Economic slump might cause bigger airlines to pounce on Avianca

Buyers interested in tapping on the LatAm travel market will be eyeing Avianca, as the strong US dollar might allow them to get in for cheap.

Foreign buyers are on the lookout in LatAm, as the economic turmoil might allow them to buy important companies for pennies on the dollar, and then flip them big as the economic cycle once again begins to favor the regional economy.

Following this logic, rumors of potential buyouts started to circle the Colombia based carrier, currently recognized by Premier Traveler as the best South American airline.

United Continental Holdings Inc and Delta Air Lines Inc are the two top prospects to make a move for Avianca, they compete with Chinese conglomerate HNA Group for the chance to acquire the airline and its subsidiaries.

The move would seem viable now, as Avianca posted quarterly losses three times last year. Besides that, low fuel prices and rising demand for air travel give potential buyers some certainty that the slump will not hit Avianca particularly hard. The strong dollar will also contribute towards making the acquisition possible and reasonably cheap.

The strong dollar also means bad news for Avianca, as it makes it harder for them to pay debts abroad using local revenues, as their profits dwindle after exchange.

United and Delta are both planning the move, as they are keen to close the gap on American Airlines, whose market share in LatAm exceeds that of the other two. American Airlines leads comfortably due to a code sharing agreement with LATAM Airlines Group SA, previously LAN, the biggest carrier in the region.

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