Colombian airline Avianca Holdings took another step toward stability on Monday with $375 million in new financing provided by major shareholders United Airlines and Kingsland Holdings, $250 million of that a secured convertible loan. Some 88 percent of debt holders agreed to an exchange of $550 million in bonds due in May 2020 for securities due in May 2023, conditioned on the new financing.
As part of its “Avianca 2021 Plan” the airline has canceled unprofitable routes and sold aircraft and nonessential assets such as subsidiaries. Avianca CEO Anko van der Werff, who arrived in July with 20 years of airline experience, has focused on improving operations, such as increasing on-time performance by 10 points, to 80.8 percent.
With the aid of investment banker Seabury Securities, Avianca has re-profiled more than $4.5 billion of lease and debt obligations to ensure liquidity, as the 100-year-old airline—it passed the century mark on December 4—improves efficiency, cuts costs, and increases profits.
“The Avianca 2021 Plan represents the foundation for Avianca’s future, and we are excited now to have completed this important re-profiling program and to have received funding from United and Kingsland that serves as the cornerstone of our plan,” said van der Werff in a written statement.