Avian Líneas Aéreas, the local company controlled by the Bolivian-Colombian Germán Efromovich and which operated under the Avianca Argentina brand for 20 months, since November 2017, managed to get the Justice to approve the preventive payment agreement with the majority of its creditors, to which it had arrived on September 6, as reported by El Cronista.
Thus, it will be able to get off the ground again, a project that would take at least six months, according to industry sources. You must revalidate your permit as an air transport operator, train your pilots, who have not flown for more than two years, as well as the technicians and other personnel. To do this, it must access international credits, which will serve not only to pay for the agreement, but also for training and various procedures prior to takeoff.
In the sector they assure that the company has the support of Efromovich, its largest shareholder, who in the past controlled the Colombian Avianca Holding, but with which it no longer has a relationship. This last company managed to get out, days ago, of chapter 11 of the Bankruptcy Law of the United States. It also controlled Avianca Brasil (franchise name of the Colombian company), which was declared bankrupt.
Judge María Cristina O'Reilly, in charge of Commercial Court 26, approved the bankruptcy and declared it concluded, maintaining the inhibition of assets ordered in the summons.
The company reached an agreement with 52.5% of the creditors, which represent 76.53% of the capital owed, for a Liability of $1,587.45 million.
The airline company had offered them two options: a 30% haircut and payment in a four-year term or a 50% haircut, with payment in three years.
That figure does not include debt on the two 2017 ATR 72-600 aircraft owed to Avions de Transport Regional (ATR), a French aircraft manufacturer owned by Airbus, which Avian acquired before starting to fly in Argentina, but of which you owe the payment of installments.
Those planes cost the company about $36 million; he paid US$9.7 million for them and, in 2019, ATR required a base debt of US$26 million. But, currently, in a context of a pandemic and a fall in the aviation sector, both aircraft are worth around US$21.8 million, according to estimates in the sector.
According to sources, ATR entered the contest late, requested by the company on July 19, 2019 and approved by the Court on September 2 of that year. Therefore, he did not have the right to vote as a creditor.
ATR claims ownership of the two aircraft for non-payment and initiated a lawsuit in New York in 2019, which has been unresolved for two years now. Avian seeks to renegotiate that debt to have the planes -which it has in its possession, at the Jorge Newbery Airport-, when it is time to take off.
Today, Avian has , in addition, still 120 employees, who are not receiving their salary but are part of the workforce, with whom the liability for unpaid wages is growing.
THE TAKE-OFF PLAN
With the endorsement of creditors and the Court, Avian has a plan to take flight, with a project presented in the contest, which involves becoming a provider and distributor of traffic to large aircraft , on short-haul flights, being complementary to large companies, such as Aerolíneas Argentinas.
It hopes, in the coming months, to revalidate its permits, train its employees and obtain the international credits that will allow it to take off again, with the endorsement of Efromovich. But the entire project depends, to a large extent, on the Argentine government being able to close the agreement with the IMF, in order to access those loans that will allow it to fly again, according to sources in the sector.
In order to cover the cost of starting an aircraft, large planes must fly a minimum of an hour and a half; On the other hand, with ATRs, Avian could make shorter flights -since they cover that cost in less flight time- without competing with Airlines, providing and distributing passengers to and from from smaller and nearby cities, which are not profitable for the state airline.
THE BEGINNING AND DECLINE OF AVIAN
Avian, under the name Avianca Argentina -due to a license with the Colombian Avianca, which has already expired-, was one of the first companies to announce its arrival in Argentina, at the beginning of 2016, when the government of then President Mauricio Macri opened the cabotage market to new airlines, announcing, together with then Minister of Transportation, Guillermo Dietrich, the "Revolution of airplanes". But it was also one of those that fell by the wayside.
In March 2016, the company announced the purchase of Macair Jet -from the former president's family- for US$10 million, since it was acquiring a firm that operated charters -he estimated- paved the way for him to start regular operations in less time.
But his relationship, for that reason, to the Macri family ended up working against him. Suspected for "conflict of interest", she did not agree to rules that her competitors did play with , according to market sources.
The company had an ambitious plan of 12 planes in the short term for domestic and regional flights, more than 100 routes and had agreed with the Government of Tucumán to install one of its hubs there.
In May 2017, 16 routes were authorized in the first hearing held by the previous government. But, at the same time, the first complaints arose for alleged favoritism, due to his relationship with Macri, when acquiring Macair Jet. Avian had already signed the purchase of 12 ATR 72-600 turboprops (with 72 seats), for a $264 million.
Finally, it was able to take flight in November 2017; It came to operate five routes and was about to start its flights to São Paulo in February 2019, with a rented A320 that it had brought from that country. But he had to return it in January of that year and cancel the route. It had 500 employees; today it only has 120.
In February 2019, he requested the opening of a Crisis Prevention Procedure, which was never approved.
Like the rest of the local airlines, it had to face the harsh impact of the strong devaluation in May and August 2018, which put all of them in check, since most of its Costs, especially fuel, are dollarized.
That same year, on July 31, the Macri government eliminated the tariff floor; Thus, with the entry of new competitors, an aggressive competition for passengers began, with the sale of tickets at very low prices, in an inflationary context, which made its operation even more complex.
To sustain itself and gain initial market by selling below cost, most airlines received the support of their shareholders, but Avian's largest shareholder, Efromovich, was in the midst of a crisis abroad, with bankruptcy in the offing. December 2018 of its subsidiary in Brazil (called Avianca Brasil, under license from the Colombian company). In addition, was at that time removed from decisions on Avianca Holdings (which controls the Colombian airline Avianca), where Synergy Group (where it is its main shareholder) owned 78.1% of the shares, after breaching a loan coverage agreement with United Airlines. Today, the businessman no longer holds shares in that company.
Thus, with its shareholder in the middle of a crisis outside of Argentina, Avian had no one to turn to to overcome the local financial difficulties, in a context of strong devaluation and declining income in pesos for the aerial ones
In addition, at the time the company also complained about not having the facilities that other companies have: they received far fewer routes than the low-cost Flybondi -which started flying three months after Avian - and that Norwegian -11 months later- and operated from Aeroparque -unlike Flybondi, before El Palomar was a possible terminal-, with higher costs .
Unlike the low-cost companies, their employees were affiliated with traditional unions, which were tougher when it came to negotiating than the new low-cost unions and with better working conditions for their employees. The impossibility of using the technical balance in favor of VAT to pay other taxes did not help either.
Thus, finally, Avian was left with two ATR aircraft and stopped operating in June 2019. In those 20 months, it transported a total of 281,000 passengers, the majority (215,000) in 2018, when it operated with a average 69% occupancy, according to data from the National Civil Aviation Administration (ANAC).
On July 19, 2019, he requested the opening of the bankruptcy, which was approved by Judge María Cristina O'Reilly, in charge of Commercial Court 26, on September 2 of that year. And, on November 26, it was approved and closed.
Avianca Colombia, out of Chapter 11
A few days ago, the Colombian airline Avianca reported that it had successfully completed its financial restructuring process and emerged from Chapter 11 "as a more efficient and financially sound airline."
The company had voluntarily entered Chapter 11 of the United States Bankruptcy Law on May 10 of last year. In 18 months, it reached agreements with its creditors and raised a new investment of US$1.7 billion, "emerging with a strong balance sheet, significantly lower debt and with more than US$1 billion in liquidity," he noted. the company.
With the departure of the Colombian airline from Chapter 11, "its new business model is based on offering a more flexible product adapted to the needs of each traveler and more affordable prices, while maintains a robust route network in the region, a best-in-class loyalty program and one of the largest cargo operations in the region," it reported.
Avianca will continue to have the support of Star Alliance, one of the airline alliances.
In accordance with the approved reorganization plan, the new shareholders will invest in Avianca Group International Limited, a new holding company, which will be domiciled in the United Kingdom and will consolidate the group's investments in all its subsidiaries (including Aerovías del Continente Americano, its Colombian subsidiary and TACA International, its operation in Central America). The previous group, Avianca Holdings, was domiciled in Panama.
