A US Court has approved Avianca’s (AVHOQ) Chapter 11 reorganization plan, the airline confirmed.
According to a statement issued by Avianca (AVHOQ) on November 2, 2021, the Bankruptcy Court for the Southern District of New York has confirmed the reorganization plan, which was proposed by the Colombian earlier in October 2021.
The Court’s decision gives the green light for the indebted airline to finalize its Chapter 11 bankruptcy process by the end of 2021.
“During the Confirmation Hearing, the Court requested that the Avianca (AVHOQ) debtors, as well as certain other parties, produce additional documentation. […] After reviewing the additional documentation, the Court announced today the confirmation of the Plan. The effective date of the Plan is expected to take place during Q4 2021,” the company said in a statement.
Avianca’s (AVHOQ) recently-approved reorganization plan should help the troubled airline get back on track. Following the plan, the carrier aims to cut its debts, stabilize its financial situation and more than $1 billion in liquidity by the time the bankruptcy process finishes.
The airline plans to reduce its costs by cutting its fleet by 15% and intends to operate 130 aircraft across 200 routes by 2025.
Avianca’s (AVHOQ) parent company Avianca Holdings filed for Chapter 11 bankruptcy in the United States District Court for the Southern District of New York in May 2020.
The company has already had significant unfulfilled financial liabilities in 2019, reaching around $7.3 billion at the time. Its debts have been exacerbated by the global pandemic.
During the bankruptcy process, Avianca (AVHOQ) was already funded by $2 billion debtor-in-possession financing, which was approved by the US Bankruptcy Court for the Southern District of New York on October 6, 2021.