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Avianca chief prefers JV for strategic partner

Latin American airline group Avianca would prefer a desired strategic partnership to take the form of a joint venture, although the airline is also open to a capital investment, says chief executive Hernan Rincon.

A joint venture will ideally allow Avianca and its partnering airline to jointly procure aircraft to achieve better prices from the airframers, he tells FlightGlobal on the sidelines of the ALTA Leaders Forum in Mexico City.

The Star Alliance carrier is, however, very certain that it does not want to merge with another carrier, and majority shareholder Synergy has no plans to give up its controlling stake, says Rincon.

Avianca has no interest in an airline merger after observing such transactions in the industry and how long they took to complete, he says. "Mergers are very costly and somewhat painful."

Avianca today is a product of a merger that closed in 2010, after Colombia-based Avianca combined with Central American airline group Taca.

A joint venture could be as effective as a merger, Rincon believes. "It can generate 90% or more of the same benefits with 30% to 40% of the costs."

The airline announced earlier this year that it is on the hunt for a strategic partner. Since then, several news reports have surfaced linking Avianca with airlines including Delta Air Lines, United Airlines and Copa Airlines.

Rincon, without commenting on any specific partner, says the airline is talking to "many, many parties – more than we thought we were going to talk to".

For Avianca, an ideal partner should have a wide global network. "The larger the airline, the more synergies we can find. But how important Latin America and Avianca will be to the partner is equally as important."

The right partner must complement Avianca's network, and offer strengths that the airline currently does not have. Avianca must also be among the top three priorities of a partner carrier, says Rincon. "If you can't convince me that I'm in your top three priorities, I'm not going to be interested."

Rincon points to Qatar Airways' plan to take up to a 10% share in LATAM Airlines Group as an example that Synergy would be "comfortable" with.

Rincon had previously said that fellow Star carriers such as United and Lufthansa are natural candidates for Avianca to consider partnering with. He reiterates this, but says that the airline is open to partnering with carriers in other alliances. Avianca is also not requiring potential partners to be devoted to the Latin American carrier exclusively, which leaves the door open for airlines such as Delta, which already has a close relationship with Aeromexico and Gol.

"In today's very competitive world, you have to understand. We will scan the world and look at all the options," says Rincon. "Iberia, for example, is one of our largest partners and they are a Oneworld carrier."

Rincon stresses that no decision on the airline's choice of strategic partner has been made. "We are not going to rush. Selecting a strategic partner is like getting married. It's something you do for the long term. You can always get a divorce later, but divorces are painful, disruptive and expensive."

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