Colombian government to loan struggling Avianca up to $ 370 million

(Reuters) – The Colombian government said on Saturday it would grant up to $ 370 million in loans to Avianca AVT_p.CN, as part of the airline’s Chapter 11 bankruptcy protection process in the United States.

FILE PHOTO: An aerial view shows Colombian airline Avianca planes parked at El Dorado International Airport amid the coronavirus disease (COVID-19) outbreak in Bogota, Colombia April 7, 2020. REUTERS / Luisa Gonzalez

“In order to guarantee service, air connectivity for Colombians and economic activity in general, the national government will participate in the restructuring process of Avianca,” the finance ministry said in a statement.

The airline, which is Latin America’s second-largest carrier, filed for bankruptcy in May.

“The operation will be through a credit of up to $ 370 million in an 18-month transaction which is the estimated duration of the restructuring process of the company,” the ministry statement added. .

The credit will expire in November 2021.

The company provides about 500,000 direct and indirect jobs and about 14.6 trillion pesos ($ 3.8 billion) per year to the Andean country’s economy, the ministry said, which equates to about 1.4 percent. of gross domestic product.

Avianca maintaining its operations has “significant” advantages for Colombia, the statement added.

The loan has been cleared by the country’s emergency fund administrative committee and will be assessed and finalized by a New York court bankruptcy judge.

The airline first requested government funding in March, the ministry said.

Avianca said he had no comment on the loan. It will partially restart its operations in Colombia next week as a national quarantine started in March will rise.

If he does not come out of bankruptcy, Bogota-based Avianca would be one of the first major carriers in the world to go bankrupt following the novel coronavirus pandemic, which has crippled travel around the world.

Reporting by Julia Symmes Cobb and Luis Jaime Acosta; edited by Grant McCool

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