AVIANCA
The logo of Avianca Airlines is pictured at a counter following the cancellation of Avianca flight 431, after El Salvador's President Nayib Bukele accused Mexico of allowing a dozen confirmed coronavirus (COVID-19) cases to board the flight due to leave Mexico City for San Salvador, at the Benito Juarez International Airport in Mexico City, Mexico, March 16, 2020.
(Photo: REUTERS/Gustavo Graf/File Photo)

Avianca Airlines, Latin America's second-biggest airline company, has filed for US bankruptcy protection on Sunday to restructure its debt "because of the uncertain effects" of the ongoing global health crisis.

In a statement released in Bogota, Avianca disclosed that along with some of the carrier's subsidiaries and affiliates, it had requested to voluntarily file for Chapter 11 of the Bankruptcy Code in a court in New York. The mechanism helps businesses struggling financially to reorganize their debt and restructure it.

In a filing, Avianca said the move was required to ensure that the airline will emerge as a bigger, more effective carrier that will operate for many more years. Avianca is facing the most daunting crisis in its 100-year history "as we tackle the consequences of the Covid-19 pandemic," chief executive Anko van der Werff, said.

If Avianca falls short in coming out of bankruptcy, the Bogota-based carrier would be among the first big airlines globally to collapse due to the pandemic, which has battered travel around the world.

The company has not flown a regularly scheduled commercial flight since late March this year, and a huge part of its 20,000 workers have gone without being compensated throughout the turmoil.

The airline, which has Kingsland Holdings and United Airlines Holdings Inc. as stakeholders, listed as much as $10 billion in total liabilities and the same figures in assets. Avianca disclosed that it will not make bond payments due for Monday.

The company grounded its aircraft late March after governments across Latin America shut down their borders to prevent the spread of the coronavirus. 

The organization has asked the New York court for permission to fulfill operational obligations prior to the bankruptcy protection request and keep the "compensation scheme applicable to its workers."

According to the International Air Transport Association (IATA), Latin American airlines will lose $15 billion in total sales for 2020, the worst crisis in the industry's history.

Avianca is second in only to Chile's Latam in Latin America in terms of size and is the second oldest carrier in the world next to Dutch airline KLM. The group started operations in the Colombian city of Barranquilla in 1919, 16 years after the Wright brothers' historic first flight.

Avianca Airlines transported more than 30 million passengers in 2019 to 76 destinations in 27 nations in the Americas and Europe. The airline earned a revenue of $4.6 billion last year, and employed 21,000 staff, majority of whom have been furloughed because of the pandemic.