Avianca Air Files For Bankruptcy, Miami Air To Cease Operations In Wake Of Coronavirus Pandemic
MIAMI (CBSMiami/CNN) -- Avianca Air, one of the oldest airlines in the world, has declared bankruptcy just as Miami Air International, a charter airline that employs 350 people in the Miami area, will liquidate as early as Wednesday due to the impact of COVID-19.
The Colombian airline Avianca, filed for Chapter 11 bankruptcy in the US Southern District of New York on Sunday, blaming its collapse on the "unforeseeable impact of the Covid-19 pandemic," according to a company statement.
Avianca was once one of Miami International Airport's busiest carriers, which flew hundreds of thousands of travelers between Latin America and Miami annually.
Avianca, which was founded in 1919, claims to be the world's second-oldest continuously running airline. As of the end of last year, it was the third-largest airline in Latin America based on market share, after Chile's LATAM Airlines and Brazil's GOL Linhas Aéreas, according to Euromonitor.
The carrier is also part of the Star Alliance, the industry group that includes other big players such as Lufthansa and Singapore Airlines. Last year, a holding company affiliated with United Airlines bought a majority stake in Avianca.
Avianca is the latest major airline to succumb to the loss of business from the pandemic, which has caused carriers to rip up their flight schedules, ground planes and put staff on unpaid leave.
The Colombian carrier said it 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 to "protect and preserve operations" as the outbreak continues, it 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 carrier.
Another Miami-based airline, Miami Air International is also ending its operations this week.
Miami Air International, a charter airline founded in 1991, employs 350 people in the Miami area, including 150 flight attendants.
According to the flight attendants union, the company will liquidate as early as Wednesday, "entirely due to the impact of COVID-19. All Miami Air employees will be immediately laid off and lose healthcare at the end of May because Secretary Mnuchin failed to respond to the airline's application for payroll grants."
"The end of this week is going to be the end of the road," said flight attendant Franz Decordova. "We're making a last effort, a last plea for the Treasury to provide that grant so hopefully we can save this airline," he said.
The Treasury Department released a statement on April 10 regarding payroll support for small and medium passenger air carriers.
"Congress took action in the periodast effort, a last plea for the treasury to provide that grant so hopefully we can save this airline," he said. of a week to save these jobs and create a $25 billion safety net for aviation workers, including the 350 at Miami Air. Mnuchin actively ignored Miami Air's less than $10 million dollar payroll grant application for six weeks, and instead pushed the company off a cliff," said Association of Flight Attendants-CWA (AFA) President Sara Nelson.
"On Friday, workers received their last paycheck and learned the current owners plan to file for Chapter 7. Mnuchin can either get the payroll grant out the door today to protect these workers through September 30, or sign the pink slips himself."
Miami Air filed for bankruptcy on March 24th, entirely due to loss of passenger demand from the COVID-19 pandemic, the same day the Senate finalized the CARES Act. The law provides financial assistance to airlines to keep aviation workers on the payroll and connected to their healthcare.
"Miami Air Flight Attendants have kept passengers safe for decades including the U.S. military, presidential campaigns, the press corps, professional sports teams, First Responders, and ushered terminally ill children to Disney World for their final wishes," said AFA Miami Air President Natasha Glasper. "Some of us have been here from the beginning. We thought the CARES Act bought us time to get our passengers back, but now after three decades we are losing everything overnight. I refuse to believe our government would leave us stranded when they had the ability to save us."
This comes as flights in and out of South Florida airports are down by more than 90 percent.
An example, at Miami International 103 flights arrived and departed on Sunday, carrying 8,699 passengers. On the same Sunday a year ago there were 892 flights carrying 123,076 passengers. Stats were not available at Fort Lauderdale Hollywood International Airport.
Airline analyst Robert Mann figures domestic travel will pick up first, lead by leisure passengers.
International travel and business travel will follow later. "I think it's fair to say, looking out to 2021, the industry would be lucky if it was only a third smaller, maybe 40% smaller and looking out at the end fo 2022 it, would be miraculous if the industry was only 20, 25% smaller," he said.
In the near future, officials at Miami International airport say larger airlines are hoping to add flights.
(©2020 CBS Broadcasting Inc. All Rights Reserved. Cable News Network, Inc., a Time Warner Company, contributed to this report.)