Wednesday , June 7 2023

Avianca adjusts the path to improve competitiveness – Business – Economy


The departure of 226 employees of Avianca Holdings on Friday is the latest in this Colombian airline's reconciliation.
He announced the day before that all subsidiaries cut his labor costs by 15% and sold some businesses like Deprisa.

This fact will be added to the change in your itinerary through dawn flights. A decline in market share after a pilot strike a year ago, waiting for an alliance with United United and Panama Cup announced 21 months ago.

What made you adjust the direction of the company in the middle of the panorama?

Experts believe that this year's rise in fuel prices, coupled with dollar appreciation, has fueled fund decisions.

The retirement of more than 200 employees between Thursday and Friday is the first step and is part of the retirement plan proposal, offering bonuses to welcome people and turning careers.

"Because Avianca Holdings affects the rate setting, it is reasonable to improve phone numbers and mitigate cost structures," explains Gilberto Salcedo Ribero.
, An expert in aviation.

Traditional companies such as Avianca are challenged to compete with low-cost companies, adding that these measures also tend to improve competitiveness on the routes they provide.

And it did not recover from the powerful impact of the 2017 strike in Colombia, which ended on Monday after a year, and forced 40 aircraft to land in Colombia. The number of regional travelers mobilized between January and September fell 7.84 percent compared to the same period last year and decreased 792,783.

Other routes of people passing through Bogota (the route most affected by pilot strikes) returned to normal, but some of them increased weekly frequency.
There is a change in the airline plan compared to August 2017, the month before the outage began.

For example, at the end of October, he made a controversial decision to change the Barranquilla – Miami flight schedule passed at 10:54. m. At 3:19 a. m.

Also, by cutting down the balance sheet by Wednesday, the balance of the first nine months of 2017 was offset by a profit of $ 67.3 million, with a deficit of nearly 18 million in the same period in 2018.

It is reasonable to improve the number and mitigate the cost structure because the company affects the rate setting.

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In addition, Avianca Holdings announced on Thursday an administrative reorganization that would raise $ 100 million, including a partial sale of Deprisa and other assets.

"The disposal of some businesses can generate additional income and improve cash flow for debt repayment," says Claudia Velásquez Castaña, an airline consultant. It is also considered to reduce the risk of investment in related businesses without stable income.

Likewise, experts say recent action is aimed at improving competitiveness, but ultimately it should keep the company in good shape before new partners arrive.

In addition, Avianca Holdings has been negotiating new aircraft to postpone additional orders since 2020, and has confirmed that it can reduce the demand for approximately $ 100 billion in funds.

"We remain concerned about the high level of leverage and liquidity that has made the company renegotiate delivery."
He said.

Roberto Held, vice president of finance, commented on the alliance with United, where Panama Copa would be added, "management and review are more complicated because of long-term relationships and marriage.

Gilberto Salcedo, an aviation expert, adds that the industry is high-income, but at a higher cost. "For example, at a global level, profit margins for income do not exceed 2 percent," he explains.

They start a voluntary retreat.

A 15% cut in labor costs for Avianca Holdings began last Friday in 27 countries. This is how 226 people (80 in Colombia) have already accepted voluntary retirement plans.

The company also notified Gerardo Grajales López's retirement plan, which he plans to retire in January, to the business unit vice president who has already agreed to the instructions in the independence process for the retirement plan. Miguel Montoya, chairman of engineering and maintenance, and Eduardo Asmar, vice president of strategy, are said to be in a similar phase.. After the administration is cut, things like surgical personnel will be handled in several countries in February.

Economy and business

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