Avianca parent plans IPO to seal comeback bondholders bet big on

The holding company for Avianca Group International Ltd., a Colombian airline that filed for bankruptcy during the pandemic, is planning an initial public offering as revenue roars back. “Without a doubt the IPO makes sense to support the group’s growth,” Avianca’s head of investor relations Maria Cristina Ricardo said in an interview. The plan is for Abra Group Ltd. to sell shares in New York or London in the next 12 to 18 months, she added. Air travel in Latin America has rebounded to pre-pandemic levels, according to data from OAG Aviation. That’s paved the way for a comeback of the industry that saw a string of bankruptcy filings after demand sank in 2020 and regional governments refrained from providing hefty support packages like those offered in the US and Europe. Avianca, the lead airline for Colombia and Ecuador, sought protection from creditors in the US a few months after the pandemic began. Within weeks, two other major carriers in the region, Latam Airlines and Grupo Aeromexico SAB de CV, did the same. The process helped Avianca cut its debt load to $3.1b at the end of 2022 from $5.3b two years earlier, allowing it to better compete with low-cost carriers. The company filled up about 80% of its planes in the fourth quarter, with total operating revenue reaching $1.2b — the best such result since the restructuring, the carrier said.Wall Street has been betting on the firm’s comeback for months. Avianca’s notes due in 2028 have handed investors returns of more than 15% this year, more than almost any company in Latin America, according to a Bloomberg index. They’ve also trounced the return of around 5% on an index of risky airline bonds. Avianca itself is doing pretty well lately,” said Sergey Goncharov, an investor at Vontobel Asset Management in Miami, “driven by overall massive resumption of travel globally, its much leaner capital structure and continuous management effort to streamline operations.” <br/>