United Airlines’ offer to prospective partner Avianca involves a joint venture, says the Latin American airline in its lawsuit against a minority shareholder that is seeking to block a tie-up between the two carriers.

Avianca also says it had rejected a loan offer for an unspecified amount from United.

The two airlines announced earlier in February that they plan to pursue a strategic partnership, but have offered few details on what that would involve.

In a counter lawsuit filed against minority shareholder Kingsland Holdings on 27 March, Avianca says United’s offer includes a “long-term, collaborative partnership with Avianca to be realised through a joint venture agreement”.

Avianca chief executive Hernan Rincon told FlightGlobal in November 2016 that he would prefer a joint venture for a potential partnership involving Avianca, but subsequently said last month that this is not decided yet for the United tie-up.

In the lawsuit against Kingsland, Avianca says it had considered offers from two other potential partners but they “submitted proposals that would require a change of control of Avianca”.

Majority shareholder Synergy is not willing to sell its controlling stake.

Avianca says of the bids from the other suitors: “Despite repeated requests, neither changed its proposal.”

It does not name the other two companies, but Copa Airlines and Delta Air Lines are being subpoenaed following the initial lawsuit by Kingsland to stop the partnership between Avianca and United.

Avianca says it “rejected a proposal from United that included United making a loan to the company, as the company did not wish to add to its indebtedness”.

Kingsland alleges that United had offered an $800 million loan to Synergy, and says that the loan helped tip Synergy towards the US carrier. Kingsland alleges that Synergy chose United over the two other offers, because Synergy would benefit from a sweetheart deal that will ultimately be to the detriment of Avianca.

Synergy’s German Efromovich has declined to confirm or deny the existence of a loan offer to his company. In legal documents, Synergy says it has "discussed only the indicative outlines of a potential loan that United is considering to provide".

Despite the legal troubles surrounding a potential partnership with United, Avianca has reiterated that it plans to pursue the deal.

Source: Cirium Dashboard