United Continental close to sealing deal on Avianca loan, partnership: WSJ


(Reuters) – United Continental Holdings UAL.N is close to partnering with Latin American carrier Avianca Holdings SA AVT_p.CN, as the U.S. airline company agrees to pay off debt owed to a hedge fund, the Wall Street Journal reported on Friday.

FILE PHOTO – AVIANCA airplanes are seen on the tarmac during a presentation ceremony of a new aircraft at Monsenor Oscar Arnulfo Romero International Airport in San Luis Talpa, El Salvador, May 7, 2018. REUTERS/Jose Cabezas

United will lend money to German Efromovich, the controlling shareholder of the Colombian flagship airline, and the funds would be used to repay a loan from Elliott Management Corp, according to the report, which cited people familiar with the matter.

Avianca shares controlled by Efromovich will be put up as collateral for the loan.

A joint venture between Avianca and United Airlines has long been in the works, but has caused significant legal back-and-forth for the Colombian airline.

In 2017 Avianca countersued its No. 2 shareholder Kingsland Ltd after Kingsland sought to halt negotiations between United and top shareholder Synergy Group Corp.

The two sides eventually agreed to withdraw their lawsuits.

United President Scott Kirby said most recently in August that the airline was seeking joint ventures in Latin America not just with Avianca but also with Panama’s Copa Airlines (CPA.N) and Brazil’s Azul Linhas Aereas Brasileiras (AZUL.N).

Avianca has significant debt of about $4 billion, of which $1.5 billion – or almost 40 percent – is due within the next two years, according to its more recent financial statements.

Avianca had $400 million in cash at the end of September, but that number had been decreasing over the most recent quarters. So far this year, Avianca has posted a net loss of $19 million.

United was not available for comment, while Avianca declined to comment when contacted by Reuters.

Reporting by Ankit Ajmera in Bengaluru, Marcelo Alonso Rochabrun in Sao Paulo and Julia Symmes Cobb in Bogota; Editing by Shailesh Kuber

Articles You May Like

More tornadoes, hail, heavy rain in store for U.S. southern plains
Trump rejects New York Times report on Deutsche Bank transactions
Exclusive: Google suspends some business with Huawei after Trump blacklist – source
Tencent Video delays ‘Game of Thrones’ finale in China, prompts fan uproar
Emotional ‘Rocketman’ cast formed close bond with Elton John

Leave a Reply

Your email address will not be published. Required fields are marked *