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Battle For The Skies As Chinese Group Targets Avianca

Battle For The Skies As Chinese Group Targets Avianca

A bid is on the table to tie up one of South America’s leading airline companies by HNA Group, a Chinese conglomerate headquartered in Haikou, Hainan.

Hong Kong, July 22, 2016 — The target for HNA is Avianca, one of the leading airline operators in South America, who have also received interest from some major American competitors such as United and Delta. Avianca commented yesterday that they are looking at the available options and working closely with investments banks to seek the best deal.

Due to market conditions the foreign interest in Avianca is high. The Brazilian based company, owned by the Bolivian born businessman Germán Efromovich through his Synergy Group, is a prime target as Latin America’s biggest economy is dazed, coming off its most serious recession for 80 years.

South America as a whole is now seen as an attractive growth area for companies in the U.S. who want to develop into the regions routing, a necessary move for continued development.

Specialists looking closely at the proposed deal say the time is ripe with Brazilian asset values significantly depressed.

“Everyone agrees that the market is not looking too healthy,” said Gary Chambers – Chief Investment Officer and Director of Corporate Trading at Fidea Wealth Management, whose company manages over $10 billion in funds. “Foreign interests understandably see this as an opportunity to move in. HNA have already made headway in the sector and are looking to consolidate,” he added.

As Chambers says, HNA have made strides into aviation already acquiring Swissport, an air cargo handling firm, and Avolon, an aircraft leasing outfit.

Their biggest Latin American deal, however, was the $500 million share purchase for the Brazilian airline Azul SA.

Azul is the second largest company of its kind in the country, managed by David Neeleman, founder of JetBlue, a budget American airline.

Avianca have yet to comment fully on the deal other than a short press release saying that nothing firm is in place. Rumours are that the company’s CFO has travelled to China for talks, although the exact nature of negotiations is still hazy at this point.

Markets reacted to the news with Avianca Holdings shares jumping nearly 30 percent at close of trading Friday.

“I think we’ll see quite a battle develop for those interested in Avianca.” Chambers added.

Kazuko Rei
Fidea Wealth Management
Tokyo, Japan

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