Airways Magazine

Avianca Secures Turnaround Agreement, Retires Final A318

 Breaking News

Avianca Secures Turnaround Agreement, Retires Final A318

Avianca Secures Turnaround Agreement, Retires Final A318
January 08
13:10 2020

MIAMI – Avianca, Colombia’s flag carrier, has reached agreements with its creditors for fresh financing and a restructuring plan to bring the airline back to normality after declaring bankruptcy last year.

The airline said it had secured extensions of bank lines, letters of credit, and other agreements with over 100 creditors and supply chain companies.

Through such agreements, the airline had managed to receive a $250 million loan from its stakeholders, as well as announcing an extra $125 million in additional financing.

Anko van der Werff, the airline’s CEO, said with such agreements now in place, Avianca’s management can now “focus again on the company”.

“For the 20,000 employees of Avianca Holdings, this is fantastic news, because the distraction of all of this has been an overhang for management attention,” van der Werff said.

Anko van der Werff joined Avianca in June 2019 following the sudden resignation of the airline’s former CEO, Hernan Rincon, and the major shakeup that saw the airline’s major shareholder, German Efromocich ousted as Chairman of the Board.

van der Werff’s move from his former role of Chief Commercial Officer at Aeromexico to Chief Executive Officer spot in Avianca was heavily criticized in Mexico—much like when former American Airline’s President, Scott Kirby, surprisingly moved to United Airlines in 2016.

However, van der Werff has managed to secure the airline’s much-needed re-financing and structuring, bringing a fresh air of optimism into Avianca’s Bogota headquarters.

Avianca’s shares have returned to 26% following the news.

Major Cut In Re-Fleeting Strategy


One significant element of this restructuring has been evidently seen through the “Avianca 2021 Plan,” which was announced earlier this week.

The airline has agreed with Airbus to reduce its firm commitments of aircraft from 108 A320neos down to 88. Avianca switched 20 planned deliveries between 2020 and 2024 to either canceled or deferred.

The 88 remaining units will be delivered between 2025 and 2028, on an average of 20 planes per year, with the remaining eight to be delivered in 2029.

However, it seems that the 20 units that have been deferred or canceled, have changed into leasing agreements. The airline has agreed to enter into 12-year operating leases for up to 12 A320neos with BOC Aviation.

Deliveries of these planes are to begin after 2023, which is consistent with the current plan.

The airline said it had spoken to Boeing about its outstanding 787-9 Dreamliner deliveries, mentioning it had “reached a mutually beneficial agreement.”

The airline’s Chief Financial Officer, Adrian Neuhauser, explained that “the completion of these three major aircraft transactions, coupled with the recently completed financial reprofiling and securing of $375 million of new long-term capital financing, places Avianca in a solid position as it moves forward with the Avianca 2021 Plan.”  

Today, the airline boasts a fleet of 99 aircraft, consisting of 11 ATR42/72 turboprops, 14 Airbus A319, 41 A320, 11 A321, eight A330-200, and 14 Boeing 787 Dreamliners.

Bye-bye, A318!


In other news, Avianca has retired its last baby-bus, the Airbus A318 from its fleet. The plane (N598EL) made its final flight on December 17th, 2019, as AV4960 to Marana Airport in Arizona.

This makes Avianca one of the remaining commercial airlines in Latin America to use the aircraft type.

In 2010-11, it had acquired all 10 units from Mexicana de Aviacion, but the phasing out began in 2019.

The aircraft is currently 14.2 years old and was first delivered to Mexicana in 2005 before joining Avianca in 2011.

The A318s operated on domestic mainline services in Colombia, with destinations such as Bogota, Santa Marta, Cartagena, Cali and some Caribbean destinations such as Aruba and Curacao.

Those A318s typically sat around 100 people in a two-class configuration, offering 12 seats in Business and 88 in Economy alike.

Business Class seats were typically configured in a 2-2 setup, whilst the Economy was at 3-3.

100 Years of Avianca… All Not Lost?


With the airline’s 100th birthday just passed, it seems that its management has managed to turn things around and keep Avianca’s legacy living on.

From transporting mail with Junkers F.13s and W.34s between the 1920s and 1940s to carrying over 30 million passengers in 2018, the airline can now focus on returning back to profitability.

With the Avianca 2021 Plan in place now, it remains clear that the deliveries will still continue, but at a rate where slow and careful incremental growth can be implemented into the carrier without any risk of a shutdown. All may not be lost with Avianca.

Comments
0

About Author

James Field

James Field

James is a passionate AvGeek based in Manchester, U.K who has been actively spotting for years. James has been an Aviation Enthusiast for 8 years and has a fond likening to Concorde! James hopes to grow in the aviation industry with journalism being his primary focus.

Related Articles

Current Issue

Cart

Polls

Would you feel safe flying on a Boeing 737 MAX once the grounding is lifted?

View Results

Loading ... Loading ...

Subscribe to our weekly Newsletter

@airwaysmagazine

Airways YouTube Channel

0