Avianca Files Countersuit Against Minority Shareholder in Heated Legal Fight over Potential Partnership with United Airlines

The legal fight between Avianca and its minority shareholder Kingsland Holdings ramped up last week, as Colombia’s largest airline filed a countersuit in a New York state court.

The legal move comes more than a month after Kingsland sued the carrier, controlling shareholder Germán Efromovich, and United Airlines, alleging that the announced negotiations seeking a partnership with United will benefit Efromovich but not the company at large or other shareholders.

Photo: Avianca Chairman Germán Efromovich (left) and top executive Hernán Rincón fired back at Kingsland Holdings and its chief Roberto Kriete in a countersuit this week.

The Kingsland suit was harsh in its criticism of Avianca, saying that Efromovich has “plundered” the airline and wants to reach a deal with United solely for personal gain. It also claimed that “he torpedoed the strategic process by clandestinely negotiating a transaction with United.”

The countersuit hits back with a similar tone. The new filing calls Roberto Kriete of Kingsland, which has a 22% voting position in Avianca, a “disloyal director who has worked actively to undermine the company’s strategic goals.” It also countered the allegations against Efromovich by alleging that the Kingsland suit was filed by Kriete “for his own selfish purposes.”

In a statement, Avianca said the goal of its lawsuit is to “stop the inappropriate actions that he has carried out seeking to prevent progress of the company.” It also appealed to the court to reject the legal claims previously made by Kingsland and issue an order preventing Kingsland from “further disclosing confidential information.”

The heated battle shows no signs of ending soon. Other potential partners that Avianca consulted last year, including Copa Airlines and Delta Air Lines, have reportedly been subpoenaed to help shed light on the nature of any alternative arrangements that the carrier may have been able to reach outside of negotiations with United. Avianca has stressed that no agreement has been reached yet with United and that the two parties have thus far only been engaged in advanced talks.

But as the controversy plays out, Avianca has stated that it hopes that this affair will become a smaller distraction rather than a protracted issue that will continue to cloud its future. “We are looking beyond the litigation,” said Hernán Rincón, chief executive of Avianca in a statement. “Avianca remains committed to achieving its two strategic objectives approved by the board: entering into a commercial alliance with a world-class airline and raising needed new capital.”

In a statement, Kingsland said that the new filing doesn’t change its previous assertions and that Kriete, who gained his shareholder position after his Taca airline merged with Avianca in 2010, has done no wrong. A spokesperson told the Financial Times that Kingsland rejects “any assertion that Mr. Kriete has acted improperly in any way or other than in the best interests of Avianca and its minority shareholders in his role as a company director.”