Avianca, one of the largest airlines in Latin America, filed for bankruptcy

Colombian airlines Avianca (AVH) filed for Chapter 11 bankruptcy in the US Southern District of New York on Sunday, blaming its collapse on “the unexpected impact of the Covid-19 pandemic,” according to a company statement.

Avianca, which was founded in 1919, claims to be the second oldest airline in the world that continues to operate. At the end of last year, it was the third largest airline in Latin America by market share, after Chile LATAM Airlines (LTM) and Brazil GOL Linhas Aéreas (GOAL), according to Euromonitor.

Carrier is also part of Star Alliance, an industry group that includes other big players like Lufthansa (DLAKY) and Singapore Airlines. Last year, a holding company was affiliated with United Airlines (UAL) bought a majority stake in Avianca.

The Colombian carrier said he was hit hard by lockdowns around the world as the pandemic worsened. Of the countries where Avianca currently operates, 88% are under total or partial travel restrictions, according to the company.

The decision to file for bankruptcy was made with the intention of “protecting and maintaining operations” when the outbreak continued, he said. Avianca directly employs 21,000 people throughout Latin America, including more than 14,000 in Colombia, where it serves as the country’s national airline.

In addition to pursuing bankruptcy protection, the company plans to close its business in Peru to cut costs and “renew its focus on the core market.”

“Avianca faces the most challenging crisis in our 100-year history as we navigate the impact of the Covid-19 pandemic,” CEO Anko van der Werff said in a statement. “We believe that the reorganization under Chapter 11 is the best path forward to protect the important air travel and air transportation services that we provide throughout Colombia and other markets throughout Latin America.”

The airline said it usually has 189 aircraft in its fleet, which conducts about 700 flights a day. But this year, its passenger flights have been ashore since mid-March, “reducing consolidated revenue by more than 80% and putting significant pressure on its cash reserves,” he added on Monday.

The company “went against a negative credit rating, underwent a sudden change in board control and appointed a new CEO after the previous CEO suddenly left the airline,” they added.