Avianca’s Sturm und Drang Continues With Chairman Calling The Airline “Bankrupt” Then Saying He Didn’t Mean It
Avianca Holdings S.A. (NYSE: AVH) (BVC:PFAVH) stock plunged to an all-time low last week after new chairman and major stockholder Roberto Kriete called the company “Bankrupt” during an internal employee meeting. An internal video was leaked showing Kriete’s comments, which quickly went viral—by investment community standards, and sent the airline scrambling to clarify to the public, investors, and regulators.
“During the meeting, I colloquially used the term “bankrupt” to erroneously refer to the Company’s situation. It was not my intention, under any circumstance, to state that Avianca Holdings is under a process of bankruptcy or insolvency governed under any law or has applied to be made subject to any such process, or any similar process, in Panamá, Colombia or any other jurisdiction,” said Kriete in a statement.
The airline issued a statement August 27, the day after the video surfaced, saying: “The company would like to make clear that Avianca Holdings is not in the process of bankruptcy or insolvency governed under any law and has not applied to be made subject to any such process, or any similar process, in Panamá, nor in Colombia or any other jurisdiction.”
See the video (in Spanish) where Roberto Kriete says “La situación financiera de Avianca está quebrada. ¿Ok? ¡Quebrada!” [The financial situation of Avianca is crushed (bankrupt)]
Avianca, Colombia’s leading airline and one of Latin America’s largest, has been buffeted by severe turbulence going back to a dispute between now-chairman Kriete and former chairman Germán Efromovich in 2017, a bitter airline strike the same year, operational chaos in 2018, and controlling shareholder Efromovich’s Synergy Holdings losing control of Avianca earlier this year, then Efromovich’s Brazilian and Argentine Airlines sharing the Avianca name becoming insolvent and ceasing operations this year.
United Airlines took effective control of Avianca, then appointed Kriete as Chairman, replacing Efromovich. Kriete became involved when his El Salvador based TACA airlines was acquired by Avianca, giving Kriete’s Kingsland Holdings a significant minority interest in Avianca.
Cleaning up the mess, Kriete went on to say in a statement shared with the media and filed with the US Securities & Exchange Commission (SEC): “The purpose of the meeting was to emphasize the support and commitment required of all members of the company to undertake the previously announced “Avianca 2021” plan, that has as it goals, among others, (a) the re-profiling of our debt through agreements with the Company’s counterparties, (b) fleet optimization, (c) strengthening of the Bogota hub, (d) generate consistent cash flow that would achieve conservative leverage levels, and (e) achieve sustainable and competitive growth. Overall, my statements during this internal meeting are aligned with the “Avianca 2021” plan.”