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Avianca bankruptcy exit fuels cargo expansion

Plan for extra A330 freighters reflects growth potential in Latin America

Avianca Cargo operates six Airbus A330 freighters (pictured). A new investment will add more aircraft to the fleet. (Photo: Avianca)

TEMPE, Ariz. — Six months after restructuring and emerging from bankruptcy in a stronger financial position, Latin American airline Avianca announced this week it plans to add up to four aircraft to its freighter fleet as part of a broad growth strategy.

Colombia-based Avianca said Monday it will lease two Airbus A330-300 passenger aircraft, converted to carry containers on the main deck, from CDB Aviation. Officials said they are in negotiations to acquire two more freighters from the Irish subsidiary of China Development Bank. The first converted freighter is expected to enter service by the end of the year. 

The pandemic and bankruptcy process crystallized for executives the importance of the cargo business, Aivanca Cargo Chief Operating Officer Juan Correa told FreightWaves on the sidelines of the Cargo Network Services conference here. 

“Carrying cargo in passenger aircraft is a competitive advantage because you are flying cargo in the belly compartment. That brings up the financials and the revenues. And then you can compete with the low-cost carriers, you can sustain routes longer or develop new markets because you have at least half of the lower decks full of revenues with cargo. 

Bankruptcy enabled Avianca to lower its debt and merge with $1 billion in liquidity.

“So the company realized that,” Correa said. “They had the freighters already. So the cargo business came up as one of the three priorities post-bankruptcy to grow the business, along with a low-cost model and frequent flier program.” 

In February, CDB Aviation placed an order for 12 A330 passenger-to-freighter conversions with engineering and overhaul specialist Elbe Flugzeugwerke GmbH, a joint venture between Airbus and Singapore’s ST Engineering. Traditionally a lessor of passenger aircraft, CDB last month took delivery of its first A330 reconfigured by EFW from a previous order for two planes. Those two planes are being leased to Mexico City-based cargo carrier Mas.

Avianca currently operates six A330-200 factory-built freighters. The cargo division’s fleet would increase by two-thirds through 2024 if all orders for the medium-size widebody aircraft are placed. Avianca also has access to capacity from Mexican cargo carrier Aerounión, which leases its five freighters from Avianca, as well as through its passenger fleet of more than 100 aircraft.

Avianca Cargo’s network is primarily focused on the U.S., including a hub in Miami, and Central and South America. It also serves three destinations in Europe. It transported more than 770,000 tons of cargo last year.

The cargo airline said it transported 14,200 tons of flowers leading up to Valentine’s Day in February, 6% more than in 2021. Other top exports it transports from South America include fresh seafood and fruit. In March, Avianca awarded a contract to Jettainer for providing, maintaining and managing a fleet of unit load devices. 

Air cargo was a lifesaver for people and airlines around the world, delivering  medical supplies and record revenues when the pandemic wiped out passenger travel, Correa said.

“There was a realization that we need to continue with this, put it to the first level. We need to grow the business,” he said during a break between meetings. “It’s the maturation of a new strategy and making the cargo business a top priority.”

Latin America market

Latin American carriers reported that cargo volumes in March increased 22% compared to 2021, the strongest performance of any region, according to the International Air Transport Association. As large airlines come out of bankruptcy they increasingly are able to field larger fleets, adding cargo capacity to the market. 

Boeing’s 20-year forecast is for cargo volume between Latin America and North America to grow 2.6% annually through 2039, below the 4% growth rate for global air cargo. Air trade between Latin America is pegged to increase 3.1% per year. The predictions were made in mid-2020, before the full impact of COVID on supply chain disruptions and extra e-commerce shopping was understood. 

Freighters are increasingly attracting investors because of the strong growth trends for general cargo and e-commerce shipments while passenger networks become less reliable for shippers. 

LATAM Group, which competes in the same market as Avianca, said Tuesday it received its third converted Boeing 767 freighter and that it expected another delivery in September. The airline is sending 10 used jets from its passenger fleet to Boeing (NYSE: BA) to reconfigure as full-time cargo jets.

The latest freighter will primarily be used to transport flowers from Colombia and Ecuador and expand to more U.S. and European destinations, LATAM said. 

Earlier this month, Avianca and Brazilian airline Gol agreed to join forces under a holding company called Abra Group controlled by the top shareholders of each company. The move, expected to close in the second half, creates a third large airline group with the scale and connections to compete for passengers. Both airlines will continue to operate as independent brands.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch. 

Related News:

Sichuan Airlines to receive 1st A330 freighters converted freighters built in China

LATAM locks in expansion plan with Boeing 767 converted freighters

F3: Future of Freight Festival


The second annual F3: Future of Freight Festival will be held in Chattanooga, “The Scenic City,” this November. F3 combines innovation and entertainment — featuring live demos, industry experts discussing freight market trends for 2024, afternoon networking events, and Grammy Award-winning musicians performing in the evenings amidst the cool Appalachian fall weather.

Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. In December 2022, he was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]