MIAMI – The Colombian government has come to the rescue of the country’s flag carrier, Avianca (AV), as well as Sureste, the operator of six Colombian airports.

Earlier this year, AV filed for chapter 11 bankruptcy protection in the United States, and the fate of the airline was left unclear. However, the airline has received US$2bn from the government to aid in its restructuring.

According to a press release from the carrier, “Avianca’s DIP loan financing is expected to consist of two tranches that include approximately US$1.2bn of new funds as part of a US$2.0bn overall financing facility (including rollups of existing debt and purchase consideration) which will allow the Company to finance its operations during the pendency of its Chapter 11 reorganization…”

Apart from the government’s commitment to participate in the DIP loan “by providing approximately 30% of the new funds, or 20% of the total DIP financing,” the airline said it was also very pleased with the positive reception the DIP loan structure had garned from third-party institutional investors that, along with existing lenders, “are expected to provide a substantial majority of the DIP loan financing.”

Avianca Boeing 787. Photo: Airways

A Colombian Airport Revival

One of the biggest hits to the Colombian aviation industry since the beginning of the COVID-19 pandemic has been the fact that the nation’s domestic airports have been closed since March. This has placed Sureste, the owner and operator of six airports in Colombia, far behind its peers in terms of performance.

However, in addition to their aid package for AV, the government made the call on Tuesday to reopen the country’s domestic airports. Even though flight schedules are nowhere near what they looked like pre-pandemic, this reopening is definitely a step in the right direction for Sureste.

Sureste, which also owns nine airports in Mexico, the most popular one in Cancun (CUN), invested heavily in Colombia two years ago with the purchase of the six airports. The most lucrative of these six is the Jose Maria Cordova International Airport (MDE) which serves Medellin, Colombia’s second-largest city.

Since the takeover, the quality of the domestic airports has greatly improved, and profit margins have increased dramatically. The reopening of the airports will ensure that Sureste can continue to change them for the better.

Feature Image: Avianca Airbus A319. Photo: Tyler Lorenz.