Avianca Holdings will restructure into a new company named Avianca Group International Limited (Avianca Group) incorporated in the United Kingdom and has suspended its trading on the Colombian Stock Exchange.

The company made the announcement in a market filing on November 3, a day after the US Bankruptcy Court in the Southern District of New York confirmed and approved its restructuring plan, which is to become effective during the current quarter of the year.

The company now expects to exit Chapter 11 bankruptcy protection by year end after receiving about USD2 billion in new financing under a debt-for-equity agreement with certain lenders concluded on September 1, 2021.

“As a result, the company will have a solid balance sheet, less debt, and more than USD1 billion of liquidity that will allow it to continue positioning and simplifying its business, in addition to developing the refinancing of its aircraft and long-term obligations,” it announced in a statement.

Already approved by creditors, the court’s sanctioning of the plan followed its review of additional documentation requested during a court hearing on October 26, 2021.

“We are pleased to have reached this important milestone that will allow us to emerge as a stronger organisation to fly for many years to come,” commented Chief Financial Officer Rohit Philip in a statement.

As part of the deal, the company’s current shareholders will not receive any distribution nor will they own any shares of Avianca Group. Unsecured creditors will receive shares as partial payment for their unsecured claims, which have been subject to a substantial haircut as part of the ongoing reorganisation process, the company said.

In accordance with the provisions of the plan, Avianca’s assets (including those of its operating subsidiaries), as well as its restructured financial obligations, will be transferred to Avianca Group.

The airline said its business plan comprised all the aspects of its operation, including the destinations it will serve, the aircraft it will operate, and how it will serve its customers.

Three key aspects of its new business plan include the strengthening of its route network, redesigning its product, and improving its services.

Amongst other things, Avianca has announced 23 new point-to-point routes in strategic markets by 2022, including Colombia, El Salvador, Guatemala, and Costa Rica. It plans to operate more than 100 new routes over the next three years.

The fleet will be reconfigured to increase the capacity of each aircraft by up to 20% by adding more seats enabling more competitive pricing.

Product and service improvements will include more flexibility for customers, more frequent flyer benefits, and better online applications and service.