Avianca declares bankruptcy, but your LifeMiles are safe....for now

Columbia's 100-year-old flag carrier Avianca just filed for Chapter 11 bankruptcy protection after failing to meet financial obligations and unsuccessfully requesting aid from the government.  The COVID-19 pandemic, which has so far resulted in an estimated $314 billion revenue decline for carriers worldwide due to ridership that has dropped by as much as 93%, has taken a substantial toll on Avianca as they haven't operated a normal schedule since March.  CEO Anko van der Werff explains the reason for the filing:
“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the COVID-19 pandemic. Despite the positive results yielded by our ‘Avianca 2021’ plan, we believe that, in the face of a complete grounding of our passenger fleet and a recovery that will be gradual, entering into this process is a necessary step to address our financial challenges.

When government-mandated air travel restrictions are lifted and we are able to gradually resume our passenger flights, we look forward to welcoming back our furloughed employees and playing a leading role in restarting the economy in Colombia and our other key markets.”

Aside from being Columbia's national carrier and the second largest carrier in Latin America behind LATAM, Avianca's LifeMiles has had one of the most lucractive frequent flyer programs.  As a Star Alliance carrier, LifeMiles is one of only a handful of programs with excellent redemption rates with zero fuel surcharges whatsover.  Since LifeMiles is actually a separate entity not owned or run by Avianca, your LifeMiles are safe . . . for now.  There is of course the chance that you may lose the ability to redeem for Star Alliance flights in the future if Avianca exits the Star Alliance as part of the bankruptcy filing process.  If you do have award travel currently in mind, which you probably shouldn't at this time, it may be wise to burn your LifeMiles, which is also a 1:1 transfer partner with Amex Membership Rewards and Citi ThankYou points.
Quick thoughts

It's sad to see these carriers fall one by one as a result of the COVID-19 pandemic.  There's no doubt that more carriers will likely secede, with thousands of jobs potentially lost as Avianca holds 21,000 employees.  Let's hope that Avianca actually is able to rise from the ashes from this one, unlike beloved discount charger carrier JetSuite, which ceased all operations on April 15th.


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