United moves deeper into Latin America with Avianca,
Copa tie-up
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[December 01, 2018]
By Tracy Rucinski and Marcelo Rochabrun
CHICAGO, SAO PAULO (Reuters) - United
Continental Holdings Inc <UAL.O> on Friday said it had finalized a
three-way joint venture with carriers Avianca Holdings SA <AVT_p.CN> of
Colombia and Copa Airlines of Panama, giving the U.S. airline a deeper
foothold in Latin America where travel demand is rising.
Like its main U.S. rivals, No. 3 U.S. carrier United has been eyeing
untapped potential for leisure and business travelers in Latin America,
where many still travel long distances by car and bus.
United, Avianca and Copa are already codeshare partners and Star
Alliance members, but a joint venture will allow them to plan routes and
fares together and share revenues on those routes.
Shares in each of the three carriers ended higher on Friday.
Under the deal, United said it would provide a $456 million term loan to
cash-strapped Avianca's top shareholder, Synergy Group Corp. Loss-making
Avianca has a roughly $4 billion debt pile, of which 40 percent is due
within the next two years, according to recent financial statements.
![](http://archives.lincolndailynews.com/2018/Dec/01/images/ads/current/modern_brake_lda_christmas_2015.png)
Latin American airlines in general have experienced a turbulent few
years, hit by a double whammy of high oil prices and devaluing
currencies in local markets, which make it more expensive to cover
dollar-denominated costs like fuel and aircraft rent.
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![](../images/120118pics/busine49.jpg)
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
![](http://archives.lincolndailynews.com/2018/Dec/01/images/ads/current/graue_18_MALIBU_112618.png)
Travel has also suffered in the dominant regional economy Brazil, which has
suffered from its deepest recession in decades but remains the largest aviation
market in the region, and one of the biggest in the world.
United, which already owns an 8 percent stake in Brazilian carrier Azul SA, said
it was exploring the possibility of adding the country to its joint partnership
with Avianca and Copa.
The three carriers' agreement is subject to regulatory approval in the United
States and several jurisdictions in Central and South America. Copa Airlines
said in a press release that process would take between 12 and 18 months.
However, a similar deal between American Airlines Group <AAL.O> and Chile's
Latam Airlines Group <LTM.SN> signed in January 2016 only received Chilean
antitrust approval last month.
United's deal with Avianca, long in the works, had undergone significant legal
back-and-forth after the Colombian flagship carrier's No. 2 shareholder
Kingsland Ltd tried to halt negotiations between United and Synergy. The parties
eventually came to an agreement.
(Reporting by Ankit Ajmera in Bengaluru and Tracy Rucinski in Chicago;
additional reporting by Marcelo Alonso Rochabrun in Sao Paulo and Julia Symmes
Cobb in Bogota; Editing by Shailesh Kuber and Tom Brown)
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