Nov 07. No part of the world is seeing as many big changes to the airline business as Latin America. The final shape is still opaque, but one thing is clear for the region’s aviation industry: All eyes are watching closely for how this transformation unfolds.
Twelve minutes. That’s all the time it took for the board of directors of Avianca, the second largest airline in Latin America, to set the fate of the carrier and begin a series of sweeping changes to the airline industry in the region.
The date was May 10, 2020. It was a partly cloudy spring Wednesday in Bogotá, where Avianca is headquartered. The weather, however, was likely of little consequence to the board that met via teleconference to decide the airline’s fate at 8:03 a.m. local time. Dialing, or Zooming possibly, in were its 10 directors, including then chief financial officer and now CEO Adrian Neuhauser.
In front of them was a momentous decision: Whether or not to take Avianca into bankruptcy given, as minutes from the meeting show, the airline’s cash flows were “severely impacted by the effects of the Covid-19 pandemic.” If they voted yes, it would be the largest airline bankruptcy to that point in the crisis.
All of the facts in front of the board pointed to a yes vote. Global air travel was a month off its pandemic nadir in April 2020. Airspace in Colombia, Avianca’s largest market, had been closed since March 20, and the airline’s flights suspended since March 25. And then there was the “uncertainty caused by the limited visibility that the industry [had] with respect to the demand recovery.”