As per a Reuters news report, Avianca has filed for bankruptcy today.
Avianca has stated that this has been brought about as a result of COVID-19 because their revenues have dropped by more than 80% in the last couple of months. While that has certainly been terrible for its finances, they were already in trouble and there had been rumors swirling regarding the company’s viability for quite some time.
Filing for Chapter 11 bankruptcy will give Avianca some time to try to reorganize the company to try and make it through, but there’s no knowing right now on how successful those attempts will be.
Avianca is of interest to many due to LifeMiles, their loyalty program. LifeMiles is run separately to Avianca and isn’t included in the bankruptcy filing, so it’s currently unaffected. That being said, if Avianca doesn’t make it through this bankruptcy process, the usefulness of LifeMiles could be called into question as their access to Star Alliance partner flights could be impacted.
LifeMiles has frequently run sales offering a 140-150% bonus on purchased miles, plus they offer a subscription where you can buy miles each month at a relatively low cost. Given the increased uncertainty, it would be best to avoid purchasing any further LifeMiles until Avianca’s future is a little clearer, despite Avianca and LifeMiles being administered as separate companies.