Steps to understand the situation of Avianca Holdings

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We will analyze the different events and situations that have led to the current situation of the group Avianca Holdings and we will clarify the issue United Airlines.

Surely these days you read that "United took control of Avianca", that the end of the administration of "Don Efro" is coming or that the airline could go bankrupt, just on your anniversary 100, Therefore, I have created this guide to understand the current situation and what were some or the main factors that influenced the situation of the holding company today..

1. ACDAC strike

The 2018 It didn't start well for Avianca Holdings and its Colombian subsidiary, where a strike by pilots affiliated with the ACDAC generated the first contingency and operational problems such as canceled flights, rescheduled and a significant impact on its institutional image.

The legal issues of the same correspond only to the Colombian courts to determine., but without a doubt this situation generated an unforeseen economic impact where the airline commented that more than $140 million dollars of stopped selling until November 2018, moment when the strike ended.

2. The Boeing 787

It was the second blow in a row for Avianca, but it was not the only airline affected, but they added negative factors for the Colombian subsidiary, generating the effects of the Boeing shutdown to be passed on 787, more ACDAC unemployment, to the rest of the Holding.

The well-known problems of Rolls Royce Trent engines 1000 generated significant operational impacts, cancellations of hundreds of flights, affected passengers in all countries where the airline flies, economic losses (although these values ​​would have been covered by Rolls-Royce), but the main affectation was its image again, losing credibility and passengers on their planes.

This situation that began in the first quarter of 2018 extended until the last quarter of that year, where the image by external factors, was affected.

3. Joint Venture con United y Copa Airlines

Avianca, United and Copa signed a joint venture agreement in November 2018, to expand cooperation between the three companies on their flights between Latin America and the United States. further, the loan was agreed by United to Avianca for $456 million dollars payable until 30 November 2025.

4. Airbus renegotiation

Part of the improvement process Avianca Holdings was to renegotiate the incorporation of new Airbus aircraft that was part of its order book during March, when the agreement was signed to defer the incorporation of 35 planes and financial commitments were reduced by more than USD 2.6 thousands of millions.

5. Cancellation of destinations

The airline has also had to cancel/suspend several destinations from Bogotá to Boston, Chicago, Montevideo, from Cartagena to New York, from Guatemala City to Chicago, New York, Orlando, from San Salvador to Boston, Cali and from Cartagena to New York and San Salvador among others.

Another point was also the cancellation of most domestic destinations in Peru, where the only route that remains operational is Lima – Cusco, concentrating the airline for international flights.

6. Change of corporate governance

In official statement, the airline indicated the following:

Through a shareholder agreement, United Airlines decided to exercise the contractual rights derived from the credit it had agreed with BRW Aviation. (Synergy Group) and appointed Kingsland Holdings Limited as an independent third party with voting rights corresponding to BRW Aviation's shares in the company, but not your property. Kingsland, largest minority shareholder of the company has a track record of more than 40 years in aviation and have been part of the company's board of directors since the formation of the Holding.

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in addition, Kingsland Holdings Limited made the decision to renew the company's Board of Directors, which will be chaired by Roberto Kriete and made up of Richard Schifter, Sergio Michelsen, Fabio Villegas, Alvaro Jaramillo, Oscar Darío Morales, James Leshaw, Juan Emilio Posada, Jairo Burgos, Rodrigo Salcedo and Roberto Zamora. This first-level board has the presence of three former presidents of Avianca and several global experts in the aeronautical sector..

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For his part, It is worth reiterating that United Airlines has not taken control of Avianca Holdings, nor of its operation, nor of your service, nor business decisions. What has happened is a change in the corporate governance of the Holding, but not its corporate composition.

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About the strategic and commercial alliance with United and Copa

BRW-related measures announced today, They do not change the course of the existing alliance between United Airlines, Copa Airlines and Avianca Holdings. United's agreement with BRW is completely independent of said alliance and does not affect it.

6.2 United Airlines

United decided to exercise the contractual rights derived from the credit agreed with BRW Aviation. United Airlines did not take control of Avianca Holdings, what has happened is a change in corporate governance, but not of its corporate composition.

6.3 Kingsland

Kingsland Holdings Limited is now the independent third party with the voting rights corresponding to BRW's shares in the company.

6.4 Board of Directors

The Board of Directors will now be chaired by Roberto Kriete, and made up of 3 former presidents of Avianca: Fabio Villegas, Álvaro Jaramillos and Juan Emilio Posada, in addition to global experts in the aeronautical sector.

7. Avianca Brazil and Avianca Argentina

The complex situation of these two airlines is public knowledge, especially from Brazil, which is obliged by the authority of this country to keep its flights suspended, but it must be indicated and clarified, that these have no relationship with Avianca Holdings and the only thing they share, is the use of brand.

Has there been any impact on Avianca Holdings? Difficult to measure exactly, but without a doubt we could say that there is an indirect image impact due to the public's ignorance of the non-relationship between the aforementioned airlines..

8. Flight effects

There will be no effects or cancellations of flights due to the airline's administrative changes., otherwise, With these changes, a strengthening of the airline's operation at all levels is expected..

9. Ecuador

Regarding our market, as well as at all levels of the Holding, There will be no effects and all operations will be maintained as they are today..

10. Future

In future installments we will continue updating the changes or developments that arise in Avianca Holdings once the new corporate government begins to present its action plan and take control of the decisions in favor of improvement within the company..

For now, We cannot know major changes or modifications in the different subsidiaries, only time will tell and we will publish it here.

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