Avianca looks to slash US$10bn 100-jet order

Avianca CEO Hernan Rincon has announced that the Latin American carrier is looking to renegotiate the US$10 billion 2015 deal it had struck with European plane maker Airbus for 100 A320neos.

Commenting on the forthcoming talks with Airbus, Rincon stated that: “Of those 100, we’ll probably receive between 50 and 80 planes,” adding: “We don’t have any doubt that we will keep growing, what has changed is the rhythm of the growth.” Rincon also said that: “The rhythm of technology is changing, it will take a while to get all of the order and we don’t want to have a commitment to planes with today’s technology which will be received by us in 10 or 15 years.”

The announcement comes at a time when Avianca is looking to create a strategic alliance with German airline Lufthansa as it sees Europe as its next target for expansion. At the end of November, Avianca, United Continental Holdings Inc and Copa Airlines of Panama confirmed that they had finalized a three-way joint venture that will allow them to plan routes and fares together and share revenues on those routes. “We’ve started conversations with Lufthansa, but it’s very embryonic,” said Rincon. “We hope to reach an agreement to benefit our passengers in Europe, which is a relevant and growing market.”

Under the United and Copa agreement, United will provide a US$456 million term loan to cash-strapped Avianca’s top shareholder, Synergy Group Corp. Loss-making Avianca has approximately US$4 billion of debt, 40 percent of which is due within the next two years, based on recent financial statements. Avianca will also begin operating a regional subsidiary in Colombia in 2019, serving medium- and small-sized cities with its current fleet of 12 ATR 42 planes.

Email Post to a Friend Email Post to a Friend

Leave a Reply