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Avianca enters bankruptcy due to coronavirus, will remain grounded

May 10, 2020
3 min read
Avianca enters bankruptcy due to coronavirus, will remain grounded
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South American airline group Avianca has entered bankruptcy citing an 80% decline in revenues due to the coronavirus pandemic.

The Bogotá-based carrier's bankruptcy is unlikely to affect many travelers as scheduled passenger operations have been suspended since mid-March due to COVID-19.

“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the COVID-19 pandemic,” said Avianca CEO Anko van der Werff, in a statement. "In the face of a complete grounding of our passenger fleet and a recovery that will be gradual, entering into this process is a necessary step to address our financial challenges.”

Get Coronavirus travel updates. Stay on top of industry impacts, flight cancellations, and more.

Avianca's loyalty program LifeMiles is a separate company and not part of the reorganization.

Avianca is the latest major airline name to succumb to the pandemic. Virgin Australia entered voluntary administration, Australia's equivalent of bankruptcy reorganization, in April. Regional carriers Flybe in the U.K., and Compass Airlines, RavnAir and Trans States Airlines have all shut their doors since the crisis hit.

The International Air Transport Association (IATA) has warned that as many as half of the world's airlines could collapse or merge with others as a result of the coronavirus crisis. Government aid in some countries, including the U.S. but not Colombia -- where Avianca is based -- has forestalled the worst impact but many expect a significantly smaller airline industry even after the threat of the virus subsides.

"The situation is extremely fragile as the recession starts to take its toll," said IATA director general Alexandre de Juniac on April 28. "We’re not out of the situation at all and airline finances are extremely fragile."

Related: More than half of global airlines could ‘die’ without aid, says IATA

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Avianca is a partner of United Airlines and a member of the Star Alliance. Prior to the crisis, it was working on a four-way immunized partnership with Azul in Brazil, Copa Airlines in Panama and United covering travel between the U.S. and South America. The pact would challenge Delta Air Lines and LATAM Airlines' planned tie up.

The Colombian airline group has hubs in Bogotá (BOG), Lima (LIM), Quito (UIO) in Ecuador, and San Salvador (SAL) in El Salvador. Avianca operated 144 passenger jets, including 107 Airbus A320 family and 13 Boeing 787 aircraft, at the end of January.

Listed on the New York Stock Exchange, Avianca filed for Chapter 11 bankruptcy restructuring in New York. It plans to file for the comparable restructuring process in Peru as well.

In addition, Avianca is in discussions with the Colombian government over possible aid.

Avianca previously reorganized under Chapter 11 from 2003 to 2004.

Related: Avianca marked 100 years of flying in December

Featured image by An Avianca Airbus A321 and a Delta Boeing 737-900ER at Miami airport in 2016 (Photo by Alberto Riva/The Points Guy)

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  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
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Best premium travel card for value
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
5xEarn 5x total points on flights through Chase Ultimate Rewards®.
3xEarn 3x points on other travel and dining.
1xEarn 1 point per $1 spent on all other purchases
  • Intro Offer
    Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

    80,000 bonus points
  • Annual Fee

    $550
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more