Delta, United Continental, and Copa Will Reportedly Bid on Avianca — Potentially for a Controlling Stake

Avianca Holdings SA has been in search of a strategic partner, and a new report says that Delta Air Lines Inc., United Continental Holdings Inc., and Copa Holdings SA are among those that will put in a bid this week. According to Bloomberg, the Bogotá-based airline is looking to bring in at least $500 million USD to shore up its books and may be willing to sell a controlling stake.

Offers are due by November 9, and the notion that a majority share may be on the table conflicts with a recent report in Colombian media. Local magazine Semana reported last week that the controlling stakeholders, brothers Germán and José Efromovich, were only looking for a partner and would in no case sell control.  They have reportedly been receiving pressure to improve financial results and cut debt from Elliott Management Corporation, the hedge fund management firm of billionaire Paul Singer that is involved in other ventures with the Efromovich brothers.

All three of the airlines — Delta, United Continental, and Copa — previously have been rumored to have interest in becoming the strategic partner that Avianca has been seeking for months.

In August, Bancolombia, the largest bank in Colombia, said that Avianca’s first-half financial results outperformed its expectations. Cost-cutting initiatives and a contraction in fuel consumption were among the positive factors, and the Medellín-based financial services giant projected that the strategic partnership would be coming “sooner than later.”

In a note to investors, the bank said that it believed completing a deal would “help to improve not only the long-term strategy but also to make an accelerated deleverage of the balance sheet, in our view one of the main risks the company is currently facing.”

While Avianca has spent the year amid a rough operating environment in South America and ongoing rumors swirling around a capital injection, it has seen an increase in passengers. So far in 2016, through September, the airline and its subsidiaries have carried 21.8 million passengers, up 3.6% year-to-date compared to 2015. It’s revenue passenger kilometers are up 7.0% this year.