Avianca chief executive Hernan Rincon will leave the Bogota-based airline effective 30 April, as the carrier and its majority shareholder face increasingly challenging times.
Hernan Rincon, who joined the Star Alliance carrier in April 2016, is leaving the airline after just three years in the role.
Rincon plans to pursue other opportunities, says Avianca chairman German Efromovich in a statement.
"We thank Hernan for his numerous important contributions to Avianca Holdings over the past three years, notably leading Avianca's successful joint venture agreement with United Airlines, which was transformational for the company," he adds.
Avianca, Copa Airlines and United unveiled a joint venture agreement in November 2018, a plan which involved United agreeing to a $456 million loan for Efromovich's Synergy, the majority shareholder in Avianca. The loan was secured by Synergy's equity and its 516 million shares of common stock in the Latin American airline.
Synergy has come under increasing pressure in recent months, with its wholly-owned Avianca Brazil filing for bankruptcy protection in December 2018. While Avianca Brazil is managed separately from Avianca, the common brand name has dented the Colombian airline's share price and confused consumers. The Brazilian airline's woes prompted the suspension of plans to merge Avianca with its Brazilian namesake. Elsewhere in South America, Synergy-owned Avianca Argentina is also struggling with financial difficulties.
While Avianca says Rincon has "successfully accomplished" a strategic transformation at the Colombian carrier, the plan was just getting started. In recent months, the airline trimmed its Airbus orderbook, eliminated less profitable flying and began divesting non-core businesses. The carrier also recently launched a regional airline subsidiary.
Avianca saw its 2018 operating profit fall 21% to $232 million, after a difficult year in which Latin American airlines faced higher fuel prices and weaker demand in markets like Argentina and Brazil. Avianca's net profit plummeted to $1.1 million in 2018 from $82 million in the year before.
Rincon's tenure at Avianca was marked by other bumps, notably a pilot strike in 2017 that lasted for more than 50 days, resulting in hundreds of million in lost revenue and additional costs.
Avianca says it has retained an international consulting firm to search for Rincon's successor, and will appoint its legal vice-president and general counsel Renato Covelo to interim chief executive if a successor is not appointed before Rincon's departure.
Source: Cirium Dashboard
