Avianca Airlines seeks separate partners with eye to merge

Bloomberg

Colombia’s Avianca Holdings SA and Avianca Brasil, the two airlines controlled by the Efromovich brothers, are seeking separate international partners while maintaining a long-term goal of merging, Jose Efromovich said.
“We are under confidentiality agreements’’ and many companies have shown interest, Efromovich, the chairman of Avianca Brasil, said in an interview in Sao Paulo. “We are looking for a partner anywhere in the world. In the Middle East, in Europe, in the United States, in the Americas. Everything is possible, but it needs to make sense.’’
Avianca Holdings hired Bank of America Corp. as an adviser, Efromovich said. He declined to identify who is advising the brothers’ closely held holding company that owns Avianca Brasil or provide any other details of the negotiations.
Earlier this year, Delta Air Lines Inc., United Continental Holdings Inc. and Copa Airlines SA made non-binding offers for a minority stake in Avianca Holdings, Bloomberg reported last week. There’s no guarantee any deal will be reached.
Colombian Market
Avianca Holdings, with a market value of $832 million, carried 61 percent of Colombia’s more than 15 million passengers through July. The Bogota-based airline, whose chairman is German Efromovich, offers potential suitors a point of entry into markets that also include Peru, Costa Rica and Ecuador.
The Efromovich brothers continue to pursue a merger of the two Aviancas that would create a single airline that flies all over South America. A combination would provide Delta and United a way to make new inroads in Brazil against American Airlines Group Inc., which has a partnership with Latam Airlines Group SA. Avianca Brasil controls about 11 percent of the Brazilian market .
“It can happen in a month or it can happen in five years, but it is going to happen,’’ Jose Efromovich said. “It is normal, it is rational, this was the goal when all this was conceived.’’
No Guarantee
A deal in Colombia is no guarantee of entry into Brazil. The Efromovich brothers have unsuccessfully tried to combine the two Aviancas in the past. The Colombian carrier, which is in better shape than its Brazilian counterpart, rejected a proposal in October, Bloomberg News reported at the time.
“We are skeptical about a merger between Avianca Holdings and Avianca Brazil,” Bradesco BBI Analyst Victor Mizusaki wrote in a report Wednesday to clients, saying the attempts to merge the two companies were frustrated in the past due to the opposition of another controlling shareholder for the Colombia airline with a veto power.
The Brazilian company announced Wednesday it started offering onboard Wi-Fi to entice more business travelers amid the country’s longest recession in more than a century.