Avianca's majority shareholder (used shares as collateral) breached UCH loan terms
Jun 18, 2019, 9:32 pm
#16
Join Date: May 2013
Posts: 3,361
Of course... it depends on the law of the state of the entity over which control is sought. Copa acquired a majority interest in AeroRepublica 10 or 15 years ago and mostly absorbed that operation into Copa, so I believe Colombian law permits full foreign ownership. Moreover, I don't think foreign ownership has been raised as a barrier to this transaction; presumably the legality of the provision would have been considered at the time the transaction was negotiated.
As to your example, I think CO owned 51% of Copa at its peak, before it started to divest at a considerable profit... much-needed cash in the mid-2000s that, in combination with some other transactions and employee concessions, kept CO out of a third bankruptcy.
As to your example, I think CO owned 51% of Copa at its peak, before it started to divest at a considerable profit... much-needed cash in the mid-2000s that, in combination with some other transactions and employee concessions, kept CO out of a third bankruptcy.
Jun 19, 2019, 9:46 am
#17
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It has to do with this language, from the United Pilot Agreement:
The argument is that as soon as United exercises its right under the terms of its loan to Synergy, which was secured by Synergy's shares in Avianca Holdings, S.A., the parent of Avianca (airline), it falls out of compliance with the scope language. The United MEC is taking the position that this majority interest in AVH constitutes control over Avianca, and, under a strict interpretation of the United Pilot Agreement, would bring Avianca flying within the scope of the agreement.
The thinking is that this creates some leverage (on the part of the pilots) with respect to the ongoing negotiations.
The argument is that as soon as United exercises its right under the terms of its loan to Synergy, which was secured by Synergy's shares in Avianca Holdings, S.A., the parent of Avianca (airline), it falls out of compliance with the scope language. The United MEC is taking the position that this majority interest in AVH constitutes control over Avianca, and, under a strict interpretation of the United Pilot Agreement, would bring Avianca flying within the scope of the agreement.
The thinking is that this creates some leverage (on the part of the pilots) with respect to the ongoing negotiations.
Jun 21, 2019, 5:29 pm
#18
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Sep 26, 2019, 7:40 pm
#20
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Perhaps deserves its own thread - but do folks think UA and Avianca May beef up their partnership in any way after the Delta-LATAM tie-up? It certainly seems like DL is going to fight it out with AA for market share in Latin America with their move.
Sep 27, 2019, 9:10 am
#21
Join Date: Jan 2017
Programs: UA
Posts: 324
The issue with Avianca is that it is financially fragile, manages too many hubs, and has terrible operating metrics. They have faced increasing pressure from lower operating cost airlines for the mass market, and (usually dramatically) lower cost premium fares by other full service airlines, such as Aeromexico.
For North American based flyers, Avianca is primarily used to complement UAs route structure for secondary and tertiary cities in Latin America. Most of those cities may be reached by another partner, Copa.
For Latin American based flyers, UA is used by travellers to North America as well as those connecting beyond. Increased competition has made UAs premiums less competitive across all levels of service. This will likely continue.
That being said, Latams move (not announced yet, but theyre leaving OneWorld) to Skyteam will create issues for American Airlines and OneWorld. If Avianca, Aeromexico, Copa, and Latam are unavailable to OneWorld codesharing, this could create some angst for DFW, especially since they have a relatively large point to point network from Latin America to South America. They may try to make a play for someone, but ownership stakes by other airlines may make that difficult.
I dont think UA needs to do much.
For North American based flyers, Avianca is primarily used to complement UAs route structure for secondary and tertiary cities in Latin America. Most of those cities may be reached by another partner, Copa.
For Latin American based flyers, UA is used by travellers to North America as well as those connecting beyond. Increased competition has made UAs premiums less competitive across all levels of service. This will likely continue.
That being said, Latams move (not announced yet, but theyre leaving OneWorld) to Skyteam will create issues for American Airlines and OneWorld. If Avianca, Aeromexico, Copa, and Latam are unavailable to OneWorld codesharing, this could create some angst for DFW, especially since they have a relatively large point to point network from Latin America to South America. They may try to make a play for someone, but ownership stakes by other airlines may make that difficult.
I dont think UA needs to do much.
Sep 27, 2019, 11:46 am
#22
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