FILE PHOTO: An Airbus A330 of Avianca airline takes off at the Simon Bolivar airport in Caracas, Venezuela October 23, 2016. REUTERS/Carlos Garcia Rawlins/File Photo
(Reuters) – United Airlines launched a management overhaul at Colombia’s Avianca Holdings on Friday, removing top shareholder German Efromovich from controlling the cash-strapped airline, according to regulatory filings.
United, which is proposing a three-way joint business agreement with Avianca and Panama’s Copa, said the move follows a default by Efromovich’s holding company BRW Aviation on a $456 million loan it made six months ago.
The Chicago-based airline, 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.
Kingsland is controlled by Roberto Kriete, who was embroiled in a long and bitter legal fight with Efromovich over the best strategy for heavily indebted Avianca.
Another Efromovich carrier, Avianca Brasil, filed for bankruptcy protection in December and its operations were suspended on Friday by Brazil’s civil aviation regulator ANAC.
United said it was willing to loan up to $150 million to Avianca Holdings.
Reporting by Sanjana Shivdas in Bengaluru and Marcelo Rochabrun in Sao Paulo,; Writing by Tracy Rucinski; Editing by Marguerita Choy and Phil Berlowitz