Court Blocks Government Aid To Bankrupt Avianca

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)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Do you think one should book an award ticket speculatively to protect the miles?

    I need until September is in the booking window, but then I might be ready.

  2. @ Beachfan — Buying an award ticket will not protect your miles unless your travel is completed prior to the airline’s failure. If you travel in the next couple weeks, you should be good. Otherwise, all bets are off.

  3. I was concerned about this months ago! Bloggers were pushing readers to purchase Avianca miles and it seemed “too good to be true.”
    Oh well, maybe those FF miles can be transferred to other Star Alliance carriers for safety?

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