Bankrupt Avianca sees governments as key in restructuring

Avianca Holdings expects the Colombian government to play a key role in its restructuring efforts after widespread travel bans forced it to declare bankruptcy, according to court documents. The carrier, which filed for Chapter 11 protection Sunday, said that due to its importance in the Colombian domestic air travel network, the government “may be one of the key stakeholders” as it reorganizes. The governments of El Salvador, Ecuador, and, potentially, Peru, may also play a role, CFO Adrian Neuhauser wrote in a declaration to the court. Colombia Finance Minister Alberto Carrasquilla said that the government is considering providing Avianca a loan. He had previously suggested an equity stake, but appeared to rule that out Monday. The airline, which has said it plans to continue to fly throughout the court-supervised process, has about half of the market share for domestic flights in the country. It operates frequent flights on routes such as Bogota to Medellin, which is the busiest in Latin America. Avianca filed for protection from its creditors in the Southern District of New York, listing as much as $10b in liabilities and the same amount in assets. The company said it will not make bond payments due Monday. The bankruptcy will be felt widely in the rest of the struggling airline industry, with providers of aircraft, jet engines and maintenance services among Avianca’s biggest unsecured creditors. <br/>