New United, Avianca and Copa Partnership Hits Snag

Aug 8, 2019

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United Airlines’ plans to form a closer relationship with its primary Latin American partners Avianca and Copa Airlines has hit a patch of turbulence.

The joint venture, which the three Star Alliance carriers reached an agreement on in November, is delayed due to the management issues at Avianca, Copa CEO Pedro Heilbron said during the Panamanian carrier’s second quarter earnings call Thursday.

The partnership “has been delayed for many reasons,” he said in response to analyst questions. “I can’t say with certainty when it will be filed.”

The joint venture would allow Avianca, Copa and United to act as essentially one carrier on their routes between Colombia, Panama and the US. In addition to aligning their schedules and businesses, passengers would benefit from improved connectivity, and expanded reciprocal frequent flier benefits and lounge access.

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Palace intrigue has consumed Avianca’s executive suite this year. The Bogota-based carrier’s CEO Hernan Rincon resigned in April after just three years in the job. His departure was followed a month later by the ouster of majority shareholder German Efromovich from the Avianca board after his firm Synergy defaulted on a loan from United.

Then, Avianca’s board named former Aeromexico executive Anko van der Werff  as CEO and former Credit Suisse banker Adrian Neuhauser as CFO in July.

The carrier has also refinanced some aircraft and restructured some of its debt, as part of a larger business transformation.

Andrew Nocella, United’s commercial chief, said In July that joint venture discussions were ongoing, without providing details.

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“We’re really excited to bring together our network along with Copa’s and Avianca’s,” he said. “We think it’s going to be a powerful alliance that can help us compete against the other large carriers in the region, so full speed ahead on that front.”

Heilbron, speaking Thursday, said he hopes the three airlines can apply for antitrust immunity from regulators in the Colombia, Panama and the US in the “coming months.”

The partnership would boost the competitive position of Avianca, Copa and United against the pending tie up of American and LATAM Airlines Group, and the two-year-old partnership between Aeromexico and Delta Air Lines.

Featured image by Edward Russell / TPG.

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