Avianca, his negotiation with United and his arrival in Mexico

We reproduce below parts of the interview granted by the president of Avianca, Hernán Rincón, to the newspaper El Espectador on important issues such as the alliance with United Airlines, the value of the company on the stock exchange, his arrival in Mexico ally:

There was a pilot strike, they were dismissed, they received 1 400 CV. What is this case?

The strike was the most unfortunate event in the history of Avianca, the history of business in Colombia. There is no strike that has lasted 52 days in Colombia or in any airline in the world, I do not like to say it, but I am the president of the company. a company with 99 years who endured a 52-day strike. As you know, the Supreme Court ruled twice in our favor and declared it illegal for two different reasons. This gives rise to disciplinary processes. They finished and they left more or less a hundred pilots. We then have a shortage of one hundred pilots and several actions. We are hiring new co-pilots, who have already completed their training process and are working. Secondly, we work with Boeing. They lent us a limited but important number of pilots for the 787. Thirdly, we started flying bigger planes on the same roads, to get more chairs. And four: we enter into the so-called crew lease, that is, you hire a company that brings your plane and crew to make a trip on behalf of Avianca. With the sum of these four things we are at 96% filling all our routes and having all the chairs flying. From here on October 1st, we will be 100%. We lost $ 250 million with this stop

How do you hope to recover this loss in the long and long term?

The only way to make these decisions is to not think about the quarter, the year, but a business almost a hundred years old that we are preparing for a hundred or so others. Today, we have domestic operations in Central America, Colombia, Peru, Ecuador and Brazil. We are starting our activities in Argentina and we are looking for a way to enter the Mexican domestic market. I can say that we are very advanced. When we do, we will fly to all markets in Latin America, except Venezuela, where I retired for obvious reasons of safety and functioning eight months ago.

and this money was never paid to them

. Never

How much was it?

200 million US dollars. This was punished when I arrived. With Venezuela, it happened twice: once with Microsoft and the other with Avianca. IATA is working to see if she manages to recover something.

What is Mexico with the acquisition … is organic or inorganic growth?

We analyze the two things: forming a business from scratch or allied with a domestic business. The conclusion was that it took a lot of work to start from scratch, so we are discussing with some national airlines and turning this into Avianca México.

What is the reality of the business you see?

I do not look at the value of the stock almost ever

You do not check Bloomberg or the BVC?

No, I'm checking one stock and that's Microsoft's, and that's because I still have stock and that's my pocket I do not have Avianca stock or I will buy them, this mixture is very bad. I do not have any shares as part of my compensation. And I do not look at it for several reasons: the markets fluctuate every day and are difficult to explain; Secondly, the airlines have not explained their strategy and their activities in the market, so many people refrain from investing. The world's most famous investor, Warren Buffett, has not invested in airlines until last year. For the first time, he changed his policy and invested millions of dollars because he understood that things had changed. Thirdly, because I came to Avianca not to solve a problem of a month or a year, I do not know how long I am here, I think it is a maximum of 10 years, but I'm trying to create the basics That will last another century

That being said, I will give you an example to explain why the value of the stock does not reflect the value of Avianca . At current prices, the value of Avianca is 1.1 billion US dollars. Three years ago, when we decided to sell a portion of LifeMiles to Advent, we invested $ 1.1 billion in LifeMiles. Today, we believe that Lifemiles can be worth $ 1.5 billion or $ 1.8 trillion. So, how come the company is worth a trillion dollars, but a tiny part of one of your companies is worth a trillion? This is an inconsistency.

But the market is still waiting for agreement with United. What happened to this case?

Either we do not express ourselves well, or they do not understand us well. We have never announced an agreement with United. What I said was that we agreed to negotiate to find an agreement. But perhaps we should better illustrate the audience. Between United and Lufthansa, for a similar agreement, they lasted three years. United with Air Canada lasted two years. We have negotiated for a long time.

What are they doing?

We had to learn, because in Avianca we had never made an alliance of this nature. The advantage that this represents for our customers is the reason why we do it, because we are going to have a virtual business between the two companies, only for the passenger experience, we think that it is is a. There is no capital investment, there are no common owners. The details are not easy. How are we? From the business point of view, 99% were in agreement. A minor point is missing, but it is not easy and, secondly, I say it respectfully, the lawyers have arrived. But that's part of what needs to be done

So, when is he ready?

There is not much left

What are we going to win?

Once approved, changes happen. I can sit down with United's people and tell them: you have a flight from Newark to Bogota at 4 pm, if you move it at 2 pm I can connect to Lima or Mompox or somewhere else . I can not do that today. Routes, connections, frequencies, everything will be agreed. We can even go to Newark because everything United is going to do. And vice versa: if I have 30 flights to Miami and the five, then I'd better do it all. All this will be for more destinations, better connections, better prices

Then, it is denied that this includes an investment agreement that personally benefits Germán Efromovitch …

I can not answer for Germán, but I can tell you that Avianca is not looking for capital investment United

More investment in aircraft?

Another 787 arrives this year to fly to Munich.

Will they open this direct flight? November, because we already cover very well London, Madrid and Barcelona. But we were missing a part of Europe. We will open Bogotá-Corozal, Lima-Mendoza, Lima-Orlando, Salvador-Cartagena and also direct Chicago. We have just arrived two 330-300, the first in Latin America, are more than 30 passengers than the 330-200, flying to New York, seven Neos arrived, with sophisticated and quiet engines, less consumption and less CO2 production, the 321 Neo arrives at two 787. All are not incremental, we will remove old ones and replace them with new ones.