January 30, 2020 / 2:14 AM / a month ago

Colombia's Avianca restructuring going well, executives say, ruling out bankruptcy

BOGOTA, Jan 29 (Reuters) - Colombian flag carrier Avianca Holdings is making progress with a restructuring plan for its finances that will keep it in the air without having to take measures such as declaring bankruptcy or insolvency, company executives said on Wednesday.

Over the course of the restructuring, which began last year, the company will divest its non‐core activities and simplify its fleet to improve profits and leave behind a financial crisis that arose in 2019.

“The company’s financial situation has turned 180 degrees. We have much more certainty about the future, we are looking forward with a lot of optimism and the numbers are much better,” said Avianca Chief Executive Anko van der Werff.

Avianca management changed last May after majority shareholder Synergy Group Corp lost control of the company when it breached a loan agreement with United Airlines.

The loan was backed by Synergy’s stake in Avianca. However, the contract United Airlines has with its pilots restricts it from majority ownership in another carrier, so it ceded management of Avianca to minority partner Kingsland Holdings Limited. In the second half of last year, Avianca received $250 million in loans from United Airlines and Kingsland, as well as a further $125 million from other investors. At the same time it also finalized a public offer for around $480 million dollars in bonds part of its debt restructuring.

“Today we do not have any financial problems, we are meeting all of our obligations within the agreed deadlines and we have enough capital to operate with the liquidity we need,” Chief Financial Officer Adrian Neuhauser told journalists at an event celebrating the airline’s 100th birthday.

Neuhauser said in June last year the airline renegotiated repayment plans with its creditors and suppliers due to not being able to make payment deadlines, adding that the situation was fixed in December.

“We do not see bankruptcy anywhere on our horizon, we are operating and focused on the next 100 years,” he said.

At the start of January, Avianca agreed with planemaker Airbus to reduce it’s purchase of A320neo planes by 20 and reached a mutual agreement with Boeing in relation to a pending order for two 787-9 planes as part of plans to reorganize its finances and improve its fleet.

The airline closed 2019 with 156 planes in operations and carried around 30 million passengers. (Reporting by Luis Jaime Acosta; Writing by Oliver Griffin; editing by Grant McCool)

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