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This document consolidates information from Avianca Holdings S.A. (the “Company”) and its subsidiaries, including unaudited financial figures, operational managerial
indicators, financial indicators and managerial projections of future performance, in line with the Company’s and its subsidiaries’ current business plans. References to
future results are indicative and do not constitute a guarantee of performance by the Company, its stakeholders, management or directors. Unaudited accounting and
financial information and projections presented in this document (including, without limitation, estimated figures for fiscal year 2020) are based on internal data and
calculations made by the Company, which may be subject to changes or adjustments and may differ from actual results under IFRS. Any change in the current economic
conditions, the aviation industry, fuel prices, international markets and external events, as well as the eventual chapter 11 plan within the meaning of Section 1125 of the
Bankruptcy Code, among others, may affect the Company’s results and future projections.
Certain statements in this presentation, including statements regarding the potential impacts of the COVID-19 pandemic and steps we plan to take in response thereto,
are forward-looking and thus reflect our current expectations and estimates with respect to certain current and future events and anticipated financial and operating
performance. Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business environment that may
cause actual results to differ materially from any future results expressed or implied in such forward-looking statements. Words such as “expects,” “projects,” “will,”
“plans,” “anticipates,” “indicates,” “remains,” “believes,” “estimates,” “forecast,” “guidance,” “outlook,” “goals,” “targets” and similar expressions are intended to identify
forward-looking statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements which identify
uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that the future effects of known trends or
uncertainties cannot be predicted, guaranteed or assured, especially in light of the ongoing COVID-19 pandemic and the resulting grounding of most of our fleet. All
forward-looking statements in this presentation are based upon information available to us on the date of this presentation. We undertake no obligation to publicly update
or revise any forward-looking statement, estimate or projection, whether as a result of new information, future events, changed circumstances or otherwise, except as
required by applicable law.
The Company and its subsidiaries warn investors and potential investors that future projections are not a guarantee of performance and that actual results may differ
materially. Every investor or potential investor will be responsible for investment decisions taken or not taken as a result of his or her assessment of the information
contained herein.
This information (the “Transaction Information”) does not contain all of the information material to an investment in Avianca and the restructuring transactions described
herein (the “Restructuring”), and does not constitute an offer or a solicitation of acceptances of a chapter 11 plan within the meaning of Section 1125 of the Bankruptcy
Code or otherwise. Any such offer or solicitation will be made in compliance with any applicable securities, bankruptcy, and other applicable laws.
The Restructuring remains subject to approval of, among others, Avianca’s Board of Directors and eventually the relevant United States Bankruptcy Court. Recipient
should review the Transaction Information with its counsel as it evaluates participation in the Restructuring. Nothing contained herein shall be an admission of fact or
liability or deemed binding on any of the Company or its subsidiaries.
2
Executive Summary | Need for Financial Support
Avianca requires new financial support to successfully reorganize during the COVID-19 crisis
❑ Avianca executed a broad and successful voluntary restructuring program in 2019, and was on a path towards sustainable profitability.
However, the COVID-19 pandemic has had a profound impact on the demand for air travel, resulting in a previously unforeseeable
decline in the company’s financial results and liquidity
❑ Following the onset of the pandemic in early March, all of Avianca’s home countries imposed travel restrictions and flight bans, leading to
a complete suspension of the Company’s scheduled passenger flight activity that largely persists to this day
❑ In light of recent developments, the Company initiated a restructuring under Chapter 11 of the U.S. bankruptcy code, allowing for an
orderly court-supervised process to reorganize the business while adjudicating claims of creditors, lessors, OEMs and vendors
❑ The Company believes it will require fresh liquidity, under debtor-in-possession financing (“DIP Financing”) issued in two tranches subject
to different terms and conditions, of approximately US$1.2bn. Total DIP financing, including roll-ups of existing debt and acquisition
financing (~US$800M) negotiated in order to provide all DIP lenders with a robust collateral package, is estimated at ~US$2.0bn
❑ The proposed DIP Financing is expected to allow Avianca to weather the COVID-19 crisis with the necessary liquidity and flexibility to
execute a restructuring plan that will position the Company to emerge as a successful, stable, viable and healthy carrier for the long term
US$ 1,289M
45.1%
69.8% New Monies
US$ 700M New Monies (US$ 316M)
(US$ 900M)
54.9%
Roll-up
30.2% Roll-up (US$ 384M)
(US$ 389M)
Tranche A Tranche B Tranche A Tranche B
3
(1) From June 1, the Company has been permitted to operate a limited domestic schedule in Ecuador
Executive Summary | DIP Financing Structure
Two-tranche DIP financing structure facilitated support from key existing stakeholders and release of additional collateral
Proposed DIP Financing (US$ M)
Tranche A Tranche A Tranche A Tranche B Tranche B Tranche B DIP Total Total
New Money Roll-Up Total New Money Roll-Up Total Total New Money Roll-Up
Final Order (Sept 574 389 963 62 384 446 1,409 636 773
2020):
Total: 900 389 1,289 316 384 700 1,989 1,216 773
Key Considerations
❑ Tranche A: US$ 1,289M
▪ US$ 900M of new money (including at least US$200M of fresh liquidity from the 2023 Noteholders) and ~US$ 389M of roll-up debt and acquisition financing1
‒ US$168.5M issued to Advent for its remaining stake in LifeMiles (in addition to cash consideration of US$26.5M)1,2
▪ The Company’s settlement with the 2023 Noteholders, and deal to purchase the remaining minority stake in LifeMiles, significantly augment the collateral
package securing the DIP lenders1,2
▪ Finalized negotiations with the Stakeholder Lenders to roll-up their outstanding debt facilities, enabling a release of collateral previously pledged to Stakeholder
Facility, further augmenting the collateral package securing the DIP lenders1,3
(1) All roll-ups and acquisitions are subject to final documentation and approval by the Bankruptcy Court
(2) Pending the Company’s closing of the transaction to acquire 19.9% of LifeMiles from Advent International along with a call option to purchase the remaining 10.1% stake in LifeMiles that will still be held by Advent International 4
(3) Stakeholder Facility refers to the secured convertible debt issued by Avianca in December 2019 and January 2020; Stakeholder Lenders refers to the participants in the Stakeholder Facility
Executive Summary | Collateral Enhancement
Negotiated three transactions to establish the collateral package securing the Tranche A and Tranche B DIP Financings
❑ To free up collateral, the Company negotiated a transaction with the Stakeholder Lenders to participate in the US$ 700M Tranche B that converts to
equity (at the Company’s discretion) in exchange for a release of significant collateral to support the entire DIP
❑ As part of the agreement, a majority of the Stakeholder Lenders have agreed to convert their pro-rata outstanding amounts of the Stakeholder Facility into
the subordinated DIP facility tranche as well as provide fresh liquidity alongside other third-party lenders to fill-out the total Tranche B, raising $316M.
❑ Enhances DIP collateral package by unlocking significant equity value and augments Avianca’s available cash balance
❑ Seller financing feature (by further increasing the Tranche A DIP sizing) is an attractive aspect of the transaction proposal
5
(1) All roll-ups and acquisitions are subject to final documentation and approval by the Bankruptcy Court
Executive Summary | Collateral Coverage
The Company’s estimated cash balance and unencumbered assets are expected to provide substantial security to the Tranche A DIP
lenders throughout the restructuring effort
❑ Entirety of the proposed DIP financing is projected to be fully covered throughout the pendency of the bankruptcy case via a
superpriority claim on the Company’s available cash balance and the following assets:
▪ A first-lien pledge on certain COP-denominated credit card receivables which currently secure the US$ 384M Stakeholder Convertible Facility issued by
Avianca in 20196
▪ Avianca’s 89.9% equity interest in the LifeMiles loyalty program, as well as its option to acquire an additional 10.1%1,6
▪ Bond collateral2,6 that was previously pledged to the 2023 Notes, including:
‒ Avianca’s branding and trademarks
‒ Certain freighter aircraft and propulsion assets, including two (2) 767Fs, three (3) A300Fs and twelve (12) CF6 engines
‒ Residual interest in certain aircraft
Estimated Tranche A and Tranche B DIP Balance and Collateral Coverage3,4,5,6 (US$ M)
4,000 Collateral Coverage Tranche B Debt Tranche A Debt
3,000
2,000
654 662 746 755
564 571
446 451 457
1,000
963 963 963 1,093 1,093 1,191 1,191 1,289 1,289
-
Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21
Estimated DIP Coverage 215% 212% 205% 184% 180% 170% 166% 158% 156%
(1) Pending the Company’s closing of the transaction to acquire 19.9% out of the 30% equity interest currently held by Advent International in the LifeMiles business (with the option to acquire the remaining 10.1% held by Advent International at the Company’s discretion)
(2) Bond collateral transferred via settlement of the US$ 484M May 2023 publicly-traded notes with the consenting Noteholders; no formal appraisal has yet been obtained for the collateral pledged on a senior secured priming basis. Estimate provided by Company’s advisors.
(3)
(4)
Collateral coverage projections include monthly estimates of cash and receivables balances
Assumes midpoint of range for all intangible and tangible collateral / available cash balance (ex. restricted cash), except for cash projections and COP credit card receivables balance
6
(5) Projected DIP balances as shown include accrued interest
(6) All roll-ups and acquisitions are subject to final documentation and approval by the Bankruptcy Court
Executive Summary | Roadmap to Recovery
Avianca has taken swift action to position the Company for successful recovery from the pandemic
❑ From the outset of the crisis Avianca has acted quickly to preserve cash
Cash Balance (before DIP financing)
▪ Suspended debt and lease payments in late March and halted passenger airline operations
US$ M (approximate) May 10 June 30 July 31(E)3
▪ Prepared fleet for storage and deferred significant maintenance events until flying recommences
Avianca Holdings1 350 369 352
▪ Significantly reduced payroll expenses with employee support
▪ Avianca’s cargo business, which operates 11 freighters, continues to contribute positive cashflow Filing Entities2 225 256 243
(1) LifeMiles cash is roughly US$ 100M of which US$ 40-50M is typically available to be dividended up to the parent at
❑ With these measures in place, Avianca’s cash position has remained relatively constant since filing any time
(2) While most of the Company’s subsidiaries filed for bankruptcy protection (the “Filing Entities”), there are several that
did not – most notably the LifeMiles subsidiary, which maintains a significant cash balance
“Variabilization” of Costs Provides Flexibility if Recovery is Delayed (3) Estimates from management financial reports
❑ The Company is negotiating with its aircraft financiers (and has reached interim agreement with most) to convert all of its aircraft financings into variable pay-for-usage leases in which the
Company’s aircraft lease payments would be a direct function of the amount of flying that was conducted in a given month
❑ The Company is also working to implement a variable cost structure with certain labor group parties, to ensure that the Company has the flexibility it needs to adapt its cost structure to an uncertain
resumption of service over the next 24 months and beyond
❑ As a result of these efforts, the Company currently projects that flight operations will be cash flow positive from April 2021 forward, despite capacity levels being trimmed to 30% of pre-COVID levels
❑ For 3Q-2020, the Company estimates its cash burn run-rate at approximately US$ 25M per month, giving it more than 2 years of estimated liquidity runway following the first drawdown of the
proposed DIP loan in September
❑ The Company believes that its forecast assumes a conservative view of demand recovery that both (a) reduces the Company’s estimated steady-state capacity level (to approximately 70% of
pre-COVID forecast levels), and (b) extends the ramp-up time assumed to reach the steady-state level (to approximately 24 months)
7
Agenda
1 Background
3 Restructuring
5 Appendix
8
Avianca | Leading Airline in Latin America Serving More Than 28 Countries Worldwide1
❑ Leading carrier throughout Latin America, serving 9.9+ million loyalty members
❑ Avianca has the
#1 ❑ World’s oldest continuously operating airline: 100 years old on 5 December 2019
largest market share
in its home market for ❑ >20,000 employees across the entire holding company
both domestic (51%)
and international (49%) Primary Segments
passenger services
Passenger Airline Loyalty Cargo Airline
▪ 21 Widebody Aircraft
Highlights of the Program
FY2019 Revenue of
9.9+ Million Active Members ~US$ 500M5
Bogota Hub Services a Strategic Network2 Belly
Countries
600+ Active Commercial Partners Outperforming
Due to the
Overview of San Salvador Hub2 COVID-Crisis
One of the Most Awarded Revenues (US$ M)
San Salvador, Direct flights to: Loyalty Programs across the Americas3
El Salvador 623 9 Cities in North America
Avg Flights / Week
11 Cities in Mexico, Central 22 127
17 96
13 America and Caribbean
0
9
Countries 4 Cities in South America Map of Freighter Network4
Q2 2019 Q2 2020
(1) Fleet count and age as of June 30, 2020; (4) Includes routes flown by strategic partners; from 2014 – 2020
(2) Passenger flight operating statistics as of 2019 (5) Includes freighter and belly cargo revenue
(3) Aggregate number of Freddie Awards and Global Traveler 10
awards granted
Avianca | Strong Market Position in Growing Markets
The strong long-term growth of the Colombian economy reinforces the strength of Avianca’s domestic network; Avianca’s
commanding market share in BOG positions the airline to capitalize on this growth
GDP Growth – Home Markets of Major Network Carriers Top 4 Latin America Hubs by Historical Flight Operations
Average Real GDP growth rate1 (%): 2009 - 2019 Departures2, Jan 2020 (M)
Metro Area
Population3
4.0
3.5%
3.5 Mexico City 42% 23% 21M
3.0 2.9%
1.5
1.2% Sao Paolo (GRU) 42% 31% 22M
1.0
AV AM LA CM
AV AM LA Peru
LP JJ CM
Brasil
12
(1) Restart of flight operations between EMEA/LatAm and NAm/LatAm will be subject to governmental and regulatory approval; Source – Diio Mi
Avianca | Robust Management Team
Anko van der Werff – Chief Executive Officer Silvia Mosquera – Chief Commercial Officer
❑ ~20 years of experience in airline industry ❑ Significant aviation experience – has held c-suite and executive positions
❑ Previously Chief Commercial Officer at Aeromexico ❑ Previously Chief Commercial Officer at Iberia Express
❑ Senior executive roles at Aeromexico, Qatar Airways and KLM ❑ Senior role at Vueling Airlines and Clickair
Adrian Neuhauser – Chief Financial Officer Matthew Vincett – LifeMiles Chief Executive Officer
❑ ~20 years of experience in Investment Banking, focused on Aviation with strong ❑ Led the integration of the loyalty businesses for Avianca and Taca Airlines
experience in Latin America ❑ Previously served as Commercial Vice President and Regional Airlines Vice
❑ Senior roles at Credit Suisse, Deutsche Bank, and Bank of America Merrill Lynch President at Taca Airlines
Renato Covelo – Chief People and Legal Officer María Paula Duque – Chief Customer Experience Officer
❑ 20 years of experience in legal practice for the airline industry ❑ Prior to Avianca, she held leadership positions at numerous Colombian
❑ Co-Founder and former General Counsel at Azul Brazilian Airlines telecommunications companies
❑ Senior positions in prestigious law firms focused on aviation industry ❑ Served for ~3 years as Colombia’s Vice Minister of Communications
Eduardo Mendoza – Chief Operating Officer Michael Ruplitsch – Chief Information Officer
❑ Served in senior management position since 2018 ❑ 10+ years of aviation industry experience in numerous leadership positions
❑ Prior to directorship, served as an A320 pilot for 13 years ❑ Previously the Chief Information Officer at Austrian Airlines during the financial
crisis, helping to transform the company / support merger with Lufthansa Group
13
Avianca | Strong Corporate Governance Structure
Avianca is led by a Board of Directors with deep experience in aviation and restructuring
Jose Gurdian
❑ Founding Partner and CEO at Caoba Capital
❑ Former Partner at Ernst Young in Transaction Advisory for Central America
❑ Previously VP Finance, Treasury and Strategic Development for TACA Airlines
14
Avianca 2021 Plan | Overview
Avianca’s successful out-of-court restructuring process in 2019 addressed shareholder defaults and an unprofitable
business model
52.6 5.9
31.2 4.2 212 • Technical defaults from
113
controlling shareholder
2013 2018 2013 2018 2013 2018
• Deterioration in Company’s
April – May access to credit markets
❑ In April 2019, BRW – Avianca’s then-controlling shareholder – defaulted on its loan from United 2019
Airlines, and United exercised remedies that led to governance changes at Avianca, including
enhancements to the Board of Directors and new Executive Management
❑ In mid-2019 Avianca developed a comprehensive restructuring plan – the Avianca 2021 Plan – to
improve profitability and position the Company to de-lever the balance sheet over time • New Ownership and
▪ Fleet restructuring: simplified and shrank fleet by selling all aircraft in two fleet types (E190 and A318), and Management team
restructured aircraft orderbook (delivery deferrals, cancellations, and PDP refunds) • Initiation of Avianca 2021
Plan
▪ Operating Performance: developed – and began implementing – initiatives to improve revenue performance
and reduce operating costs to competitive levels June – July • Fleet right-sizing
2019 • Balance sheet restructuring
▪ Balance Sheet: Re-profiled over $5B in debt, improved cash position through asset sales and sale-leasebacks,
as well as by raising $375 million of new liquidity
▪ Through February of 2020, the Company was tracking ahead of profitability and liquidity goals
(1) Leverage ratio reflects year-end adjusted net debt (total balance sheet debt + 7x annual rental expense less cash and cash equivalents) divided by LTM EBITDAR 15
(2) Adjusted debt includes total balance sheet debt + 7x annual rental expense (as an estimate of capitalized aircraft lease obligations)
Avianca 2021 Plan | Substantial Achievements and Foundation for Continued Improvement
Significant Milestones Already Achieved in Avianca 2021 Plan Key Financial Goals
Successful execution of financial reprofiling with broad support from the financial markets
✓ Bond Exchange, 88.1% tendered
✓ Agreement with over $5bn of creditors, lessors and ECAs on 2018 2021 Plan
deferral of US$220M of payments – 100% participation
✓ US$ 250M convertible note facility from current stakeholder
Leverage Reductions
and US$ 125M additional facility from other investors
✓ Completed sale leaseback of 9 aircraft for US$ 160M in 1Q20 Net Adjusted Debt to EBITDAR
≤4x
Continue to improve
commercial performance
and customer service
Modify fleet to optimize new
network
Redesign network and Key tenets of the Avianca 2021 Plan 2018 2021 Plan
strengthen BOG hub remain, and additional value can be
Eliminate unprofitable achieved through in-court restructuring
routes and flights 16
Avianca 2021 Plan | Investor Confidence
The international bond market validated investor confidence in the Avianca 2021 Plan, with Avianca’s debt returning from
heavily discounted levels to par value upon the completion of the restructuring
Par Value of Avianca 2020 Bond During Out-Of-Court Restructuring Investor confidence restored
upon completion of Avianca’s
% of Par Value out-of-court restructuring
105%
100% 100
95%
90%
85%
Change of
Technical default by former management, Avianca finalizes
80% ownership led to out-of-court restructuring plan and
subsequent downgrade restructuring accesses $125M in
and change of control commences additional financing
75%
Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb-
19 19 19 19 19 19 19 19 19 20 20
17
Source: Bloomberg as of August 9, 2020
Avianca 2021 Plan | Outperformance Through February 2020
More efficient cost structure yielded improved profitability in January & February 2020
Total Cost 706.2 728.2 773.9 (21.9) (3.0%) (67.7) (8.7%) 7.8
8.1
PRASK (US¢) 6.10 6.19 6.08 (1.4%) + 0.3%
Yield (US¢) 7.58 7.50 7.43 + 1.2% + 2.1%
TRASK (US¢) 8.57 8.74 8.31 (2.0%) + 3.2%
CASK3 (US¢) 8.21 8.49 8.39 (3.3%) (2.2%)
CASK3 excluding Fuel (US¢) 6.19 6.23 6.25 (0.7%) (1.1%)
(1) Figures reflect unaudited management financial reports
January February
(2) Last year (2019), Proforma results shown are IFRS16 compliant; 2019 operating expense excludes on-time gain on interline commission settlements 18
(3) Operating expenses exclude gains and losses related to asset sales
COVID-19 | Pandemic Dramatically Impacted AVH’s Business and Outlook
Substantial drop in demand coupled with global and local travel restrictions led to a temporary suspension of passenger flights
❑ A320 densification project to increase seats per aircraft EBIT (US$ M) ❑ More than half of Avianca’s employees were
from 150 to 174 100 86 furloughed and the remaining employees
accepted voluntary pay reductions
❑ Sale of 2 A330s, 2 A319s and 1 A320 aircraft 0
❑ Contracts suspended for contract workers
-100
❑ Sale of 1 A330 freighter aircraft
-200 ❑ Working with financial entities to support
(210) employees:
❑ Implementation of digital initiatives
-300
B-Plan Forecast - Q2 2020 Actual - Q2 2020 • Defer payment of loans through payroll
❑ Modernization improvements, fleetwide WIFI installation • Continued payment of health insurance
19
Note: Q2 2020 Actuals include forecast values for June, which are pending finalization
Response to Crisis | Cash Preservation Measures
Avianca acted quickly to preserve cash and has taken measures to align its cost structure to evolving market conditions
❑ The Company has preserved cash from the onset of the crisis
▪ Suspended debt and lease payments in late March and halted passenger airline operations
▪ Prepared fleet for storage and deferred significant maintenance events until flying recommences
▪ With strong employee support, significantly reduced payroll expenses with most employees taking voluntary furloughs and temporary wage reductions
▪ Avianca’s cargo business, which operates 11 freighters, continues to contribute positive cashflow
❑ With these measures in place, Avianca’s cash position has remained relatively constant since filing
❑ Avianca variabilized key fixed costs in order to preserve cash through the pendency of the case and position the Company for restoration
of passenger demand and a successful exit from bankruptcy
▪ Payroll costs: dramatic cost reductions have been achieved through a variety of initiatives
▪ Fleet costs: now directly tied to aircraft usage
20
Response to Crisis | Human Capital Initiatives
Avianca instituted two programs designed to significantly reduce payroll costs and improve working capital
❑ Starting in April 2020, management – with the support ❑ Starting in June 2020, management implemented
of employees – achieved a dramatic temporary longer term measures, including long-term voluntary
reduction of the workforce, decreasing payroll costs by and involuntary furloughs, and has launched a
more than 50% voluntary early retirement program
▪ This reduction has been achieved through a combination ▪ Over 7,000 employees accepted long-term unpaid leave,
of temporary measures, including short-term voluntary and an additional 2,720 employees had their contracts
and involuntary furloughs as well as temporary wage suspended
reductions ▪ 502 employees with fixed contracts accepted early
retirement packages
2020 Monthly Payroll Cash Expense (US$ M)1 Estimated Monthly Net Savings (US$ M)
49 6.7 0.6 23.5
0.7 1.3
28 13.7
18 18 19
0.5
March April May June July 3-month 6-month 9-month 12-month Contract Early Total3
leave leave leave leave Suspension Retirement2
(1) Payroll expenses (including pension) paid out in each month; includes 1M in severance payments made in July
(2) Will incur one-time severance cost of US$ 1.1M 21
(3) Savings include all filing entities, including Long-Term Leave Program and Suspension savings from SAI, Regions, and Deprisa
Response to Crisis | Power-by-the-Hour Payment For Aircraft Usage
Avianca’s fixed fleet cost has largely been converted into a variable structure
❑ Power-by-the-Hour (PBH): the Company has agreed with PBH Example: Total Monthly Compensation by Utilization
aircraft counterparties on a fully variable power-by-the-
hour compensation structure with uniform rates for 102 $400,000
aircraft
$350,000
▪ Capital Cost compensation driven by Flight Hours, with rates
set by aircraft type and vintage PBH
$300,000
maintenance
▪ Maintenance compensation driven by Flight Hours, APU Typical Monthly Lease Rate1
Hours, and Flight Cycles, with rates set by equipment type $250,000 payment
▪ In negotiation for remaining 44 aircraft where counterparties
have been given extended timelines $200,000
$150,000
$100,000 PBH Capital
payment
$50,000
$0
0 50 100 150 200 250 300
FH/month2
1 Background
3 Restructuring
5 Appendix
23
Disclaimer
As stated above, this presentation includes unaudited financial figures, operational managerial indicators, financial indicators and
managerial projections of future performance which are forward-looking and thus reflect our current expectations and estimates with
respect to certain current and future events and anticipated financial and operating performance.
Such forward-looking statements are and will be subject to many risks and uncertainties relating to our operations and business
environment that may cause actual results to differ materially from any future results expressed or implied in such forward-looking
statements. Additionally, forward-looking statements include statements that do not relate solely to historical facts, such as statements
which identify uncertainties or trends, discuss the possible future effects of current known trends or uncertainties, or which indicate that
the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured, especially in light of the ongoing COVID-
19 pandemic and the resulting grounding of most of our fleet.
References to future results are indicative and do not constitute a guarantee of compliance by the Company, its stakeholders,
management or directors. Unaudited accounting and financial information and projections presented in this document (including, without
limitation, estimated figures for fiscal year 2020) are based on internal data and calculations made by the Company, which may be subject
to changes or adjustments and may differ from actual results under IFRS. Any change in the current economic conditions, the aviation
industry, fuel prices, international markets and external events, as well as the eventual chapter 11 plan within the meaning of Section 1125
of the Bankruptcy Code, among others, may affect the Company’s results and future projections.
24
Business Plan | Fleet
The Company’s plan assumes a significant fleet reduction, particularly in turboprop and widebody aircraft
Fleet Plan Fleet Ramp-Up Plan – Active & Operational Spares (Quarter end fleet count)
94 94 94
TP 89 6 6 6
Steady-State Pre-COVID Current NB 6
Fleet Count Fleet (March) Plan WB
74 74
Turboprop 15 6 6 6
Narrowbody 109 77 57 57
6 6
Widebody 23 11 77 77 77
72
57 57
Total Passenger 147 94
41 41
Freighters 11 11
2 2 10 10 11 11 11 11 11 11
June 2020 3Q-20 4Q-20 1Q-21 2Q-21 3Q-21 1Q-22 2Q-22 3Q-22 4Q-22
25
Business Plan | Operational Statistics and Metrics (Long-Term)
Load Factor and Average Fare (US$ per pax) Average Stage Length1 (km per departure)
85.1% 84.1% 84.8% 84.8% 1,390 1,399 1,405
81.7% 82.2% 1,353
77.5%
1,202 1,243
108.6 109.9 110.9 1,128
102.1 106.2
101.8
95.3
2019 2020 2021 2022 2023 2024 2025 2019 2020 2021 2022 2023 2024 2025
Average Fare
Load Factor
Unit Revenues (US₵ per ASK) Unit Costs (US₵ per ASK)
14.4
11.0
10.4 10.1 10.2
9.6 9.8 Total RASK
8.5 10.3
12.2
2019 2020 2021 2022 2023 2024 2025 20192 2020 2021 2022 2023 2024 2025
(1) Figures includes passenger flights / routes only 26
(2) 2019 excludes one-time events expenses of US$ 605.6M
Business Plan | Projected Results
2,322
22.3
1,554
14.1
2019 (act.) 2020 2021 2022 2023 2024 2025 2026 2019 (act.) 2020 2021 2022 2023 2024 2025 2026
Revised Forecast Avianca 2021 Plan Revised Forecast Avianca 2021 Plan
16
490
(60) (473)
2020 2021 2022 2023 2024 2025 2026 2020 2021 2022 2023 2024 2025 2026
Margin: (3.9%) 21.1% 30.9% 31.6% 32.1% 32.1% 32.1% Margin: (30.3%) 0.7% 12.5% 13.9% 15.0% 15.2% 15.4%
27
(1) Adjusted EBITDAR excludes estimated maintenance payments to aircraft lessors (a proxy for capitalized maintenance event expense)
Business Plan | Variable Cost Structure Helps Preserve Cash In All Operating Environments
Avianca has successfully variabilized its costs, and can continue to respond to COVID-19 operating realities with a flexible cost
structure (variable costs ~75%; semi-variable ~20%)
141
130
Aircraft Ownership2 119
Fixed Cost
(1) Adjusted operating expense includes an estimate of interest expense related to aircraft ownership
(2) Aircraft Ownership expense consists of an estimate of aircraft depreciation expense and aircraft interest expense (for both debt and IFRS-16 lease liability interest); going forward, the Company’s forecast assumes that aircraft
ownership will be replaced by a fully-variable PBH aircraft leasing structure 28
(3) Operating costs exclude gains and losses from asset sales
Business Plan | Avianca’s Transformation Aligns with Broader Trends of the LatAm Market
With a reduced cost structure and de-leveraged balance sheet, Avianca will be well-positioned compared to its Latin American
network peers and growing LCC competitors
Airline Fleet size1 Comments
114 NB
• Hubs in Colombia, El Salvador and Ecuador
21 WB
133 NB • 3rd largest carrier in Brazil (24% domestic and 5% international share in 2019)
10 WB • Low-cost structure, but scheduled as network carrier
• Largest domestic airline in Brazil (38% share); 4% international share in 2019
128 NB
Low-Cost • Limited international service to destinations in the Americas
Carriers 81 NB
• 2nd largest airline in Mexico with hubs in Guadalajara, Mexico City, and Tijuana
• Serves both domestic markets and routes to the US and Central America
• 2nd largest airline in Chile serving the domestic market and select destinations
19 NB
in South America (Peru, Argentina, Brazil, Uruguay, Bolivia)
❑ Market recovery from COVID-19 is highly uncertain; however, the Company believes that it has incorporated conservative assumptions regarding the recovery,
including:
▪ Long-term demand reductions of 15% in domestic markets and 20% in international markets
▪ 2-year recovery to reach steady-state capacity, with a gradual phased re-launch of service
❑ The Company’s forecast does not assume any benefit from any proposed joint-business agreements or partnerships
❑ The Company believes that additional network partnerships and/or Codeshare Agreements would result in expanded connecting itineraries, improved customer
service in partner hub airports, and enhanced loyalty benefits / redemptions
❑ The Company is engaged in a continuous exercise of process improvement as it seeks to refine its cost structure and improve its competitiveness
❑ The Company has several significant efforts underway to identify further opportunities for improvement, including a potential back-office efficiency initiative and
an overall cost-base re-design to ensure that its cost structure is as competitive as possible
30
Agenda
1 Background
3 Restructuring
5 Appendix
31
Avianca Restructuring | Objectives
The Chapter 11 process will accelerate progress towards the objectives of the Avianca 2021 Plan
Working Capital Adjustment • Working capital accounts are generally assumed to gradually revert over the next 12 months to levels consistent with long-term driver trends
(e.g., “days of”); the forecast assumes a write-off of approximately US$ 92M of pre-petition accounts payable as a result of the bankruptcy
filing; the forecast also includes other working capital usages of cash
Pre-delivery Deposits • Projections assume no new aircraft deliveries and company has conservatively set a reserve against PDP payments but intends to vigorous
pursue recovery of such PDP payments
Fleet Ownership • Aircraft financings (debt or lease contracts) are assumed to be rejected or abandoned through the court process (or materially adjusted in
favor of the Company); the forecast assumes monthly cash rental payments for all required aircraft at estimated market lease rates
• Aircraft rental and maintenance payments are assumed to be pro-rated based on the expected utilization of the aircraft
• Security deposits reflecting 2-months’ rent are assumed to be paid for the Company’s fleet at bankruptcy emergence
• Capital expenditures for aircraft maintenance have been removed from the cash flow forecast and replaced with an estimate of expected
monthly maintenance payments that would be due under operating leases (to compensate lessors for the post-petition allocation of heavy
maintenance event costs)
Debt • LifeMiles debt is assumed to be refinanced upon maturity in August 2022 with a one-for-one new debt issue that features the same
amortization and interest rate as the existing issue
• For all other debt that remains on the balance sheet, amortization schedules have been adjusted to assume either 5-year or 7-year
maturities with no amortization through mid-2022, and straight-line amortization from then to maturity
• Principal payments are assumed to be suspended during the court proceeding for all debt issues that remain at the Company (at the filing
entities); interest is assumed to be paid on a current basis on the assumed debt amounts outstanding
DIP Facility • A two-tranche term loan facility in an aggregate amount of US$ 1,989M drawn through a series of installments throughout the restructuring
period, expected to be converted into exit financing and equity upon emergence
Equity upon Exit • The forecast assumes the US$ 700M Tranche B DIP Facility (plus any applicable accrued interest) will convert into equity of the newly
reorganized entity
Legal and Professional Fees • The forecast includes an estimate of the legal and professional fees that would be required throughout the restructuring 33
Avianca Restructuring | Treatment of Operating Leases
In 2019, the Company adopted a new international accounting standard (IFRS 16) that requires operating leases to be capitalized
Adjustment to To estimate the off-balance sheet lease obligation, net debt is adjusted to The on-balance sheet operating lease liability is counted as debt, therefore
Net Debt Calculation include annual rental expense capitalized at 7.0x (industry convention) no adjustment is needed to the net debt calculation
While the Company’s published financial reports now reflect IFRS 16, the Company’s restructuring forecast as included herein
reflects the older pre-IFRS 16 lease accounting (which is more conservative)
❑ For simplicity and capital-structure neutrality, the restructuring forecast shows all aircraft as operating leases on a go-forward basis
❑ The Company’s restructuring forecast includes estimated market lease rates for each aircraft type assumed in the operating plan; however, the Company has
not estimated the lease term for the new or revised operating leases (an element that is required in order to calculate the IFRS 16 lease liability)
▪ The lease liability assumed under IFRS 16 is highly sensitive to the lease term (shorter term leases generate a lower lease liability)
▪ The Company did not want to create an artificial bias in the projected leverage ratio by assuming lease terms that may be shorter than the lease terms to be agreed
❑ Instead, the Company has elected to show the restructuring forecast using pre-IFRS 16 accounting (with rental expense and no on-balance sheet liability), as
this allows the lease obligation to be capitalized at a standard 7.0x rate in all years (this additionally allows for a more consistent comparison to historical results)
34
Avianca Restructuring | Pro-Forma Capital Structure
1 Background
3 Restructuring
5 Appendix
36
Proposed Loan Structure | DIP Financing Key Assumptions
Borrower / Credit Parties Avianca Holdings S.A. and each of its subsidiaries
Tranche A Interest Rate TBD interest rate calculated monthly in arrears and to be paid at the company’s discretion in cash or in-kind
Tranche B Interest Rate 14.50% per annum, calculated monthly in arrears and to be paid at the company’s discretion in cash or in-kind
DIP Facility shall contain covenants customary or appropriate in the context of the proposed DIP Facility, including: reports,
budgets and variance reports, projections, officers’ certificates, monthly reporting packages and other information
Budget / Covenants DIP Facility will also contain a covenant providing that the Credit Parties will obtain certain case milestones on a timetable to be
agreed
– Milestones will provide for certain case controls regarding the progress of the case toward and approved plan of
reorganization
All obligations under the DIP Facility shall at all times be secured by:
(i) Superpriority claim status having priority over any and all other claims;
(ii) Perfected first priority lien on all cash accounts;
(iii) COP-denominated credit card receivables1;
Collateral (iv) Avianca’s trademarks1;
(v) Freighter fleet and spare engines1;
(vi) Residual interest in a portion of Avianca’s passenger aircraft fleet1; and
(vii) Liens on Operating Company equity, where permitted (principally Avianca’s 89.1% equity interest and call option for
incremental 10.1% in LifeMiles) 1
Entire Tranche B facility, including capitalized interest, will automatically convert into equity of the Reorganized Debtor provided
Tranche B Conversion to Equity specific conditions are met
Events of Defaults DIP Facility shall contain events of default customary or appropriate
(1) All roll-ups and acquisitions are subject to final documentation and approval by the Bankruptcy Court 37
Proposed Loan Structure | Key Segment of Overall Collateral Package2
Beyond the cash collateralization and other assets, the Company is pledging its interest in LifeMiles1,2 and certain COP-denominated
credit card receivables2 as a portion of the total security to further bolster the DIP facility
COP-Denominated Credit Card Receivables2 Avianca’s Interest in LifeMiles1,2
❑ Due to the settlement with the Stakeholder Lenders to roll-up ❑ Prior to Avianca’s proposal to purchase the remaining minority
the prepetition secured claims into the Tranche B DIP, certain stake in the loyalty program, the Company was pledging its original
Colombian Peso denominated credit card receivables became 70% stake of the business unit (a non-filing entity) on a first-lien
available to pledge against the DIP financing basis to secure the DIP facility
▪ During initial investor outreach, the Company was only able to ❑ AVH recently negotiated a contract to acquire 19.9% out of
offer a second-lien position on the security Advent’s 30% equity stake in LifeMiles (with an option to purchase
the remaining 10.1%)
❑ As a result, the Company is offering a first-lien position on the
credit card sales ❑ LifeMiles is a highly diversified, top-tier loyalty program, generating
~70% of its annual gross billings from non-Avianca customers:
❑ For reference, in FY 2019 the average monthly balance of
Colombian Peso denominated credit card receivables was ▪ Credit card co-brands
US$ 42M ▪ Financial partnerships
▪ Hotel, retail and transportation
❑ LifeMiles’ strong market position, significant runway for growth and
robust cash flow generation allows the company to maintain a
strong valuation on a stand-alone basis
1 Background
3 Restructuring
5 Appendix
39
LifeMiles
LifeMiles Loyalty Program | Overview
The LifeMiles loyalty program is uniquely positioned to continue to bolster its growth trajectory and profitability
Premier
US$ 334M in FY19 Airlines Underpenetrated consumer markets foster
Gross Billings 2 significant growth potential
GLOBAL Auto/Gas
Renowned
Proven, experienced and aligned management
~700K Active Restaurants
5
& Eateries team, supported by a top private equity sponsor
Co-branded Credit Cards
Apparel
41
LifeMiles Loyalty Program | Business Model
LifeMiles continues to augment its non-airline partner network to drive robust operational results and profitability
Successful and Diverse Business Model Strong EBIT Growth and Margin Expansion (IFRS 15)2
❑ Diversified geographic presence with 6 countries contributing 6%+ of gross billings (US$ M)
EBIT Margin (%) 133
❑ Asset-light business model with favorable working capital dynamics, cash margin of ~45%1
112
of gross billings
❑ Proven management team, the core of which has been in place since 2010 and has grown 81
non-airline sales by 4x over the same time period
52
35.7% 39.6%
❑ On average, non-air rewards provide a 10% to 20% higher profit margin than redemptions 33.1%
25.6%
for air tickets
❑ With a growing customer base and partner network, non-domesticated (Colombia) gross
billings have increased by 10%+ since FY2017
2016 2017 2018 2019
A Diversified Mix of Customers & Geographies …..Is Accelerating Growth in Gross Billings
(US$ M)
Gross Billings by Type3 Non-Airline Gross Billings by Geography3
356
Guatemala 334
Costa Rica 308
6% 6%
29% 263 110
Air 97
El Salvador Colombia 99
Direct to 6% 43% 77
Members & 22%
Others Peru
11% 246
209 237
186
Financial 49% USA
14%
LifeMiles plans to leverage its diversified partnerships across an expanding geographic footprint to accelerate growth
25
21
11.0%
10 2.8% 2.7%
9 0
4
0 North America Central South America Colombia
America
Co-branding contracts deliver diversified and Members are able to utilize their accrued points as a Financial Partners in North America
predictable sales streams vs. AVH point redemptions liquid currency outside of the airline industry have gained significant relevance
Air miles sold through financial partnerships yield Non-airline channels have diversified redemption U.S. conversion of bonus miles grew 241% in 2019 vs
higher margins than redemptions for air services capabilities, thereby increasing platform appeal 2018 and represent ~42% of conversion gross billings
Co-branded credit cards facilitate continuous customer Partnership with Uber Eats further entrenches LifeMiles Robust international partnerships enable global
engagement with the LifeMiles brand into the high-growth, food delivery business customers to redeem rewards towards LifeMiles’ points
Network of financial partnerships enables LifeMiles to LifeMiles’ branded e-commerce and mobile wallet offer a Expansion of geographic footprint enables the business
provide a more comprehensive loyalty program compelling value proposition for members and partners to appeal to a broad array of travelers
Through a growing global network of co-branding opportunities and redemption channels, LifeMiles serves as a world-class loyalty platform to its
customers and commercial partners beyond that of a typical frequent flyer program
43
(1) YoY Growth, as of Mar ’20
LifeMiles Loyalty Program | Entrenched Brand Recognition
LifeMiles’ award winning brand facilitates strong member engagement across its accrual and redemption network
Best
Last 7
2014 2015 2016 2017 2018 2019 2020 Redemption Member Engagement Continues to Strengthen1
Years
Ability (last 5Y)
2 2 3 2 1 1 1 12 5
– – – – – – – – –
– – – – – – – – –
2
2 3 2 4 5 3 3 22 – Loyal Members Core 23.1%
2 2 1 1 1 1 1 9 –
– – – – – – – – –
LifeMiles is indisputably the most awarded program in Latin America….only Southwest Rapid Rewards & American Advantage rival LifeMiles in all of
the Americas
(1) YoY Growth, as of Mar ’20
(2) Members active for two consecutive years in Core Markets 44
(3) Members who are active in two or more categories over the last 12-month period
LifeMiles Loyalty Program | Response to Crisis and Go-Forward Strategy
The LifeMiles business unit is largely immune from the effects of the COVID-19 pandemic due to its diversified
partnerships and global customer base
❑ Although forecasts indicate that Covid-19 will have a profound FY2019 Financial Results (US$ M)1
impact upon the financial and operational results for the
foreseeable future, LifeMiles’ management has developed a
number of strategies to effectively “weather the storm” and 337
Revenue
emerge as top-tier loyalty program:
EBIT
▪ Broaden partnerships with global banking institutions and expand co-
branded credit cards that provide higher margin business for
LifeMiles
▪ Offer additional point transfer opportunities with other Latin American 133
and worldwide carriers to attract a diversified membership base
▪ Develop and market in-house products that offer further channels for 2019A
members to accrue / redeem points while driving brand awareness:
45
(1) Revenue and EBIT reflect stand-alone LifeMiles financials and include significant amounts of intercompany transactions between LifeMiles and other Avianca Holdings entities (primarily the passenger airlines)
Thank You