Out Of Chapter 11: Avianca Prepares For A Strong Start To The New Year

Avianca has exited the Chapter 11 bankruptcy process and will start 2022 with a bang. The airline has already announced it has successfully completed its financial reorganization process in the US, and it is emerging as a more efficient and financially strengthened company.

Avianca has exited its Chapter 11 process. It was the first Latin American carrier to do it. Aeromexico and LATAM could do it in 2022. Photo: Getty Images

New tailwind for Avianca

The last couple of years has been difficult for Avianca. The airline not only suffered from the COVID-19 pandemic, but it also faced a crisis prior to the pandemic. Avianca financially reorganized (out of court) in 2019. Nowadays, it is set to face new challenges.

“We look forward to the Company’s future success as we continue building upon Avianca’s rich history across Latin America and internationally. We appreciate the support of our loyal customers, partners, and lenders throughout this process,” said Adrian Neuhauser, President, and CEO of Avianca.

The South American carrier expects to reach pre-pandemic capacity levels by April 2022. Nonetheless, profitability may take a while longer to come back, maybe even until 2023 or 2024, according to a filing by the company.

More routes, better prices?

Avianca’s Chapter 11 allowed the airline to reduce costs to better compete against low-cost carriers across Latin America. The airline faces pressure from operators like Viva, Volaris, JetSMART, and Sky throughout the region.

By 2023, Avianca aims to serve 200 routes while cutting fares by 30%. The airline has been able to reduce ticket prices by going through a densification process in its short-haul, single-aisle fleet.

Its new strategy aptly called “Avianca para todos” (or Avianca for everyone) projects the airline will have more than 200 active routes and 125 active aircraft within the next two years. If executed correctly, Avianca would open 20% more routes than in 2019.

Adrian Neuhauser explained,

“We are going to continue to be competitive; we are going to keep lowering prices and, in the context of expanding the market, we are looking to make this airline viable in the long term. The company has to be successful.”

This interactive map shows the routes Avianca currently has, according to its website aviancawillkeeponflying.com,

From Bogota, Avianca connects with 50+ destinations in Colombia and elsewhere. The airline has around 2,000 weekly flights and over 300,000 available seats. Likewise, Avianca has 19 destinations from El Salvador, ten domestic and international destinations from Medellin, and more.

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What about the fleet?

Avianca has 142 planes throughout South America. It has reduced its fleet from 196 aircraft at the end of 2018 (prior to its two crises).

The Chapter 11 bankruptcy process forced Avianca to delay the reception of new planes. The airline won’t receive any new units from Airbus and Boeing until 2024.

Between 2024 and 2029, Avianca will receive up to 90 aircraft from the two OEMs. Boeing will deliver two B787-9 in 2024. Meanwhile, Avianca will deliver 88 A3320neo starting in 2025. Avianca will receive 20 planes per year between 2025 and 2028 and an additional eight units in 2029.

Will Avianca be successful in 2022? When do you expect the airline to be profitable again? Let us know in the comments below.

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