China’s HNA Group eyes South American airline groups Avianca

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China’s HNA Group has expressed interest in acquiring Avianca Holdings SA and Avianca Brasil, the South American airlines controlled by Bolivian-born entrepreneur Germán Efromovich’s Synergy Group, people familiar with the matter said.

Avianca Holdings and Avianca Brasil are working with investment banks to explore options. They have also attracted interest from U.S. peers United Continental Holdings Inc and Delta Air Lines Inc, the sources said on Friday.

The growing foreign interest in Avianca shows that even as Latin America’s largest economy reels from its worst recession since the 1930s, airlines see the broader region as a growth area and one their route networks must embrace.

Depressed asset values there make this a tempting moment for acquisitions.

“The market is down,” said Joel Chusid, U.S. executive director for China’s Hainan Airlines Co Ltd, speaking as an aviation industry veteran without any knowledge of parent company HNA‘s interest in the transaction. “That’s the time to buy.”

If HNA makes the deal, it would be the second major Latin American investment for the aviation, tourism and logistics conglomerate, which has also snapped up air cargo handlers Swissport and Irish aircraft leasing company Avolon.

The Chinese group agreed in November to pay $450 million for a 23.7 percent stake in Azul SA, Brazil’s third-largest airline, which is controlled by JetBlue founder David Neeleman.

In a filing later on Friday, Avianca denied that it is negotiating with companies and said it has signed no agreements.

“With the idea of exploring potential long-term strategic associations the company is taking advice from a investment bank,” Avianca said in a filing with Colombia’s financial regulator.

A source at the airline in Bogota said earlier that Chief Financial Officer Gerardo Grajales has flown to China. The structure of an eventual deal remained unclear, said the sources familiar with negotiations.

Shares of Panama-based Avianca Holdings, which operates flights in Colombia, Peru, Ecuador, Central America and the Caribbean, were up 27 percent in Friday trading on news of a potential deal, which was first reported on Thursday.

Efromovich’s Synergy Group separately controls Avianca Brasil, the fourth-largest airline in Brazil, where the government is reconsidering laws requiring domestic control of its airlines. Efromovich has Colombian and Brazilian citizenship.

Delta and United shares fell nearly 2 percent in New York.

“We continually evaluate opportunities to strengthen our relationships with partners that will enable us to provide better and more convenient services to our customers. However, we won’t discuss rumors or speculation,” United said in a statement.

Delta declined to comment. Avianca Holdings and Avianca Brasil did not immediately respond to questions. HNA and Synergy could not be reached for comment.

The sources asked not to be identified because the deliberations are confidential.

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Air France-KLM in talks to sell stake in catering unit to China’s HNA

Reuters

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.