Avianca Holding Loses $121 Million In First Quarter

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Avianca Holdings recorded a net loss of $121.195 million during the first quarter of 2020. The coronavirus pandemic affected the carrier’s outcome, although Avianca had troubles even before. What can we learn from its first-quarter report? Let’s investigate further. 

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Avianca lost more than $121 million in the first quarter. Photo: Daniel Martínez Garbuno/Simple Flying

Avianca had a more significant net loss and fewer incomes

During the first quarter of 2020, Avianca had $943.9 million in total operative profits. Almost $780 million of these incomes came from passenger revenues, while the extra $165.8 came from cargo. 

Nevertheless, Avianca Holdings had an essential decrease in its operative incomes in comparison with 2019. In last year’s first quarter, the South American group had $1.15 billion in revenues. 

Additionally, the net losses in the first quarter of 2020 were more than in 2019. Last year, Avianca had $67.9 million in net losses during the first quarter. By that time, Avianca still belonged to German Efromovich. But in a year, the whole structure of Avianca was shaken to its core. As Adrian Neuhauser, CFO of Avianca Holdings said a few months ago

“2019 was a very tough year. We had to have extraordinary costs, known as one-time events, to go on with our transformation plan.”

Sadly, for Avianca, 2020 hasn’t been better at all. Avianca said that, until June 2020, its passenger income has fallen over 51% compared to last year. 

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Only Avianca Ecuador is operating at the moment. Photo: Getty Images

The fleet decreased

At the end of 2019, Avianca had a fleet of 171 aircraft. Of this fleet, Avianca owned 113 airplanes and leased 58. It had a vast and diversified fleet composed of Airbus, Boeing, ATR, and Embraer. 

Three months later, Avianca reduced its fleet to 158 airplanes. The carrier said goodbye to its ten Embraer E-190, one Airbus A330, and two Airbus A-300F. 

We can expect that, over the next few months, Avianca will get rid of more planes as it goes through its restructuring process. It could give up an extra 14 more aircraft. 

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Of these aircraft, 13 out of the 14 are Airbus. This includes two A330-300 (the last remaining in Avianca’s fleet), two A321, seven A320, and two A319. The lonely Boeing is a B787-8 Dreamliner.

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Avianca will get rid of 14 more airplanes due to its Chapter 11 bankruptcy. Photo: Getty Images

What’s up lately with Avianca?

Since Avianca filed for a Chapter 11 bankruptcy in the US, the carrier has been pretty much grounded. It was until this week that it finally flew up again, with a few domestic routes in Ecuador. 

In Colombia, the carrier has started to sell international tickets again. The only issue is that nothing has changed: Colombia has banned all international operations until 1 September. From that day on, Avianca plans to fly from Bogotá and Medellín to Los Angeles, Panama, Quito, Cancun, and Santiago de Chile. 

In the US, Avianca received authorization to maintain its LifeMiles program during the Chapter 11 reorganization. 

But the carrier also had some stark remarks regarding its Chapter 11. It said, 

“As a consequence of our Chapter 11 filing, our operations and capacity to develop and execute our business plan, as well as our existence as a company, are subject to the risks and uncertainties associated with the bankruptcy.”

What do you think of Avianca’s first-quarter results? Let us know in the comments.

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