IATA has issued the following communication regarding Avianca Group Holdings filing for bankruptcy
Avianca Group Holdings has initiated a voluntary reorganization process in the United States of America, known as Chapter 11. This filing includes Avianca Airlines (AV-134) and several of its subsidiaries (see the list below).
IATA has started discussions with Avianca senior management and their appointed advisors in order to address the requirements for the Avianca Group2 airlines to remain in the IATA settlement systems during this period and to ensure that all payment obligations are maintained.
Additionally, the Avianca Group airlines included in the Chapter 11 proceeding have applied for court approval to continue to pay all amounts due to the IATA settlement systems in the ordinary course. This motion has not yet been ruled upon by the court, but IATA is optimistic for its approval, as similar motions have been approved in other airline Chapter 11 proceedings in the past.
A separate announcement was made that Avianca Peru (T0-533) will be wound down as part of the reorganization process. Further clarity on this will be provided shortly.
Note: (1) A Chapter 11 bankruptcy filing is a form of voluntary reorganization where companies in financial distress seek to reorganize under a court administered protective shield. The company continues its operations during the reorganization. This is different than a liquidation (Chapter 7) filing where the company is immediately wound down and assets are sold to pay creditors amounts owed by the company.
Note: (2) The Avianca Group Airlines included in the Chapter 11 filing, which are active in IATA’s settlement systems are: Avianca (AV-134), Avianca Costa Rica (LR-133), Avianca Ecuador (2K-547), TACA – Avianca El Salvador (TA-202), and Tampa Cargo (QT-729). IATA does not believe that Avianca Peru (T0-533) is part of the filing but is seeking confirmation.