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Avianca and United Airlines planning 10-year joint venture

Avianca and United Airlines are planning to strengthen partnership through a 10-year joint venture. The move is aimed at earning big revenues and gaining profitability. The proposed joint venture would also include Avianca’s subsidiary Avianca Brazil as well. Earlier, both the airlines had announced in February this year that they would be entering into a strategic partnership, but divulged few details ever since.

Hernan Rincon, Chief Executive of Avianca, said, “The board of Avianca is going to meet shortly and would be voting on joint venture proposal within 8 to 10 weeks. The negotiations with United Airlines are currently underway. So far 9 meetings have been planned and scheduled to take place in the following weeks. I can say that nearly 35 percent of work in this regard has already been done.”

A meeting has been held between Avianca’s chief executive Hernan Rincon and United Airline’s chief executive Oscar Munoz during AGM of IATA held on June 5, 2017. Both airlines – Avianca and United Airlines – are presently members of leading global airline alliance Star Alliance.

Media reports said that the planned joint venture would be covering the routes operated by United Airlines and Avianca between the United States and Latin America. The two airlines would be coordinating their respective flight schedules and feed each other’s networks.

According to the reports, the joint venture would become effective only after necessary regulatory approvals, which is likely to take 6 to 9 months, or even may be few months longer. It took nearly 2 years for Delta Air Lines and Aeromexico to receive U.S. regulatory approval for their joint venture. Both the airlines have started operations under joint venture in May 2017.

A spokesperson of United Airlines said that the company has made no plans so far for acquiring a stake in Avianca, or whether to join its board. United Airlines is currently focusing on developing the strategic partnerships in Latin America. Further details are awaited in future.

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