COVID-19: time is running out for distressed Latin airlines

Premium Analysis

The predictions for plummeting revenue for global airlines triggered by the rapid spread of COVID-19 continue to intensify, and no region of the globe will escape the devastation.

IATA's latest data show that Latin America will experience one of the starkest declines in traffic for 2020, second only to Europe's. Many airlines in the region have ceased their operations completely as countries in Latin America close their borders in order to combat the spread of COVID-19.

Airlines in Latin America are navigating the COVID-19 crisis with varying degrees of strength.

One of the region's largest operators and Colombia's flag airline, Avianca, is in a unique situation, having just completed a major restructuring of its debt and aircraft order book. However, the airline remains one of the most highly leveraged in Latin America, which could create challenges for Avianca as it works to sustain and increase its liquidity during the COVID-19 pandemic.

Avianca has now ceased all commercial passenger operations, and the revenue hit from the grounding will be intense. At this point, governments in Latin America have been slow to offer support to airlines during the crisis, and the region's major airline association is warning that some operators could have a short window for survivability without government aid.

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