LONDON – Latin American airline Avianca (AV) has confirmed it has secured a US$370m loan from the Colombian government. This commitment is part of a US$2bn financing package that is being used to help the airline during COVID-19. The US$370m will join the US$1.2bn in already secured funding, with around US$400-500m left to raise to keep the airline afloat.

Back in May, AV filed for bankruptcy protection in the New York Courts as it continued to restructure the business. The airline then announced in June that it would continue operations during such restructuring. Such financing, including loans received, would also consist of roll-ups of existing debt.

This ultimately means the airline could finance its operations during the reorganization proceedings.

Avianca’s first Boeing 787-8 undergoing pre-delivery preparations at Paine Field. (Credits: Jeremy Dwyer Lindgren)

A Rocky Year

Following a turbulent 2019, Avianca appeared to be ready to succeed again following board shake-ups and the halting of its Brazilian operations.

2020 saw AV’s CEO Anko van der Werff welcome consolidation of the market in Latin America, which was seen as a step forward for the airline. Then in February, more positive news came through to the airline following the code-sharing arrangements with TAP Air Portugal (TP).

It was not until March when some more problems arose for the airline, featuring the minimization of operations during COVID-19.

Photo: Avianca

Lifeline Ahead

Avianca expects the financing package to be completed by September, with domestic flights due to resume tomorrow. As for its international operations, the carrier will gradually restart on the conditions of governments of the various countries that will authorize such entry of flights.

All eyes will be on Avianca, especially from the likes of the LATAM Group, which will want to consolidate as much of the market during this pandemic.

For now, however, AV remains safe and if the financing deal goes ahead, then the element of consolidated competition will become a fiery one once again in Latin America.

Featured Image: Avianca Boeing 787-8 Dreamliner. Photo Credit: Wikimedia Commons