss for the first quarter late on Monday, accounting for just two weeks of severe impact from the coronavirus crisis, Reuters reported. The airline was the first in the region to file for bankruptcy protection in the United States and spent a full three months grounded without operating any regular flights. It has since restarted some operations in Ecuador, but its hubs in Colombia, El Salvador and Peru remain closed.
Passenger revenue at Latin America’s No. 2 airline, Avianca Holdings, has fallen 51% for the year as of early June compared with a year ago, the carrier said, in a look into the dire financial toll that the coronavirus has taken on the company, Reuters reported. Colombia-based Avianca was the first airline in the region to file for bankruptcy protection, after the coronavirus added financial strain to the already weak carrier. The revenue figure shows just how bad second-quarter results are likely to be for Latin America’s airlines.