The world’s second-oldest airline has gone bankrupt

Avianca Holdings one of the biggest carriers in Latin America

The world’s second-oldest airline has gone bankrupt

Avianca Holdings SA, one of the biggest carriers in Latin America, filed for Chapter 11 bankruptcy after travel bans across the region forced the Colombian airline to ground its fleet.

Avianca, which counts United Airlines Holdings Inc. and Kingsland Holdings as stakeholders, filed for protection from its creditors in the Southern District of New York, according to court papers. It listed as much as $10 billion in liabilities and the same amount in assets. The company said it will not make bond payments due Monday.

The carrier grounded planes in late March after governments across Latin America sealed borders to curb the spread of the Covid-19 pandemic. Avianca had just emerged from a tumultuous year in which it restructured debt and embarked on a business turnaround plan aimed at restoring profitability by focusing on flights through its Bogota hub. It cited the impact of the pandemic in a statement Sunday, adding that it intends to keep flying during the reorganization.

“Avianca is facing the most challenging crisis in our 100-year history as we navigate the effects of the Covid-19 pandemic,” Chief Executive Officer Anko Van Der Werff said in the statement. “We believe that a reorganization under Chapter 11 is the best path forward to protect the essential air travel and air transport services that we provide across Colombia and other markets throughout Latin America.”

Quick and Orderly

In late March, the company deferred lessor payments, canceled planned investments and offered unpaid leave to the majority of its 21,000 employees to cut costs. The company also delayed filing its annual report until June and said it will include a warning that there’s substantial doubt about Avianca’s ability to stay in business.

By filing for protection in New York, the company laid out a clearer path for its creditors, said Roger Horn, a senior emerging markets strategist at SMBC Nikko Securities America in New York.

“Unlike with so many messy Latin American bankruptcy situations, at least a U.S. filing is quick and orderly and allows for debtor-in-possession financing,” he said. “Avianca could have a chance of coming out of this crisis actually operating as an airline.”

The bankruptcy will be felt widely in the rest of the struggling airline industry, with providers of aircraft, jet engines and maintenance services among Avianca’s biggest unsecured creditors. The documents show more than $30 million each is owed to IAE International Aero Engines AG and General Electric & CMF International. Over $28 million of obligations are listed for Rolls Royce Plc.

Lufthansa Group is owed $4.44 million, a unit of Boeing Co. is due $3.66 million and Airbus claims total $2.83 million.

Skipped Payments

Avianca will not pay a $65.6 million bond maturity or make a coupon on bonds due in 2023, Chief Financial Officer Adrian Neuhauser said in an online briefing Sunday evening. The payments are due Monday and the company decided to keep as much liquidity as possible during the restructuring, he said.

The company requested authority to continue paying wages and honoring employee benefit programs, as well as pay vendors and suppliers, it said in the statement. It intends to “wind-down” operations in Peru “to renew its focus on core markets upon emergence from its court-supervised reorganization.” Peru represents about 5% of operations, the company said.

Its loyalty program, LifeMiles, which is a separate business, was not affected by the filing, the company said in a statement.

Avianca said it remains in discussions with government officials in Colombia and in other countries to provide financial support during the reorganization. Neuhauser said those discussions involve debtor-in-possession financing, which can often last months.

“While these discussions are ongoing, the company intends to utilize its cash on hand, combined with funds generated from its ongoing operations (such as cargo), to support the business during the court-supervised reorganization process,” Van Der Werff said in the statement.

Van der Werff has been in charge only since June 2019, when Avianca’s finances were already shaky. The company is getting financial advice from Seabury Securities LLC and FTI Consulting, with legal help from Milbank LLP, Smith, Gambrell & Russell, LLP, Gómez-Pinzón Abogados and Urdaneta, Vélez, Pearl & Abdallah Abogados.

The case is Avianca Inc., 20-11132, U.S. Bankruptcy Court for the Southern District of New York

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New FDA-approved antigen test for coronavirus is a ‘game-changer,’ ex-chief Scott Gottlieb says

It will allow for the kind of rapid testing that's need to reopen economy

New FDA-approved antigen test for coronavirus is a ‘game-changer,’ ex-chief Scott Gottlieb says

U.S. approval of a new antigen test to rapidly screen people for the coronavirus “is a real game-changer,” said the former head of the U.S. Food and Drug Administration.

The emergency use authorization — the first ever by the FDA for a Covid-19 antigen test — was granted to San Diego-based Quidel Corp. late Friday, according to a notice from the agency.

The move could mark a breakthrough in screening for the virus and comes as state and local governments ease lockdown orders and businesses begin reopening across the nation — and as health professionals argue that swift screening is essential to temper new outbreaks.

“It’s a very rapid test that could be used in a doctor’s office,” former FDA Commissioner Scott Gottlieb said Sunday on CBS’s “Face the Nation.” “Doctors now have about 40,000 of these Sophia machines already installed in their offices” where they are used to test for strep throat and flu, he said.

Each test will probably cost about $5, with results available within minutes, said Gottlieb, now a special partner at New Enterprise Associates, a venture capital firm that invests in the health-care and biotech sectors.

A big challenge will be what guidance is made by U.S. authorities about how doctors test in their offices, he said: “If turning over a positive case in your medical office means that you have to do a deep cleaning and quarantine your nursing staff and close your office, doctors aren’t going to be testing.”

Wanted: Innovation

Dr. Deborah Birx, a member of the White House coronavirus task force, said in April that a “breakthrough innovation” in antigen testing was needed to speed reopening of the U.S. economy.

“We have to be able to detect antigen, rather than constantly trying to detect the actual live virus, or the viral particles itself, and to really move into antigen testing,” Birx said April 26 on NBC’s “Meet the Press.”

Existing diagnostic screening for active infections relies on polymerase chain reaction tests designed to detect genetic material from Covid-19. While accurate, those tests take time to run and analyze.

By contrast, tests like the just-approved Quidel one are meant to rapidly deliver results by detecting antigens — the proteins located on the outer surface of the coronavirus that trigger an immune response in the body.

False Negatives

Antigen tests can generally be produced at a lower cost than their slower-to-analyze PCR competitors, and their simpler design could allow manufacturers to produce enough to test millions of Americans per day, the FDA said in a news release.

While test results can come within minutes, the FDA warned that they’re far from foolproof, with a higher chance of false negatives. The World Health Organization has made similar observations.

The newly-approved test is about 85% sensitive, said Gottlieb. In other cases, doctors who suspect a patient may have Covid-19 would order one of the PCR-based tests, which take about 24 hours to deliver results, he said.

The FDA said it expects more antigen tests to be authorized for Covid-19, and the agency said it would provide a template to guide future approvals.

A third type of tests — antibody tests — use blood to look for proteins that are markers of a previous coronavirus infection. They work by identifying antibodies that were produced by the body’s immune system in response to an earlier infection. Although they can detect an active infection, the FDA says these serological, or antibody, tests should not be used that way.

Shares in Quidel have more than doubled in 2020 so far, closing Friday at $158.60, driven by optimism about the diagnostic health care company’s role in Covid-19 testing.

The new approval is specifically for Quidel’s Sofia 2 SARS Antigen FIA.

More coronavirus coverage from Fortune:

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—WATCH: Fortune’s top 10 , Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic

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