The US Bankruptcy Court for the Southern District of New York has approved a proposed financing plan allowing Avianca Holdings to access about USD2 billion while it seeks an exit from its Chapter 11 restructuring.

Avianca Holdings will be able to use the debtor-in-possession (DIP) financing to fund its operations as the bankruptcy case, launched in May, continues.

The cash injection, previously announced on September 21, consists of USD1.27 billion Tranche A senior secured financing and a USD722 million Tranche B secured subordinated loan, the Avianca Airlines (AV, Bogotá) parent explained in a stock exchange filing on October 5.

The package includes USD1.217 billion in new loans, namely a combination of USD881 million in Tranche A and USD336 million in Tranche B, plus refinanced debt that is secured by assets such as the company’s stakes in its cargo subsidiaries Avianca Cargo and TAMPA Cargo and its LifeMiles loyalty scheme.

“The approval of the DIP financing package is a significant milestone and an important step forward for Avianca. We continue to work on our go-forward operating plan in order to emerge from this process as a stronger and more efficient airline, and look forward to presenting our plan to the US Court as we move forward in the Chapter 11 process,” Adrian Neuhauser, chief financial officer, commented in the filing.

With court approval to access the funding, Avianca Holdings now has “ample liquidity to support our operations,” claimed Anko van der Werff, its president and chief executive.

He added that as covid restrictions began to ease, Avianca had restarted passenger flights to 21 cities in Colombia and 14 international destinations, and he promised to add more to the list over the coming weeks and months. According to the ch-aviation capacities module, Avianca Airlines will serve 23 Colombian destinations besides Bogota as of October 18, and 27 cities outside Colombia.