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AVH - Avianca Holdings SA News Story

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Last Trade - 08/05/20

Micro Cap
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Colombia's Avianca says bankruptcy of Avianca Brasil causing 'reputational harm'

Mon 29th April, 2019 7:20pm
April 29 (Reuters) - Colombia's Avianca Holdings SA
 AVT_p.CN  said on Monday it is experiencing "reputational harm"
from its association with Avianca Brasil, an air carrier that
licenses its name and has canceled over 1,000 flights amid a
bankruptcy restructuring. 
    Both Aviancas belong to the same family-owned business
group, led by brothers German and Jose Efromovich, but are
maintained as separate companies. Bogota-based Avianca Holdings
is the larger, better-known airline and licenses its brand for
free to two smaller airlines owned by the Efromovich brothers,
one in Brazil and one in Argentina.
    The disclosures were made by Avianca Holdings in its annual
report filed with the U.S. Securities Exchange Commission on
Monday. It added in the filing that association with the
Argentine and Brazilian carriers "could generally result in an
overall decrease in customer confidence, any of which could lead
to a significant loss of business."
    Avianca Holdings and Avianca Brasil had been planning a
merger but it was abruptly canceled when the Brazilian airline
filed for bankruptcy in December, crippled by high fuel and
leasing payments.*:nE6N1YA02K
    While Avianca Brasil managed to keep most of its planes
after filing for bankruptcy, its operations have unraveled in
recent weeks leading to more than 1,000 flight cancellations.*:nL5N2220LY
    Avianca Brasil's bankruptcy also has meant that Avianca
Holdings will need to absorb four planes it had subleased to its
sister airline, according to the securities filing. Avianca
Holdings said it was looking into incorporating the planes to
its fleet or selling them. 
    In late 2018, Avianca Brasil operated as many as 60 Airbus
aircraft but is now operating with fewer than 10, according to
court documents. The airline has also canceled all of its
international routes, and Brazil's civil aviation regulator said
last week that Avianca Brasil was now operating out of just four
domestic airports. 
    The Argentine airline, which was bought from the family of
now-president Mauricio Macri, is similarly troubled. A planned
flight between Sao Paulo and Buenos Aires was announced but
canceled before its inaugural flight due to financial troubles.
Earlier this year, Avianca Argentina started a so-called "crisis
procedure" with Argentine authorities to allow it to dismiss
certain employees.

 (Reporting by Marcelo Rochabrun)
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