Avianca Receives Court Approval To Access $2B In Bankruptcy Financing
Avianca Holdings received approval from a U.S. federal court to tap over $2 billion in debtor-in-possession (DIP) financing, marking the latest step in its attempted restructuring after seeking Chapter 11 bankruptcy protection in New York on May 10.
The DIP financing will enable Avianca to fund its operations while its bankruptcy case plays out in the U.S. Bankruptcy Court for the Southern District of New York. The $2 billion infusion of cash consists of $1.2 billion in new loans, as well as refinanced debt, secured by key assets including the company’s ownership stakes in its LifeMiles loyalty program and cargo subsidiaries.
“The approval of the DIP financing package is a significant milestone and an important step forward for Avianca,” Avianca CFO Adrian Neuhauser said in a statement. “We continue to work on our go-forward operating plan in order to emerge from this process as a stronger and more efficient airline and look forward to presenting our plan to the U.S. Court as we move forward in the Chapter 11 process.”
Approval of the emergency financing package comes after the Bogota-based airline restarted international flying on Sept. 28, initially operating to 14 cities in Brazil, Chile, the Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico and the U.S. The airline is also currently operating to 21 domestic destinations in Colombia, with plans to add more destinations back in coming months.
Colombia opened its borders to international air travel on Sept. 21 for the first time since March, although the federal government requires international arrivals to present a negative polymerase chain reaction (PCR) test taken within 96 hours of their final leg of departure to enter the country. The country restarted domestic flights on Sept. 1, after a nearly five-month standstill.
Avianca’s initial fleet will consist of 34 aircraft, featuring a mix of Airbus A320-family models for domestic routes and Boeing 787s on international flights.