Plan Avianca 2021: aircraft sales, airlines and more

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The plan Avianca 2021 accelerates the process of aircraft sales and divestment in non-strategic businesses such as small airlines of the Holding.

During the second quarter of 2019, Avianca Holdings accelerated the “Avianca 2021” transformation strategy, which seeks to strengthen the company's competitiveness by implementing strict financial adjustments, operational optimizations, fleet simplification and sales of non-strategic assets.

The redefinition of the strategic north of Avianca Holdings is essential given the rapid growth of the organization in recent years, coupled with a challenging macroeconomic and industry environment marked by rising fuel prices, the devaluation of regional currencies, as well as the contraction in demand.

Financial Results 2Q2019

The most relevant figures so far in the 2019 are the following:

• The company transported 7,55 million passengers during the second trimester, growing a 2,7% compared to the same period of 2018. Similarly, consolidated an occupancy factor of 81,8%.
• during this trimester, Avianca increased its capacity measured in ASK´s (seats available per kilometer flown) on 4,7%. For his part, travelers paid per kilometer flown (RPK´s) increased a 4,1%.
• Finally, the cost per seat available per kilometer flown (CASK-ex fuel), contracted 6,7%, tightly, when arriving at US6.1 centsfor the period.
• Operating revenues stood at USD1.1 billion, recording a decrease in 6,9% compared to the first quarter of 2019.
• Yield was USD 8,4 cents, showing a decrease in 9,2%.
• registered, and EBIT de -USD36 million and an EBITDA of USD116.4 million (excluding non-recurring charges)*

Sale of non-strategic assets

• Getcom: sale of 100% of the participation in Getcom Int'l Investments S.L (50% of total shares), Contact Center and BPO services company, a Seger Investments Corp.
• CAE: sale of 100% participation in the training business with flight simulators; which included the sale of certain assets and all of the shares (50%) that was held in Avianca-CAE Flight Training (ACFT) S.A.S. The Holding carried out the sale to the company CAE International Holdings Ltd, which was already the owner of the 50% rest of this company.
• SANSA and La Costeña: sale of 100% of the participation in these airlines that provide services to the interior of Costa Rica and Nicaragua. for this sale, about USD were received 15,5 millions.
• ongoing transactions: the sale of the 100% of haste and 42% of Success Travel.

Fleet simplification

Progress is being made in the strategy to slow down the entry of the fleet and its simplification. added to the renegotiation with Airbus of the first trimester, which allowed a reduction of USD2,6 billions in financial commitments and a protection in cash resources USD350 millions. further, During the second quarter, sales contracts were signed for a total of 39 planes (including those associated with the sale of the airlines Sansa and La Costeña):

• output of 13 cessna aircraft 208 and two (2) ATR 42 Due to the sale of Sansa and La Costeña airlines.
• Sales 14 family planes 320 to the American company Fortress Transportation and Infrastructure Investors LLC.
• The sale of the entire Embraer fleet (10 planes).

The sale of the fleet will have deferred effect during the rest of the year. With these transactions, Avianca Holdings will close the 2019 approximately with 156 planes, which will imply a reduction in its fleet of around one 21%, and consequently the reorganization of supply to be more consistent with demand. What's more, you will have significantly simplified your operation, both in maintenance costs, as in inventories and crew training.

Optimization of operational profitability

Network adjustment is one of the main actions implemented so far this year. The modifications were made to serve those with greater demand and better performance.. For this reason, they were canceled 25 routes and frequencies were reduced. The adjustments took place mainly in the Central American markets, North America and Peru. Similarly, capacity was redistributed on some routes, increasing flights from Bogotá to Cali, Medellin, Bucaramanga, Santiago de Chile, Orlando-United States and Barcelona-Spain, thus seeking to locate resources in the most profitable routes.

Soon it could be expected to close several frequencies from Lima such as Cali, Santa Cruz and others.

Performance of the Business Units

The business units contributed to the total income of the 2Q in a 16%:

• Avianca Cargo: continues as the leader of the Colombian market with the 38,3%, and as the third company in the Miami International Airport with a participation of the 13,7%.
• LifeMiles: highlights the growth of the membership base in a 10,7%, surpassing the 9,2 millions of associates. from the other side, The program closed the period with 537 Business partners throughout Latin America.

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