With major shareholder Germán Efromovich’s holding company BRW Aviation defaulting on a US$456 million loan provided by United Airlines, the American carrier has launched a management shake-up that will see the removal of Efromovich from cash-strapped airline Avianca Holdings (Avianca). United is now proposing a three-way joint business deal with Panama’s Copa and Avianca. As part of United Continental Holdings, United Airlines is looking to strengthen its foothold in South America.
United Airlines’ loan was against Efromovich’s 51.5% stake in Avianca, though as a result of an existing contract with United Airlines’ pilots which restricts the carrier from taking a majority stake in any other airline, United Airlines will cede voting rights to Kingsland Holdings, which currently holds a 15.64% stake and is the second-largest stakeholder. The American carrier is also prepared to lend a further US$150 million.
Kingsland Holdings is under the control of Robert Kriete who had been involved in a very lengthy legal battle with Efromovich over an optimum strategy for the struggling carrier. According to Reuters, another Efromovich carrier, Avianca Brasil, filed for bankruptcy protection in December and its operations were suspended on Friday by Brazil’s civil aviation regulator ANAC.
Avianca is the second-largest airline holding in Latin America by revenue and fleet size after Santiago, Chile-based LATAM Airlines Group. It currently has a fleet of 173 aircraft and over 19,000 staff, serving more than 100 destinations in America and Europe,