Colombia-based airline Avianca has suspended all commercial flights due to the COVID-19 pandemic, which has dramatically reduced its revenue and while fixed costs continue. As a consequence, the company estimates that its revenues will not return to previous levels in the short term and it “will require substantial incremental financing to fund its operations.”
This was indicated on a statement published with the country’s Financial Superintendence, in which the firm also indicates that “it is consuming cash reserves to fulfill obligations that have not been deferred”, revealed a report by La Republica.
Avianca has faced worsening financial and operational difficulties over the past 3 years, and the coronavirus pandemic may have pushed the airline over an existential cliff.
Even before governments ordered closures of airspace, Avianca had scarce cash on hand to cover current liabilities, and had just completed a debt restructuring and closed on additional financing.
“Avianca has entered into conversations with different governments where it operates, including, among others, the Colombian government. In the course of these conversations, Avianca has proposed different structures that it considers would provide these governments with adequate protections, while ensuring that Avianca continues operating in these markets, maintaining connectivity and employment in the region, “said the company.