BOGOTA – Latin American airline giant Avianca is hoping to sail into smoother skies after a Chapter 11 bankruptcy filing – but it will take more to keep the region’s second largest carrier afloat.
Colombian Finance Minister Alberto Carrasquilla signaled Monday that a government loan isn’t off the table, though the nation is strapped for cash and might be limited in how much it can offer.
“We are looking for a way to be a piece of the solution,” he told BLU Radio. “The problem will require giving cash at some moment, for sure.”
Avianca is Colombia’s largest airline and has seen revenue plummet as key markets shut down all air travel. But unlike air carriers in wealthier nations, Latin America’s governments have been slow to boost the airline industry. Whereas the U.S. has spent billions shoring up distressed airlines, Colombia and other nations in the region have thus far taken only small steps to stop airlines from going under.
Avianca had pre-existing financial issues and a rocky relationship with much of the public, complicating government efforts to rescue it. At the same time, letting Avianca fail could bring about dire consequences for a country trying to make international tourism a key driver as it emerges from a half-century of civil conflict.
“It’s an emblematic company,” said Iván Montoya, an economic analyst. “We’d be left to the whims of carriers from other nations deciding who we are connecting to or not.”
Avianca was founded around the time of another pandemic – the Spanish flu – and has survived a century of turbulence including wars, bankruptcy and economic downturns to emerge as the behemoth that it is today. Pilots and crew members dressed in signature red cape uniforms now fly to over 75 destinations. Last year, the company celebrated its 100th anniversary, but talk of financial worries began to mount.
Shares fell in August after a video leaked online showing Avianca’s chairman warning staff that Colombia’s crown carrier was “broke.” The airline denied it was bankrupt but went about taking out loans, reorganizing debt and making changes to expand the number of passengers on flights.