Avianca carried $7.3B in debt into a pandemic that stopped 80% of its revenue

Avianca was Latin America's second-oldest airline, founded in 1919 in Colombia. By the end of 2019, the company had accumulated total debt of $7.3 billion — a burden built through years of fleet expansion, route competition and the 2009 merger with TACA. The debt was manageable while planes were flying.

When the pandemic hit in March 2020, Colombia's lockdown suspended Avianca's domestic and international operations. The airline operated no scheduled passenger flights from late March through May, except repatriation missions. Eighty percent of its revenue stopped. The debt did not.

On 10 May 2020, Avianca Holdings and 23 affiliated debtors filed for Chapter 11 bankruptcy in the US District Court for the Southern District of New York. The same day, the company liquidated its Peruvian subsidiary, Avianca Perú. The filing was one of the largest airline bankruptcies triggered by the pandemic.

Avianca's reorganization plan was approved on 2 November 2021, and the airline emerged from Chapter 11 on 1 December 2021 — eighteen months after filing. It moved its legal address to the United Kingdom, simplified its fleet to Airbus A320-family aircraft and Boeing 787-8s, and continued operating. The airline survived; the pre-pandemic capital structure did not.