United Airlines shakes up Avianca leadership after shareholder default
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FILE PHOTO: A United Airlines plane with the Continental Airlines logo on its tail, taxis to the runway at O’Hare International airport in Chicago October 1, 2010. UAL Corp and Continental Airlines Inc. closed their merger on Friday to form the world’s largest carrier, called United Airlines. REUTERS/Frank Polich
(Reuters) – United Airlines said on Friday it had started a management overhaul at Colombia’s Avianca Holdings, removing top shareholder German Efromovich from controlling the cash-strapped airline.
The move follows a default by Efromovich’s holding company BRW Aviation on a $456 million loan United had made as part of a proposed three-way partnership with Avianca and Panama’s Copa.
United, part of United Continental Holdings Inc, is seeking a deeper foothold in Latin America, which is considered ripe for air travel growth.
United’s loan was backed by Efromovich’s 51.5% stake in Avianca. However, the U.S. airline’s contract with its pilots restricts the company from majority ownership in another carrier. As a result, United is ceding voting rights to Kingsland Holdings, the Colombian carrier’s second-largest shareholder.
In a regulatory filing on Friday, United also said it was willing to loan Avianca up to $150 million if needed and requested, subject to conditions.
Reporting by Sanjana Shivdas in Bengaluru and Marcelo Rochabrun in Sao Paulo, writing by Tracy Rucinski; Editing by Anil D’Silva and Marguerita Choy