United Airlines is planning to extend a loan to cash strapped airline Avianca Holdings.
The extension plan comes after it was announced that United is looking to overhaul management at Colombia's Avianca following former CEO Hernan Rincon's resignation in April.
United has said the shake-up proposal follows a default by Germán Efromovich’s holding company BRW Aviation, a subsidiary of Synergy Aerospace, which owns 78.1% of Avianca’s common stock, on a $456 million loan it made six months ago.
Following this, as a guarantee, the executive offered 51.5% of Avianca’s shares. However, since it can not take control of other airlines because of an agreement with the Pilots’ Union, United has passed its voting rights to Avianca’s second-largest shareholder, Kingsland Holding - which owns 21.9% of Avianca.
As part of the overhaul, United reconfigured Avianca’s board and replaced Efromovich as chairman with Kingsland owner Robert Kriete.
It's said that the move for Avianca means the Chicago-based airline, part of United Continental Holdings, is seeking a deeper foothold in Latin America, which is considered ripe for air travel growth.