Share prices for beleaguered Colombia-based airline Avianca fell sharply on Tuesday, days after the company filed for bankruptcy. Quarantine measures around the region meant to stem the spread of the novel coronavirus obliged airlines to suspend flights from around mid-March.
The airline filed for Chapter 11 bankruptcy in New York on Sunday after failing to meet a bond payment deadline and as its pleas for assistance from Colombia’s government over the coronavirus crisis were met with a tepid response.
Shares were down 55.6% to 200 pesos ($0.05) per share at the start of trading and later were off nearly 80%. The stock was not traded on Monday, after closing at 450 pesos on Friday.
Finance Minister Alberto Carrasquilla told local radio on Monday the government would “try to be a piece of the solution” to Avianca’s problems, possibly via a loan.
“I think as a lender, it’s difficult to predict, but obviously entering as a shareholder is something that would be extremely delicate, I don’t think that’s a solution to put on the table first,” Carrasquilla told Blu Radio.
If it fails to come out of bankruptcy, Avianca would be one of the first major carriers worldwide to go under as a result of the pandemic, which has crippled world travel.
Avianca, the second-oldest continually operating airline in the world after KLM, had $7.3 billion in debt in 2019. The airline said it would continue operations while it restructured its debts.
Avianca had already gone through bankruptcy in the early 2000s, before being rescued by oil businessman German Efromovich.
Efromovich expanded Avianca aggressively but saddled the carrier with significant debt until he was ousted from the airline last year in a boardroom coup led by United Airlines Holdings Inc. He still owns a majority stake in the carrier.
United stands to lose up to $700 million in loans related to Avianca.
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