Avianca voluntarily joins the Chapter 11 of the Bankruptcy Code

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Avianca Holdings and some of its subsidiaries voluntarily join the Chapter 11 of the Bankruptcy Code of the USA in order to maintain the operation.

Taking advantage of this process was necessary due to the unforeseeable impact of the pandemic COVID-19, which has led to a decrease in 90% of global passenger traffic and is expected to reduce industry revenue worldwide in 314.000 billion dollars, according to the International Air Transport Association (THERE IT IS). Avianca's regular passenger operations have been grounded since mid-March, which has reduced its consolidated income by more than one 80% and has put significant pressure on its liquidity.

Through the Chapter reorganization process 11, Avianca intends to:

• Protect and preserve operations to continue serving customers with safe and reliable air travel, under the strictest biosecurity protocols, as COVID-19 travel restrictions are gradually lifted;
• Ensure connectivity and boost investment and tourism by continuing as the main airline in Colombia, serving more than 50% domestic market in the country and an essential non-stop service through South America, North American and European markets; as well as continue with cargo operations, playing a key role in the economic recovery of Colombia and the other main markets of the Company after the COVID-19 pandemic;
• Preserve jobs in Colombia and other markets in which the Company operates, being Avianca directly responsible for more than 21.000 direct and indirect jobs throughout Latin America, including more than 14.000 In colombia, and working with more than 3.000 providers.
• Restructure the company's balance sheet and obligations to face the effects of the COVID-19 pandemic, as well as manage their responsibilities, leases, aircraft orders and other commitments.

«The effects of the COVID-19 pandemic have led us to face the most challenging crisis of our 100 years of history as a company," said Anko van der Werff., CEO and President of Avianca Holdings. «Despite the positive results of our «Avianca 2021» plan″, we believe that, before the total suspension of our passenger operation and a recovery that will be gradual, Entering this process is a necessary step to face our financial challenges.".

Avianca -like many other airlines around the world, including those of the United States, the European Union and Asia, as well as those of Latin America- is seeking financial support from the governments of the countries in which it provides essential services. The Company continues to participate in conversations with the Government of Colombia, as well as with the governments of its other key markets, in order to find financing structures that provide additional liquidity under the Chapter 11 and that they play a vital role in ensuring that the company emerges from its reorganization as a highly competitive and successful airline in the Americas.. While these conversations are taking place, Avianca intends to use its liquidity together with the funds generated by its ongoing operations. (like cargo transportation), to support the business during the reorganization process.

Measures to protect employees and suppliers

As part of the process, Avianca has submitted several applications to the Court for the support of its reorganization and the Company expects the court to decide on these requests in the coming days.. The Holding has requested authorization to fulfill labor commitments prior to the request, as well as maintain the compensation scheme applicable to its employees. Avianca has also requested authorization to comply with various pre-application obligations owed to some of its travel agency partners and their suppliers prior to the submission date.. The Company intends to pay suppliers and travel agency partners in accordance with their normal practices, in a timely manner for goods and services rendered from the filing date and throughout the Chapter process 11.

Continue to provide services to customers

Avianca has also submitted requests to maintain its client programs throughout this process.; therefore, passengers can trust in continuing to organize trips and fly with Avianca in the same way that they have always done.. in addition, customers can use the tickets, vouchers and gift vouchers purchased before Avianca started this process. further, will continue to earn miles when they fly with the airline, and they will be able to continue redeeming the miles accumulated through LifeMiles™ to purchase tickets with Avianca during this process. Likewise, additional frequent flyer benefits remain active, including access to VIP rooms, priority check-in, cabin upgrades and others. Avianca also expects to continue to issue ticket refunds and honor travel bonuses and payments or credits associated with baggage or service claims in accordance with its current policies.. Given the impact that COVID-19 has had on travel plans, Avianca will continue to implement its policy of flexibility in the event of ticket changes until 31 October of 2020.

In the same way, as soon as travel restrictions are lifted, the airline plans to resume its flights under the strictest biosecurity protocols.

“Avianca 2021” Plan and impact of COVID-19

Last year, Avianca successfully launched the “Avianca 2021” plan, and throughout the 2019 and in the first two months of 2020, the Company had achieved important positive results in this plan. Through this strategy, the Company redesigned its network with 130 routes to 76 destinations in 27 countries, joining the launch of a new rate model «Fly to Your Measurement» in the national markets of Ecuador and Colombia, including flights to and from Europe. These initiatives, along with customer-focused programs, led to an improvement in operating indicators, with an itinerary completion rate of 98,7% and an increase of 6 points in customer satisfaction.

according to plan, at the beginning of 2020 The Company successfully completed the out-of-court reprofiling of its lease and financial debt obligations and collected 375 million dollars of new financing.

Nevertheless, like other airlines in the world, Avianca's operations have been dramatically affected by the COVID-19 pandemic and the consequent air travel restrictions imposed by governments, while the Company continues to have high fixed costs. Of the total countries in which Avianca operates, the 88% has total or partial restrictions on passenger air transport, which has forced the airline to adopt a series of extraordinary and structural measures. These have included unpaid leave for employees, temporary salary reductions, reductions in non-essential capital expenditures and deferrals of long-term lease payments. Avianca cannot predict when and once current travel restrictions will be lifted., does not expect revenue to return to pre-pandemic levels anytime soon. These factors, added to the important financial obligations of Avianca, made it necessary for the Holding to explore alternatives to reorganize its operations and restructure its debt.

Operations in Peru

Parallel to the decision to join the Chapter 11, Avianca intends to start a reduction of its operations in Peru in accordance with local laws. This decision supports sizing efforts and will allow Avianca to focus on its core markets as it exits its court-supervised reorganization.

Chapter 11 – Process and Advisors

The Chapter process 11 It is a legal procedure established in the United States of America that is recognized by other countries of the world.. It is a temporary process, according to the legislation of that country, allows a company to reorganize and complete a financial restructuring under the supervision of the United States court system, while continuing its operations under the leadership of its Board of Directors and management team. Several companies, including many airlines, have used the Chapter process 11 to reorganize their financial obligations and emerge as stronger organizations. Even Avianca took refuge in 2003 to a process of the Chapter 11 that allowed it to strengthen itself for its subsequent expansion in Latin America.

additional resources

Additional resources can be accessed for customers and other stakeholders, as well as other information about Avianca presentations, visiting the company Reorganization website at www.aviancaseguiravolando.com. Court files and other documents related to the Chapter process 11 in the United States are available on a separate website managed by the Avianca claims agent, Kurtzman Carson Consultants, on www.kccllc.net/avianca. Information is also available by calling (866) 967-1780 (EE. UU. / Canada) o al +1 (310) 7512680 (international), as well as by email to www.kccllc.net/avianca/inquiry.

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