Avianca Brasil was the business bet, Germán Efromovich, from a Bolivian State and nationalized in Brazil – being launched to turn Colombia's flag to a regional player, at Latam Airlines height.
Efromovich, through its Syngery Group group, was collected in 2009 OceanAir, a company that started offering an air taxi service to provide services to the oil sector and ended up becoming a fourth player in that industry in Brazil.
The company started to use it to Brazil and, from today, it operates 55 aircraft, offering 26 domestic destinations in that country, 4 outside of Brazil and performs more than 290 flights every day . Efromovich, in turn, is the indirect manager of Avianca Holdings, who has located in Colombia, who controls operations in Ecuador, El Salvador and Peru. In secret, Avianca Holdings and Avianca Brasil are not part of the same group, but they share their main shareholders and, in addition, they are in the merger process.
It was all at risk yesterday, after Avianca Brazil received the bankruptcy protection figure, a situation that would force the company to cancel a flight between December 10 and 31, affecting around 77,000 passengers, because the threat of having rid of 14 aircraft, according to the documents reported by Reuters.
The measure seeks to reduce the risk of losing an important part of a fleet, close to 20%, due to judicial conflicts with the owners of the plane. "There's a measure of defense, to save time," said aeronautical expert Ricardo Delpiano.
The great winner
And yet, the dream of turning Avianca as a regional player is not completely rejected – it's still noticed if the move in Brazil is successful – Latam appeared as winner big. This is, mainly because it would remain the only player with a regional occupation, a situation that has read the market well. In fact yesterday, local company shares rose by 4.74% and today has already moved 1.28%. Despite this, during the year a accumulation of 20.28% is accumulated. However, its price is close to $ 7,000 per paper and more than the price Qatar Airways is entering the group property, which today holds 10% of Latam properties.
But another point is that there is a possible reduction in the activities of Avianca Brasil – a company with 12% of Brazilian market – opens options for its competitors there: Azul, Gol and Latam themselves earn more land.
"Everything will depend on how Brazilian Avianca develops, whether it's reducing its fleet, and if it should happen, it's really possible, because they will have to freeze: Are there opportunities to compete, Blue, Gol and Latam. Latam has international routes such as Miami, Santiago and New York, and this is the best position to take this opportunity. That's why the markets respond favorably, "adds Delpiano.
The history of both companies and arrivals in Brazil goes hand in hand. A year after the creation of Avianca Brasil, in 2010, LAN Airlines then combined with TAM, the largest air operator in Brazil and owned by the Amaro family. The association allowed the national group to enter the largest regional market, adding these operations to those already in Ecuador, Argentina, Peru and Colombia . Then, one of the historic settlements of its owners became substantial: to become a regional operator.
But the bet did not go well at all. As soon as the merger had to materialize in 2012, Brazil began to show signs of the serious economic, social and institutional crisis that was in breach, and can not be held out of it. In addition, it was added that the merger was not easy, given the size of TAM – Brazil is the largest market in the region – the challenge of integrating these operations and incorporating the LAN seal in its operations is extremely complicated.
"Just as we see great opportunities for growth, we are also aware that the merger processes are not easy. On the contrary, we know that there are many challenges and learning to face. particularly relevant in this sense, our organizational challenge, because the LAN and TAM association is involved in a team, "said the president of Latam Airlines, Mauricio Amaro.
Between them, other competitors also grew, but many also faced serious difficulties. This is the case, for example, from TACA, which opened its subsidiary in Peir, or COPA, who dedicated to Colombia and also tries to become a regional competitor. In contrast, Brazil's GOL was hit by the crisis in that country – only this year it started to recover – and Argentine government has only produced costs for Argentine's government for many years after its reatatization.
But parallel, another phenomenon began to take shape: the low cost. The first to adopt this model was SKY Airline, a company associated with the Paulmann family and who also aims to become a regional player. Latam has adapted to this and has also changed its ticket sales model, adjusting its price structure and adding package charges for the cheapest ones. But despite this, as Latam insists they are not "low cost".