German Efromovich, owner of Latin America’s second-biggest airline group, said he’s cooling on plans to take a stake in a European flag-carrier and may instead establish his own operation to penetrate the market.
Efromovich, who runs airlines in Brazil, Colombia, Ecuador, Peru and Central America under the Avianca brand, failed in a bid for Portugal’s TAP SGPS SA in 2012 and has since been linked with Rome-based Alitalia Spa and LOT Polish Airlines SA. While open to making a “strategic” deal in Europe, building an airline from scratch could prove more sensible, he said in an interview yesterday.
“When you start to do the calculations, when you look at the implications and the contracts that people want you to sign and the restrictions being imposed, and more the exposure and liabilities that you are eventually going to undertake, why not start fresh?” the entrepreneur said. “Do it your way with new planes and compete with the ones that are in trouble.”
Portugal’s government may try to sell TAP again this year, Secretary of State for Public Works Sergio Monteiro said in November. The country agreed to dispose of the carrier after a bailout by the International Monetary Fund and European Union.
“The longer they take the more damage they’re doing to their own company,” Efromovich said, speaking in an interview in Dublin. “We would look at it, but by the analysis we did it would be much cheaper today for the big debt and risk involved for us to start a new airline.”
While not fully developed, the idea would be to set up a full-service carrier, supported by a regional network created either from scratch, purchased or as part of a cooperation agreement, the executive said. Given how well-connected Europe is already, the focus would be on setting up a business that extends the reach of Avianca Holdings SA (AVH:US), he said.
Eframovitch’s Synergy Group owns most of its airline assets through Avianca Holdings, the company formed from a merger of Colombia’s Avianca and El Salvador-based Taca in 2010.
The executive said he has not explored the possibility of buying a stake in Italy’s troubled flagship carrier Alitalia. While he has not ruled out the possibility, “there is nothing that attracts us,” he said.
“We’re not desperate, we will do things at the right time,” he said. “We’re looking at this to compliment what we’re doing and what we’re trying to do in global way.”
Alitalia is struggling to repair finances hurt by years of losses and mounting competition from low-cost rivals. Etihad Airways PJSC said in December that it is in talks with the ailing airline, and may make a cash contribution of about 300 million euros ($409 million), according to people familiar with the talks.
Efromovich said the Middle Eastern carrier’s model of taking stakes in smaller airlines to extend its reach is “not the model that we like,” though he said it can work depending on the terms of the agreement.
Latam Airlines (LFL:US) SA, created through the 2012 takeover of Brazil’s TAM SA by Lan Airlines SA of Chile, is Latin America’s biggest carrier.
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