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San Francisco / AFP
Avianca Holdings SA jumped the most on record amid reports that Delta Air Lines Inc. and United Continental Holdings Inc. are weighing bids for the Latin American airline.
Avianca is exploring strategic options including a full or partial sale, according to people familiar with the matter. Avianca has recently begun working with a financial adviser to raise about $500 million in a process that could lead to an outright sale, said one of the people, who asked not to be identified because the matter isn’t public.
“In our view, Avianca Holdings is a natural candidate for strategic investments, especially considering its strong position in the region,†Banco BTG Pactual analysts led by Renato Mimica in a report. Avianca could be a good strategic fit for both United and Delta, and a capital injection and partnership would in part address one of the key risks, which is the
airline’s leveraged balance sheet, according to the
report.
Avianca, which owns Colombia’s largest airline, said in May it would cut aircraft deliveries from Airbus Group SE by $1.4 billion during the next 30 months as part of an effort to reduce indebtedness.
Efromovich’s Synergy Aerospace Corp., which owns about 78% of the common shares, has pledged a majority of its stake to secure loans from third
parties, according to the company’s 2015 report.