Colombia's Avianca seeks extension in bankruptcy

lucasiu — Thu, 17 Jul 2003 04:53:26 GMT

http://www.usatoday.com/travel/news/2003/07/10-avianca.htm

NEW YORK (Reuters) — Colombian airline Avianca, the world's second-oldest airline after KLM Royal Dutch Airlines, has asked a U.S. court to extend its deadline to file an exclusive reorganization plan to emerge from bankruptcy protection.

Under U.S. law, Avianca has 120 days from the day it seeks bankruptcy protection to file a reorganization plan with the courts. During that period, competing plans cannot be filed.

But Avianca has now asked the U.S. Bankruptcy Court for Southern District of New York to extend the deadline — which would be next Friday — by another 90 days until October 16. In papers filed with the court last week, the airline said that it has begun "the process of negotiating a consensual plan" with its creditors, but added that "much work is left to be done."

Avianca is a corporation organized under the laws of the state of New York.

Avianca, a unit of Alianza Summa, argued in the papers that it should be given the extension because of the size and complexity of the case, among other reasons.

Summa — formed by the merger of Avianca with fellow Colombian airlines Aces and Sam last year — has suffered along with other carriers from the slowdown in air travel, while it has also been hurt by rising fuel and insurance costs and a depreciation of the peso.

Summa recently said it would cut its 54-plane fleet and 7,500-strong work force by 30 percent each to reduce costs.

Summa — owned 50-50 by Colombian conglomerate Valores Bavaria and by the National Coffee Growers' Federation — has cut costs by more than $80 million thanks to the merger of the three airlines last year.

General Aviation

Colombia's Avianca seeks extension in bankruptcy