Avianca turns page on Chapter 11 with route expansion

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Avianca shares have tanked, trading as of Tuesday at COP$98 (equivalent to 3 cents). The dramatic sell-off and rapid demise of the holding company’s preference shares comes as the Colombian airline prepares to leave Chapter 11 with a restructured business model that includes a more streamlined fleet and host of new routes.

After fifteen months in which its future hung in the balance, Avianca leads a pack of other regional carriers, Latam and Aeromexico, in leaving bankruptcy court, and at a critical moment for the global aviation industry as on-going coronavirus restrictions, international border closures and fears of new variants keep the traveling public away.

Despite the still elusive age of post-pandemic travel, Avianca is not alone in reactivating routes or launching new destinations, both domestic and international. With smaller aircraft to service important hubs in the U.S., Central America, Caribbean and South America, as well as, its Boeing Dreamliners to Europe, Avianca recently confirmed that it will resume its direct Bogotá – London LHR service (suspended in September 2020), and announce a launch date of its new Bogotá – Toronto flight, one that will compete with Air Canada’s revamped service.

Avianca has also returned to many of its South American stalwarts – Rio de Janeiro, Montevideo and Asuncion – after they were among the first to be suspended with the declaration of health emergencies.

The flagship will also add a Cali – JFK – Cali route to its established U.S portfolio, complementing American Airlines’ recent expansion of its Colombia network. On July 15, Orlando became the latest U.S city to be connected with Cali, Colombia’s third largest city.

As Avianca looks to connect intermediary cities with strategic gateways, a planned direct Bucaramanga to Miami flight is in the works. Rivals Latam and Copa Airlines are not being left behind though, also adding new routes to offer greater connectivity for their business and leisure travelers. Copa will connect as of December 2, Armenia, in the heart of Colombia’s coffee-growing region, with Panama, and four days later, inaugurate Cucuta, marking the first international flight to and from the capital of Norte de Santander.

Having secured US$1.6 billion to turn the page on Chapter 11, Avianca’s 23 new routes, as well as time-tested ones, will no doubt be challenged by budget-conscious carriers Wingo, Viva and Ultra. Independently, however, of the many tailored options to fly by, Avianca joins other heavyweights in eyeing a resurgence in air travel, and one – hopefully – that aligns the rights of passengers with corporate vision.

 

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