Avianca Airlines has been for the past few months has been trying to find a new partner that can help it grow. The airline had been struggling economically and had been courted by various airlines. Among those were Copa of Panama, and Delta Airlines and United from the US. Finally, the airline has decided who it will partner with. United and Avianca form a partnership in order for Avianca to better finance itself and grow.
Although neither airline has yet to formally comment on the situation, it makes sense that Avianca chose United. They are both members of the Star Alliance, and this makes it easier for them to cooperate. Even though Copa is also a member of Star Alliance, they do not have the size advantage. United is the US’ third largest airline by passenger numbers, and have been struggling to find a good partner in Latin America. With this partnership, it would be beneficial for both parties. Delta was an unlikely candidate because they already have an investment in GOL in Brazil. Avianca Brazil, a partner that operates in Brazil for Avianca, would compete with GOL. Even if they proposed a merger, it would have been unlikely that regulatory authorities would have approved that merger.
The Reuters article states that the Avianca owner will merge Avianca Brazil with the normal fleet of Avianca. The airlines will do so under fair agreements. Synergies Group, the Avianca owner, is willing to invest up to $200 million in turning around Avianca. United Airlines will probably enhance their codeshare agreement with them.
I am thrilled to see United begin to invest in foreign airlines, given that they sold off their last investment when they sold Copa. I think that Avianca made the right decision in picking United, given that they will be able to compete better with American and LAN, which have an anti-trust joint venture. We will see if United and Avianca apply for the same kind of protection in the coming months. It will be exciting to see what other projects United embarks on, and we might even see American take stakes in some foreign carriers too! That, though, is purely speculation.
What do you think? Do you think Avianca made a right decision in picking United as its partner? Should United invest in Avianca further? Let us know!
All photos taken from Wikimedia Commons unless otherwise noted.