German Efromovich, the former owner of Avianca Holdings, said United and Kingsland Holdings conspired to take control of the South American carrier. In May 2019, United launched a management overhaul at Avianca, removing Efromovich from controlling the airline. Let’s see why Efromovich is making the allegations.
There was an agenda behind all of this
Last year, Efromovich lost control of Avianca Holdings. This happened after United loaned $456 million to Synergy Group in 2018. In 2019, Synergy (owned by Efromovich) couldn’t meet some conditions of the loan and United forced a takeover of the airline. This lead some to believe that Avianca, the oldest airline in Latin America, was near bankruptcy.
With this, Efromovich was out and Kingsland Holdings, owned by Salvadorian Roberto Kriete, became the biggest minority stakeholder in the airline. Kriete took control of Avianca Holdings and brought a new CEO, Anko van der Werff.
What did Efromovich say about this?
“I think that this process shouldn’t even exist. It is even illegal. I think that Kingsland, protected by United, is trying to take this company for free. It is machiavellian and intelligent” said, as reported first by El Tiempo.
Right around the same time, United gave Avianca a loan of up to $250 million. There was also a plus of $155 million extra in cash. All of this is incredibly fishy for Efromovich. He wondered why someone would give such a large loan to a company that was bankrupt.
We contacted Avianca Holdings about the remarks made by Efromovich. The company said it had no comments.
United could have saved Avianca Brazil
The American carrier United could have saved Avianca Brazil, said German Efromovich.
United was going to invest $150 million USD in Avianca Brazil. But it backed out at the last moment because the carrier also has an investment in domestic Brazilian airline Azul.
“The people in Brazil had to decide between paying Elliot (an investment fund in charge of bidding Avianca’s actives) and saving the commercial agreement with United” he said.
As we know, Avianca Brazil lost its air operator certificate last year and finally disappeared leaving a hole in the Brazilian domestic market. Star Alliance also cut ties with the now defunct airline.
What has happened with Avianca since the oust of Efromovich?
As Anko van der Werff, new CEO of the airline said last week, the company’s outlook made a 180 degree turn in the last six months. This is reflected in the launch of the restructuring plan under the banner of “Avianca 2021”.
Avianca sold some of its old aircraft, reduced some of its orders with Airbus. It also canceled some of its unprofitable routes and launched some new ones. It seems like Avianca will focus more on its hubs of Bogota and San Salvador. That means its hub in Lima, Peru will become less important.
Furthermore, the airline has launched an internal corruption probe. In doing so, it will try to determine if an employee was involved in corrupt acts with Airbus.
German Efromovich had remarks on this topic as well. He argued that if Airbus paid someone within the company it was “a stupid thing”. This is because he and the CEO of the airline made all the negotiations to acquire new aircraft.
Do you think there was a conspiracy to remove Efromovich? Let us know in the comments.