Thearticle published in The Wall Street Journal on March 28, 2017, bySusan Carey focused on Avianca Holdings SA, a Bogotá-based companyand one of the largest airlines in Latin America, which filed a suiton Monday at the New York Supreme Court. It intends to block asubstantial minority shareholder from interfering with the strategicpartnership deal involving United Continental Holdings Inc.
Thelegal battle with Kingsland Holdings Ltd. began when Aviancaannounced its desire to partner with the Latin Carrier. In thelawsuit filed on February 28, Kingsland alleged that SynergyAerospace Corp owned by German Efromovich was to benefit personallyfrom the partnership. Kingsland Holding Ltd., a Company, owned byRoberto Kreite’s family controls 22% voting stock while SynergyAerospace Corp owns 78% voting stock of Avianca. On Monday, Aviancadenounced efforts by Mr. Kreite to block it from holding talks withUnited Continental Holdings Inc, hence called for the dismissal ofthe lawsuit.
AlthoughAvianca owns 180 planes and makes more than 800 flights a day, it hasbeen battling with financial problems. Last year, it was forced tohire bankers to help it find an airline partner that would increaseits capital and share price. They received offers from Copa HoldingsSA and Delta Air Lines Inc, but the proposals were rejected by Mr.Efomovich and Synergy who refused to sell their controlling stakes.However, the Avianca’s board approved the partnership with UnitedContinental Holdings Inc (Carey, 2017).
Thedisputes come in the wake of United Continental Holdings Inc. desireto expand its network overseas, specifically in Latin America.However, its attempt has been barred by cross-shareholders andcurrent airline alliances that often cause tensions in Latin America.The United Continental Holdings Inc chief executive Oscar Munozstated that it values the commercial relationship it has establishedwith Avianca and hopes to come up with a deal that can be favorableto everyone.
Carey,S. (2017, March 27). Avianca Holdings Sues Large Minority Shareholderin Colombian Flag Airline. TheWall Street Journal.Retrieved fromhttps://www.wsj.com/articles/avianca-holdings-sues-large-minority-shareholder-in-colombian-flag-airline-1490650485