Colombia's Avianca, Latin America's oldest airline, appears to have found the capital it needs to emerge from court-supervised reorganisation.
Brazil's Sinergy group has agreed to buy 75% of Avianca for $64 million and to assume Avianca's $300 million in debts. Headed by Brazilian investor German Efromovich, Sinergy also owns a Brazilian air taxi firm and OceanAir, a Brazilian regional carrier.
The Santo Domingo family, which has controlled Avianca for decades, will sell its entire stake to Sinergy. The Colombian coffee growers association, which acquired half of Avianca when ACES and Avianca formed the Summa alliance, will sell half of its interest, but keep the other half for at least three years. Thus Avianca will be 75% owned by Sinergy and 25% by the coffee growers.
It is unclear how this fits under Colombia's aviation law, which supposedly caps foreign ownership at 40%. In fact, this cap has been loosely applied. Aerorepublica, Colombia's number two airline, is majority-owned by Aeron Aviation, a US company. Yet, when a Colombian official proposed three years ago to open domestic routes to foreign carriers if Avianca and ACES failed, members of parliament complained. The other unknown is how other nations will treat a Brazilian-owned Avianca under their bilaterals with Colombia.
Avianca filed for Chapter 11 bankruptcy protection in the US in March 2003 in an effort to speed up the carrier's restructuring process. This has partly succeeded, with Avianca showing an operating profit of $160 million for 2003.
Source: Airline Business
