March 31, 2020
Colombian airline says it is seeking "mutually satisfactory agreements" with key lenders
Colombian airline Avianca has deferred payments on some loans and long-term leases as it adopts cost-cutting measures to manage the financial impact of the coronavirus outbreak.
"Avianca is actively seeking mutually satisfactory agreements with its key suppliers, strategic lenders and other
creditors to address the current scenario," the airline said in a securities filing on Friday.
Avianca reorganized much of its debt late last year to stand on better financial footing. In November, it swapped $484 million in outstanding 2020 bonds for new 9% notes that mature in 2023, which freed up a $250 million loan from shareholders United Airlines and Kingsland Holdings. It received a $125 million loan from the US hedge fund Citadel and a group of Latin American investors in December ahead of a convertible bond sale planned for January.
But after the Colombian government grounded air traffic in an effort to contain the spread of the coronavirus, Avianca had to cancel international and domestic flights until at least April 12. It said on Friday that it put 14,000 employees on a voluntary unpaid leave program. It also said it decided not to distribute shareholder dividends for 2019.
Earlier this month, S&P Global Ratings downgraded Avianca to CCC from B- and put a negative outlook on the airline's ratings, saying the airline will not likely meet its revenue projections for this year and face higher refinancing risk. S&P added that it expects Avianca's debt levels to remain well above five times EBITDA this year.