Avianca Banks Partnering with United Airlines in Bankruptcy Exit Plan
Avianca plans to emerge from the Covid-19 crisis as a smaller but stronger competitor, with partner United Airlines at its side, under a new restructuring plan that has been filed with US bankruptcy court.
The Bogotá-based carrier’s plan, which was submitted to the court on Tuesday, lacks any significant additional changes to Avianca. Bogota and San Salvador remain its main hubs with secondary operations in Costa Rica and Ecuador; The airline’s Peruvian subsidiary closed in 2020. Its fleet will shrink to at least 109 planes – 98 passengers and 11 freighters – when it emerges from bankruptcy before growing rapidly with 58 new chartered planes arriving from 2021 to 2023. United and Star Alliance is the mainstay of its international network strategy.
Avianca expects to build on its core strengths, including its strong operating performance, increased capacity, brand recognition, and market leadership position in the vibrant Latin American airline market… its Star Alliance membership, the strength of its LifeMiles program, as well as The airline said in its reorganization plan:
The registration marks the beginning of the end of the Covid-19 reorganization of three major Latin American airlines. Avianca led the way with the introduction of Chapter 11 in May 2020, Latam Airlines Group followed suit later that month and Aeromexico in July. The three airlines – the largest in Latin America – have been hit hard by the sharp drop in air travel and the lack of government support to pay their bills. Their bankruptcy filings came when then-IATA director general Alexandre de Juniac warned that half the world’s airlines could “die” – either collapse or merge with competitors – without government help.
While half of the world’s airlines are not yet gone, many have had to take dramatic steps to survive from laying off tens of thousands of employees to cutting fleets. Most have done so outside of formal restructuring or management processes although Latin American airlines have joined companies such as Norwegian Air and Virgin Australia in these formal processes.
One of the cornerstones of Avianca’s reorganization plan is its proposed joint venture with United. Before the crisis, this was planned as a triple fortification link between Avianca, Copa Airlines, and United covering all flights between South America and the United States. . While Avianca never reneged on the agreement during its restructuring, the bankruptcy process opens the door to shifting airline loyalties.
As part of its plan, Avianca has extended its agreements with United for seven years until 2030, and the US carrier has the option to take a stake in the Colombian airline.
Low-cost airlines pose Avianca’s biggest competitive threat at home. During the restructuring, Viva Air Colombia expanded in its domestic common market, and Mexican competitors VivaAerobus and Volaris revealed plans to expand in the market. Volaris plans to open a new subsidiary in El Salvador by the end of the year. Avianca said in its plan that this expansion “led to significant and lasting downward pressure on prices” and changes in traveler preferences.
In response, Avianca plans to increase seat density in its Airbus A320 family by about 24 percent, according to the plan. This would translate to up to 186 seats on the airline’s A320 based on its pre-crisis 150-seat double-class configuration. Viva Aerobus and Volaris each configure the A320neos with up to 186 seats.
Unlike AeroMexico and LATAM, Avianca has not canceled any of its outstanding aircraft commitments with Airbus and Boeing during the restructuring. The airline has firm orders for 88 A320neo planes due in 2025-29, and two 787-9s due in 2024. Avianca has terminated leases for 12 planes and can refuse another 47 — including 11 ATR 72s. By the time she leaves Chapter 11. In addition, she can turn down 10 more A320neos due in 2023 that she leased from BOC Aviation in early 2020.
Avianca made drastic improvements to its balance sheet through bankruptcy. The carrier has reduced nearly $3 billion from the $5.2 billion in debt it owed at the start of the crisis. In addition, it raised $1.6 billion in bankruptcy exit financing to boost its working capital for recovery.
But these reductions do not come easily to unsecured creditors. Many secondary and cross-company claims will receive nothing on the dollar under Avianca’s restructuring plan. Most secured creditors will be fully compensated, either through cash payments or equity transfers.
A bankruptcy court will hold a hearing on Avianca’s restructuring plan on September 14. Comments or objections to the plan are due by September 7.
The Story of the A220, how it Came About and How it’s Becoming Popular
Aside from the fact that the Airbus A220 is the only airbus aircraft to not have a 3 in its name, the A220 is special from the fact that it isn’t fully made by Airbus, but instead a joint venture between them and Bombardier. This is all because of what some might call a mistake made by Boeing, causing Airbus to acquire a 50.01% stake in the company. In this article I explore its controversial creation, and why it’s needed.
The Airbus A220 was first named the “CSeries” by Bombardier, and was meant to cater to the demand of small aircraft in between their current-sized fleet and those larger already made by Airbus and Boeing. The particular area where it was expected to boom were the US markets, given there is always demand to be flying from small airports as there is no lack of them in the large country. At first, things were running smoothly and it was expected to enter commercial service in 2014, just one year after its first flight. However, things turned out not to go as planned, and the CSeries encountered issues on one of its test flights, causing it to miss the Farnborough air show, the largest in the industry, and delay its release. This was not good for the aircraft, nearly causing the project and the company to go bust, until financial aid was provided by the Canadian government.
Boeing’s crucial mistake
Eventually, these problems were fixed, and the first CSeries was delivered to SWISS on June 26, 2016. Eventually, more orders began to come for the new aircraft, including the critical ones in the US. In fact, Bombardier was offering Delta 75 of the aircraft at $20 million a piece, a price which was even lower than the cost to build them, and a cost which was just too good to refuse. However, this was contested and was seen to be Dumping, when a manufacturer essentially gives away its aircraft as sort-of “Samples”, and is illegal in the US and other countries. Boeing was quick to take action, claiming that it was stealing the market from its 737s, despite the fact that Delta had explicitly said that they weren’t looking to purchase the variants that Boeing were claiming to be losing out. It was then decided that, given Bombardier was a foreign company, the US government would impose a 300% import tariff, something near-destructible for the company.
Airbus saves the day
However, Airbus decided to step in and acquire a 50% stake in the company, something beneficial for both parties concerned. This was good for Bombardier, as Airbus has its final assembly station situated in Alabama in the US, meaning that seen as the aircraft technically wasn’t foreign, the import tariff wouldn’t be imposed on it. This would also help Airbus, as it would mean that the company would now profit off of an aircraft which had no competitors at the time. This allowed the aircraft to be reintroduced to the US market, allowing it to thrive.
Where it is now
Now, the CSeries has been re-branded to be the Airbus A220, a move which has knocked it out of the park for the world’s largest aircraft manufacturer. This has allowed airbus to spend absolutely no money on development, and come away with an excellent aircraft, which is dominating its playing field. As of April 2023, 251 aircraft have been delivered, with another 785 firm orders. The airlines operating the aircraft include Delta, JetBlue, SWISS and airBaltic, who operate a fleet solely made up of the A220. When Aviation for Aviators asked their CEO, Martin Gauss, about the aircraft, he said that “The aircraft has performed beyond the company’s expectations, delivering better overall performance, fuel efficiency, and convenience for both passengers and the staff.”
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Airlines of the World
An interview with Helvetic Airways CEO, Tobias Pogorevc
Helvetic Airways is a Swiss airline which operates its fleet of Embraer aircraft to destinations such as Greek islands and the Egyptian Red sea coast from their hubs in Switzerland. Their CEO, Tobias Pogorevc, has been in charge of the company since 2018 and overseen major developments such as the introduction of the Embraer E195 E2 and E190 E2 to their fleet. I put some questions to the man himself about the environment and the pandemic.
What do you see as the biggest challenge to the aviation industry at the moment?
One of the biggest challenges in the entire aviation industry is the staff situation. The pandemic
disrupted the entire aviation ecosystem and the situation is still very tense in the personnel area – both
on the ground and in the air. Helvetic Airways was able to counteract the natural fluctuation in the
cabin through early recruitment measures. In addition, as of the beginning of 2023, Helvetic Airways
has significantly expanded its existing and very popular part-time models for cabin crews, and now
offers various innovative models with “Fly your way”, in which cabin attendants can determine their
own assignments on a weekly, monthly or annual basis. Today, we employ over 240 flight attendants
and senior flight attendants in the cabin crew – more than ever before in the history of Helvetic
In the cockpit, we benefit from the good and long-standing cooperation with our sister company
Horizon Swiss Flight Academy. From this pool, we were able to recruit 24 pilots this year.
Another challenge relates to supply chains, from carpet suppliers to engine manufacturers. This will
keep the industry busy for a long time to come.
How are you lessening the impact of Helvetic’s aircraft?
Helvetic Airways has renewed almost its entire fleet between 2019 and 2021 and now has 12 state-of-
the-art Embraer E2s – eight E190-E2s with 110 seats and four E195-E2s with 134 seats – and four
Embraer E190s. Helvetic Airways thus operates one of the most modern regional jet fleets in Europe
and the most modern fleet in Switzerland. The Embraer-E2 is currently the most environmentally
friendly regional aircraft on the market. Compared to the E1, the E190-E2 consumes 20 to 23% less
fuel per seat on European routes and the E195-E2 up to 30% less. Our own measured values are
even higher than Embraer’s factory specifications.
The E2 also sets new standards in terms of noise emissions, impressing in particular with its low noise
levels both inside the cabin and outside. The noise diagrams for departures from Zurich Airport show:
The noise contour of the Embraer E195-E2 is 28% lower than for the Airbus A319 and 60% lower than
for the Airbus A320. Particularly for airports near densely populated areas, the ability to reduce the
noise impact on people is an important factor.
What lessons did you learn from the pandemic?
In aviation, crisis situations are regularly trained for, but no one was prepared for a global crisis like the
Corona pandemic. We kept all our crews current during the pandemic so that we would be ready when
business picked up again. In retrospect, that was absolutely the right decision. But then the restart
happened faster than expected. On the one hand, we all had to get back to the “old normal” as quickly
as possible; on the other hand, the pandemic was not yet over – a balancing act that placed enormous
demands on the entire industry.
The pandemic showed us that even when things are at a standstill, you always have to keep moving.
As an airline with lean structures, we have the opportunity to implement new ideas and innovations
quickly, which proved its worth during the restart after the pandemic.
How is the Russo-Ukrainian war affecting Helvetic Airways’ business?
The Ukraine war and the fates associated with it are terrible but have no immediate impact on us as a
regional airline from an operational point of view. Our routes do not pass over Russian or Ukrainian
territory, which may not be flown over at present. What we do feel, however, are the indirect effects of
the war, for example on the fuel prices.
You have been CEO of the company since 2018, what has been the biggest change you have seen in the company since you became in charge?
On the one hand, as a small, private company, the fleet renewal to an E2 fleet has been very busy for
us. It is something special that we, as a niche player, can rely on the most modern fleet. But this is
only possible thanks to the financial strength of our owner, which got us through the Covid crisis even
without government aid. Today, we are financially strong, with no liabilities.
On the other hand, there was the biggest difference in the area of human resources: the needs that
applied in 2018 are outdated today. Today, we need to offer innovative and flexible working models to
recruit the best young talent. Work-life balance, diversity, inclusion must not just be buzzwords, they
must be lived.
Helvetic airways operates a fleet solely made up of Embraer aircraft, why was the decision made to do this?
Before unifying to an all Embraer fleet, Helvetic Airways operated Fokker100 aircraft, an Airbus A319
and Embraer E1 aircraft, four of which are still in our fleet today. The cooperation with Embraer was
excellent from the beginning and the development of the E2 series progressed well also due to our
experience and input from Switzerland. So the decision was also obvious to carry out the planned fleet
renewal in 2019 to 2021 with the new Embraer E2 models. The Embraer E2 is an aircraft of the latest
generation and therefore the right aircraft for the future. The E2 consumes significantly less fuel than
the E1 and, especially in times of high kerosene prices, it makes economic sense to operate an
aircraft that saves 20 to 30% fuel on certain routes at high load factors.
Another key reason for choosing the E2 jet was the commonalities, which is particularly advantageous
in the areas of training and maintenance.
All our pilots are certified for both the E1 and the E2, and the maintenance in our hangar is also
certified for both types of aircraft. We operate the aircraft, we maintain it and we have our own flight
school, the Horizon Swiss Flight Academy, where we train our pilots and engineers – all from Zurich.
In other words, we have specialists for all areas: training, operations and maintenance – in effect we
have become the Embraer competence center in Europe.
And Finally, what can we see in the near future for Helvetic airways?
First and foremost, our goal is to continue to offer our partners, customers and passengers reliable
flight operations with top service. In doing so, we will continue to rely on our three main pillars of
wetlease, charter and scheduled flights. Furthermore, we want to remain a good and modern employer
for our employees. Due to our manageable size, we remain agile and score with innovation and a
family atmosphere with flat hierarchies. We will continue to promote this spirit. From April, for example,
the first “Helvetic shared apartments” will be ready for occupancy – apartments rented by Helvetic
Airways and sublet to employees who do not have their main place of residence in Zurich. These
colleagues should immediately feel at home in our Helvetic family!
Cover image credit: Flikr
Brussels Airlines’ Female Crew on International Women’s Day 2023
On March 8th, International Women’s Day 2023, Brussels Airlines made history by operating a flight from Brussels to Marseille with an all-female cockpit crew. This milestone marks the first time that the airline had ever flown with an all-female cockpit crew, and it sends a powerful message of support for gender equality in the aviation industry.
Brussels Airlines is the flag carrier airline of Belgium and operates flights to over 120 destinations, with a fleet of more than 50 aircraft offering both economy and business class seating. The airline is also committed to sustainability and supports social initiatives through its charity program, b.foundation for Africa. Its subsidiary, Brussels Airlines Cargo, provides cargo services.
Captain Anne-Sophie Godart, First Officer Charlotte Verstraete, and Flight Engineer Virginie Dupon, all highly experienced pilots with a combined total of more than 25,000 flight hours, were the crew who operated the special flight. The three women were honored to be part of this historic event, with Captain Godart stating, “It’s an honor to be part of this flight and to be able to make a statement about gender equality in the aviation industry. We are proud to be able to show that women can do the same job as men, and that we can do it just as well.”
The flight was a success, and the crew received cheers and applause upon arrival in Marseille. It was a powerful statement of support for gender equality in the aviation industry, and a reminder that women are capable of anything men can do.
Brussels Airlines has been actively recruiting more female pilots and creating a more inclusive and supportive work environment for all of its employees. This flight was a proud moment for the airline, which is committed to promoting gender equality in the aviation industry and providing equal opportunities for all.
As International Women’s Day 2023 is celebrated, it is a time to acknowledge the progress made in the fight for gender equality, but also recognize the work that still needs to be done. Brussels Airlines‘ all-female cockpit crew serves as a beacon of hope for aspiring female pilots and a symbol of progress for the aviation industry as a whole.
“Let us soar higher on this International Women’s Day 2023, celebrating the fearless women who have conquered the skies and shattered stereotypes in aviation, inspiring generations to come.“
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