Avianca, the second largest Latin American airline and part of the Star Alliance, is mostly relevant to U.S. customers because the frequent flyer program is good and sells miles cheap.
LifeMiles an independent company, separate from the airline, but the value of the miles are ultimately contingent on the continued operation of the airline because the miles only matter to the extent they can be redeemed for Star Alliance premium cabin awards – and the way the program accesses those seats is through Avianca’s membership in Star.
So it’s worth flagging that while the government announced the backing of a $370 million loan to the airline as part of its bankruptcy restructuring, a Colombian court has now blocked the government aid. The lawsuit prompting the injunction argued that:
- The loan lacks adequate protection for taxpayers
- The Colombian President’s sister is a senior executive of the airline
- The firm ostensibly conducting due diligence on the loan was hired the night before the loan was announced
- Covid isn’t a special circumstance for the airline which was struggling before the pandemic
It doesn’t appear a court has ruled on the merits, but this suit may tie up the bailout even as the airline’s restructuring proceeds.
(HT: Emily Derrick)