25899 - Avianca

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Environmental & Social Review Summary

Project Number

25899

Company Name

AEROVIAS DEL CONTINENTE AMERICANO SA

Date ESRS Disclosed

Jun 20, 2008

Country

Colombia

Region

Latin America and the Caribbean

Last Updated Date

Nov 30, 2016

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Sep 19, 2008
Signed : Sep 26, 2008
Invested : Jan 22, 2009

Sector

Air Transportation

Industry

Infrastructure

Department

Regional Industry INF LAC & EUR

Project Description

Aerovias del Continente Americano S.A. (Avianca or the company) is planning to renew its fleet over the period 2008-2012 to reduce costs, improve efficiency and safety as well as provide better passenger service (the “Upgrade Program”). The company has negotiated the purchase of 42 aircraft over the next 5 years (including at least 12 Boeing-787s and a number of Airbus-319/320s) to replace its MD-83 and Boeing-757/767 aircraft. The proposed project is to provide financing of up to $50 million to Avianca and its subsidiaries to help finance the implementation of the company’s fleet renewal program.

Overview of IFC's Scope of Review

The scope of the project review with IFC’s Performance Standards included assessment of Avianca’s management capacity and review of the following documentation:

- Operations Manual;
- Safety Equipment and Emergency Procedures Manual;
- Corporate Safety Structure; and
- Disaster Response Plan.

The project appraisal team and technical consultants also conducted a site visit and met with Avianca’s senior management.

E & S Project Categorization and Applicable Standard

Performance standards that are applicable for this investment include:

- PS 1: Social and Environmental Assessment and Management System
- PS 2: Labor and Working Conditions
- PS 3: Pollution Prevention and Abatement
- PS 4: Community Health, Safety, and Security

Other performance standards are not applicable since there are no issues related to land acquisition and involuntary resettlement, indigenous people or cultural property, natural habitats, forests, or protected or sensitive areas and no risks specific to a particular community/group.

Environmental and Social Mitigation Measures

The company has presented plans to address these impacts to ensure that the proposed project will upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the World Bank/IFC environment and social policies and the environmental, health and safety guidelines. The information about how these potential impacts will be addressed by the project is summarized in the paragraphs that follow.

- PS1: Social and Environmental Assessment and Management System:

The company maintains detailed manuals with respect to air and ground operations covering all aspects of aviation, flight operations, maintenance, crew procedures and aircraft handling. These plans ensure compliance with the requirements of Colombian Civil Aviation Authority (Aerocivil), the International Civil Aviation Organization (ICAO), the European Aviation Safety Agency (EASA), the Federal Aviation Agency (FAA), and the IATA Operational Safety Audit (IOSA) Program. Avianca is registered and certified under IOSA; it was certified in 2005 with no deficiencies in safety procedures detected. Avianca is audited by both civil authorities and clients, these audits evaluate procedures related to maintenance, workshops and hangars, aircraft, and technical records. Engineering and Maintenance (E&M) policies and procedures are also evaluated by code-share partners (e.g., Air France, Delta, TACA and Air Canada). Avianca is ISO 9001 certified by Bureau Veritas Quality International. The company will also develop an integrated Environmental Management System, addressing key project Environmental, Health and Safety issues and incorporating existing relevant procedures and manuals, by end 2008. The company has a centralized Operational Safety Division which reports directly to the CEO.

- PS2: Labor and Working Conditions:

Avianca has a Human Resources (HR) policy and procedures which include aspects of recruitment, working hours and overtime, holidays, sick and annual leave, wages and benefits, employees’ and employers’ responsibilities, disciplinary practices, promotion and a grievance mechanism. The HR policy and procedures are based on Colombian labor regulation. Policies and procedures are communicated to all employees and are available on hard copies. Contracts clearly state terms of employment and working conditions as per national regulations.

All employees (pilots, cabin crew, mechanics and ground staff) are free to unionize and have the right to collective bargaining. However some complaints with regard to labor aspects have been raised by external organizations. Avianca will provide IFC with status reports on these complaints, including measures implemented or planned to ensure compliance with PS2.

Avianca works with contractors and cooperatives which provide them with specific services. Avianca has a management system implemented for contractors and cooperatives which includes verifying that contractors comply with national labor regulations. In order to be in line with best practices, Avianca will amend, as necessary, its HR policies and agreements with contractors and cooperatives and suppliers to ensure non-employee workers are retained in a manner consistent with this PS.

- PS3: Pollution Prevention and Abatement:

Avianca’s fleet modernization will result in fuel efficiency and greenhouse gas emissions benefits. Geenhouse gas emissions will be quantified by Avianca and tracked. Avianca is licensed to carry radioactive materials used in the health industry but no other hazardous materials/cargo are transported or handled by the company. All catering services are outsourced to third parties. Avianca conducts line checks and heavy C and structural C checks. All other checks and engine maintenance are completed by reputable and international companies including major international airlines (e.g., Delta, American Airlines). Colombia has adopted, and Avianca complies with ICAO Annex 16 Noise Certification (Stage 3) requirements. No fuel is stored or handled by the company as this is done by major oil companies contracted by the airport.

Avianca’s Environmental Policy seeks to ensure that it:

- minimizes the generation of dangerous and conventional waste and maintains clear, relevant and updated information on environmental management; and
- establishes, maintains and revises an environmental management system for environmental issues within the legal framework of national and international authorities.

The implementation of this policy is the responsibility of all employees and contractors and will be monitored by management through relevant indicators. All waste oils, fluids and parts are disposed of by licensed companies at sites designated by municipal authorities. All fire safety systems meet local and national standards.

- PS 4: Community Health, Safety, and Security:

Avianca employs armed security services. The employees will receive training consistent with PS4 and Aerocivil and national requirements. Avianca will establish and maintain written security training procedures and manuals applicable to firearm handling and use.

Stakeholder Engagement

**Information on IFC's Policy and Performance Standards on Environmental and Social Sustainability can be found at www.ifc.org/sustainability

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

For IFC projects that are active or under consideration, individual(s), or their authorized representative(s), who allege they have been or will be adversely affected by E&S risks or impacts arising from IFC's clients' business activities, may submit a complaint to IFC directly for consideration. When receiving an E&S complaint, IFC engages with complainants and works with its clients to find solutions to E&S concerns as quickly and efficiently as possible.

Complaints can be submitted to IFC online at www.ifc.org/escomplaints or by email to EScomplaints@ifc.org.

IFC complaint response is separate from and complementary to IFC’s clients’ project level grievance mechanisms and IFC’s Independent Accountability Mechanism (CAO). Lodging a complaint directly with IFC does not, at any time, restrict access to CAO.

Affected communities have unrestricted access to the Compliance Advisor Ombudsman (CAO), the independent accountability mechanism for IFC and MIGA. CAO facilitates the resolution of complaints related to IFC and MIGA projects and sub-projects, undertakes reviews of IFC’s and MIGA’s environmental and social compliance, fosters public accountability for their commitments, and enhances the environmental and social performance of IFC and MIGA.

Independent of IFC and MIGA management and reporting directly to the IFC and MIGA Boards of Executive Directors, CAO helps resolve issues raised about the environmental and social impacts of projects through a neutral, collaborative, problem-solving approach via its Dispute Resolution function. It also reviews IFC’s and MIGA’s compliance with environmental and social policies, assesses related harm, and recommends remedial actions through its Compliance function. Additionally, CAO provides advice to IFC, MIGA, and their Boards to enhance environmental and social sustainability performance and minimize the risk of harm.

Complaints may relate to environmental and social harm regarding any aspect of the planning, implementation, or impact of a project or sub-project, and can be made by any individual, group, community, entity, or other party affected or likely to be affected by the environmental or social impacts of an IFC- or MIGA-financed business activity.

Complaints can be submitted by any of the following methods:

Online form: available at https://www.cao-ombudsman.org/
Mail/Hand Delivery to: 2121 Pennsylvania Avenue, NW, Washington, DC 20433, USA
Voice mail: +1 202 458 1973
Email: cao@worldbankgroup.org
SMS, WhatsApp, Telegram, and Signal: +1 202 650 2627

CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Environmental and Social Review Summary (ESRS) is prepared by IFC to disclose its findings and recommendations related to environmental and social considerations regarding potential investments. Its purpose is to enhance the transparency of IFC's activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this ESRS is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein.
It is distributed in advance of IFC Board of Directors' consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following ESRS is disclosed in accordance with IFC's Access to Information Policy (AIP).

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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