As per Reuters Avianca has filed for Chapter 11 bankruptcy. The decision to file was likely prompted by a bond payment deadline and requests for aid from the Colombian government being unsuccessful. All is not lost for the airline or those loyalty customers with miles. Chapter 11 bankruptcy filings by airlines are an infrequent but common occurrence and are usually done to restructure debt. For example in 2005 Delta filed for chapter 11 bankruptcy and after 19 months of restructuring they exited that bankruptcy. You can read more about what happens to your miles and points during bankruptcy by clicking here.
LifeMiles has released this statement:
LifeMiles is a separate business from airline partner Avianca, remains well capitalized and is insulated from Avianca’s reorganization process
https://finance.yahoo.com/news/avianca-may-lifesaver-aid-colombia-201729424.html
Hello Doc,
If an airline declares bankruptcy and does dissolve, are those holding miles or travel vouchers considered creditors?
Tried using LIfemiles on Amazon…says BE BACK SOON
Did they disable this function?
So what happens if I have travel credit with them from a flight canceled due to the coronavirus?
I was pleased to get a cheapest-in-the-market partner redemption from US to Costa Rica with LifeMiles. I hope they make it through ok! Was my first and only experience with them, but I liked them a lot! Definitely good service. And I liked calling in and speaking with Columbians. A beautiful accent.
I have IAD to VIE paid with LifeMiles, scheduled for mid June on OS metal with return in August. OS already grounded its entire operation for the month of May. Good luck to me now
I have ZERO sympathy for these 3rd class airlines. I am curious what happens to the miles and credit cards issued to the customers.
Any news?
I’ve had a nicer time on this “3rd class airline” than 1, maybe 2, of the major US carriers… I guess the airline standards in the US can’t even reach 3rd rate.
Such an ignorant comment. It’s a member of Star Alliance. You probably just saw the word “Colombian” and decided to label them as “3rd class.”
Blame mgmt for overleverage.
Wait that happens to 1st class stores/companies in the USA and Europe…
Greedy mgmt…hey…what about those stock buybacks…Boeing, etc..
All those banks that got bailed out in 2008 or LTCM in 1997/8 or whenever…
If capitalism played it’s course…Citibank, BofA, Wells Fargo, they would all be toast.
https://money.cnn.com/news/specials/storysupplement/bankbailout/
Now if ALL high execs made reasonable amount of money <$ 1million PER year (including bonus/stock)…I would hold no hard feelings…but they make a crap load EVERY year…for their scoundrel-ness.
And I'm being generous at the moment with $ 1 million. It should be more like $500,000.
Yeah…maybe that should'a happened….lots of people would have lost a lot of $$$..being over the FDIC insurance limits…but that woulda been a lesson learned. And lots of exec greedy bankers would be dead or had their homes torched. I see nothing sad about that.
Well..the pyramid is collapsing now….I shed no tears.
https://money.cnn.com/news/specials/storysupplement/ceopay/
Big bank execs: What they take home
Makes me want to puke. No matter…money will become more/less worthless in short order (~20 years)…and all these folk will realize they have over specialized….in making $$$…rather than being broad-minded.
Make the same mistake if you want…
Now the jewel for many in banking and int’l real estate – NYC is being ravaged…while I feel for those lower on the totem pole….I shed no tears…..many rounds to go…
And so it begins…
Or at least so it continues.
Airline bankruptcies are nothing new. Last year (well before the COVID-19 was a known danger), more than 20 airlines around the world went through bankruptcy. It’s entirely possible there could be fewer bankruptcies this year than last because airlines will be getting bailouts from various governments. That just wasn’t the case this time with the government of Columbia and Avianca.
“government of Columbia and Avianca.”
I thought Avianca was a foreign airline, not from South Carolina.
Why are they even filing Chapter 11 in the US?
The majority of the creditors and the debt owed are here.
Also, this so called “3rd class” airline, Dwilson, is the 2nd oldest continuously operated airline in the world (after KLM, I think).
Yes, I misspelled Colombia. Thank you for kindly pointing that out my incorrect usage of a ‘u’ instead of an ‘o’. And thank you for not making a joke at my expense over such a very minor mistake.
Doc I had a trip to Peru that was cancelled and now I have 40K avianca miles sitting around. Do you think making a speculative partner booking is the best use for them? Getting the miles back *once* was already a pain and I have no travel planned, but I’d be really disappointed to leave them behind. I know there’s no definite planned closure but it doesn’t paint a good picture.
FYI, airline partners don’t get paid until the flight actually happens. The other airline may honor the ticket as good will but odds are still that you’d get left with nothing.