Family ties & state money: Avianca’s loan raises disputes


Colombia’s flag carrier Avianca (AVHOQ) (AVH) has almostly lost hope of getting up to $370 million state loan, yet still continues to fight for survival. The airline filed an appeal on Colombian court’s decision to suspend the payout of a major loan that had been already approved. However, the decision to block the loan is based on allegedly controversial details of the financial injection.

In an appeal on Colombian court’s decision, Avianca (AVHOQ) (AVH) stated that without the $370 million government loan its liquidity would fall further down. The carrier claimed that lack of new financial resources would make its operations unsustainable and it would have to cut 123,000 jobs.

The court blocked Avianca (AVHOQ) (AVH)’s loan after receiving a lawsuit from a Colombian citizen earlier in September 2020. The lawsuit was focused on scandalous information regarding kinship ties between President of Colombia Ivan Duque Marquez and a Senior Executive at Avianca (AVHOQ) (AVH). 

According to the lawsuit, the position of Senior Executive in the airline is holded by the President’s sister and this is the reason why the loan could give a rise for a conflict of interest.

Moreover, the lawsuit raised some more transparency questions behind Avianca (AVHOQ) (AVH)‘s loan. It stated that the company, which was appointed to produce a report about the airline, was allegedly hired just the night before the government state aid had actually been assigned.

The Colombian court took citizen’s arguments into account. Another argument to block the loan was that Avianca (AVHOQ) (AVH) was already facing financial difficulties before the pandemic. The lack of liquidity and a total debt of $7.3 billion left the airline particularly vulnerable at the end of 2019.


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