Year: 2022

Winner: Avianca $1.1BN Restructuring

Colombia’s Avianca is used to being on the cutting edge. It was the first airline established in
Latin America more than 100 years ago and is the second oldest airline still operating in the
world. It has consistently vied with competitors to adopt new strategies to meet customer
It set a new milestone in May 2020, becoming the first airline in Latin America to file for
Chapter 11 bankruptcy when the pandemic bore down on the region. Its biggest regional
competitors followed suit as the aviation market collapsed. Latin America saw a 62% drop in
revenue passenger kilometers and a 21% drop in cargo movement in 2020. Airlines lost $26
billion in 2020 and the aviation section in the region has been slower to recuperate than other
parts of the world. While cargo transport increased 9.4% in 2021 worldwide, it shrunk 5.8%
in Latin America.
Despite the challenges, Avianca set an even more impressive mark in December 2021, when it
became the first airline in the region to exit Chapter 11.
The deal, which wins the award for Corporate Restructuring of the Year, involved raising $1.7
billion in senior secured notes. It acquired full ownership of its loyalty program, LifeMiles, for
$200 million. Moody’s gave the rated the transaction B3 citing “expectations for improving
operating performance and financial results in the next 12 to 14 months.”
Avianca emerged with a significantly reduced debt and over $1 billion in liquidity. The
bankruptcy exit put Avianca “in a stronger financial position to continue serving our customers
and flying the skies for many years to come,” according to Rohit Philip, Avianca’s chief
financial officer, who points to the continued recovery in travel demand as being central to the
company’s future success.
Marcelo Mottesi, partner and co-head of the Latin America practice at law firm Milbank,
which advised Avianca on the restructuring, says the company was able to exit bankruptcy
while the market was still strong.
“The management of Avianca was at the forefront of realizing what was coming [with the
pandemic] and they did not delay,” says Mottesi, who adds that the company’s postrestructuring recovery put it on a path towards “tremendous success.”
The company presented a new strategy coming out of Chapter 11, with 2022 considered a
“transition” year and 2023 a “consolidation” year.
Avianca reported that it carried 22.6 million passengers in the first 11 months of 2022. It
added 21 routes in 2022 including seven to the United States six internally in Colombia and

added 21 routes in 2022, including seven to the United States, six internally in Colombia, and
five to other Latin American countries. It will add another 20 routes in 2023 and put in service
30 new aircraft. The company forecasts an increase of 10 percent in cargo traffic.
A big step in the consolidation will include finalizing a merger with Viva, a low-cost
Colombian carrier, and a partnership with Brazil’s GOL to rival Latam as the largest airline in
the region. LF

Financial Advisor to Avianca: Seabury
Legal Advisor to Avianca: Milbank

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