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Avianca and TACA poised to announce strategic tie-up

Colombia's largest airline Avianca is poised to announce plans for a wide-ranging tie-up with El Salvador's Grupo TACA today.

Further details of the alliance will be released during a conference call with relationship banks and investors of both airlines scheduled for 13:00 US central time.

While the scope of the tie-up is unclear, the facts that Avianca president Fabio Villegas filed a letter with Colombia's financial authorities, and that news is scheduled to be released simultaneously in Bogota, San Salvador and Lima, point to a high profile announcement.

The deal will be seen as a response to plans by Avianca's main southern competitor, the Chilean LAN group, to exchange shares with TACA, its main northern competitor.

Avianca started this month to integrate the operations of its Brazilian affiliate Ocean Air, converting it into a unit managed directly by the airline allowing for a code share agreement on several Ocean Air domestic trunk routes.

In August, Avianca successfully completed a bond offering of more than 500 billion pesos ($250 million) on the Bogotá stock exchange aimed at partly financing its fleet renewal. The newly raised cash could also provide a source of funding for a possible takeover or a merger.

Avianca and TACA share fleet commonality as predominately Airbus operators.

According to Flightglobal's ACAS database, TACA currently operates 28 A320 family aircraft, including seven A319-100s, 16 Airbus A320-200s and five A321-200s, as well as three Embraer 190s. It also holds orders for five A319-100s, 13 A320-200s and five E-190s.

Avianca holds orders for 12 Boeing 787-8 aircraft, six A330-200s, 27 A320-200s and 14 A319-100s.

The airline currently operates four A319-100s, seven A320-200s, four A330-200s, six 757-200s, three 767-200ERs and two 767-300ERs. It also owns 10 Fokker 50 aircraft and 10 Boeing MD-83s.

The A330s and A320s on order will replace the MD-80s, 757s and 767s, while Avianca plans to use the 12 787s to launch routes to London and Frankfurt.

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