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Watch the trailer at: http://www.foxsearchlight.com/theclearing/index_nyt.html \----------------------------------------------------------/ With Bid, Continental Looks to Expand in South America April 16, 2004 By JUAN FORERO BOGOTÁ, Colombia, April 15 - Continental Airlines and its partner in Panama have made an offer to buy Colombia's financially troubled airline, Avianca, which, if approved, would expand Continental's already long reach into Latin America. Neither Continental, which is based in Houston, nor its partner, Copa Airlines, offered details on Thursday about the bid to purchase Avianca, which began flying in 1919 and offers 300 flights a day, including service to Madrid and Kennedy International Airport in New York. Avianca, short for Aerovías Nacionales de Colombia, is the world's second-oldest airline. The bid appears to provide more money for Avianca than was offered by Brazil's Grupo Sinergy, which in March announced that it would inject $64 million into Avianca and assume its $300 million debt as part of a takeover. "We are not going to make a counteroffer for Avianca," German Efromovich, the Brazilian entrepreneur who controls Grupo Sinergy, told reporters. "The offer that we made was the last one." The proposed purchase underscores a trend in the Latin American airline industry: the consolidation of weaker airlines or government-run airlines by larger, more financially stable carriers, like LanChile in South America or Taca in Central America. "As carriers have become public, instead of government entities, that consolidation has begun," said Robert W. Mann Jr., an airline analyst in Port Washington, N.Y. Avianca and its subsidiary airline, SAM, filed for bankruptcy protection in New York in March of last year. The company has been battered by the drop-off in travel after the terrorist attacks of Sept. 11 and skyrocketing fuel costs, though it had fallen on hard times long before the recent regional downturn in air travel. Avianca, though, is seen by aviation analysts as well-positioned for a recovery. The airline's hub in Bogotá, which has undergone improvements recently, is in the middle of Latin America, making it a gateway into South America. Avianca also controls most of Colombia's market, flying its 41 planes to 18 cities in this country of 40 million and to 16 cities abroad, including Miami and Fort Lauderdale, Fla., according to Avianca's Web site. "Avianca has a bright future ahead and should survive to be a hundred in the next couple of decades," Bob Booth, an aviation analyst in Florida, wrote in his newsletter, AVNews. Avianca would also be helped if Colombia's economy grows at 4 to 5 percent this year, as some economists and government officials have predicted. American carriers increasingly see Latin America as an opportunity for growth this year, as the economies of Argentina, Colombia, Peru and Venezuela continue stabilizing. Continental's chief executive, Gordon M. Bethune, said Thursday in a conference call that the deal, if it goes through, would better position Continental in a region where it has focused much of its growth in recent years. Mr. Bethune explained that it was Copa that was making the offer for Avianca, though he said that Continental is supporting the venture. Continental owns 49 percent of Copa, which was founded in 1947 and owns 21 Boeing 737 airliners that fly to 20 countries. "It appears that they are going to use Copa as their proxy for acquisitions in the region," Mr. Mann said. The rest of the company is owned by Grupo Motta, a Panamanian conglomerate. Continental, the fifth-largest airline in the United States, flies to 117 international destinations. On Thursday, the airline reported first-quarter net losses of $124 million, an improvement over first-quarter losses in 2003. The latest offer to purchase Avianca has the support of Colombia's pilots union, whose president, Alberto Padilla, is part of a committee that is trying to renegotiate Avianca's debt. The United States Bankruptcy Court in New York must approve any sale and its terms. Arturo Salazar, vice president of the pilots union, told the Bogotá newspaper, El Tiempo, that the latest offer gives more security to Avianca's 5,184 employees while offering stockholders more guarantees that the airline's debt will be absorbed. In a statement issued Wednesday, Copa said that under the offer, Avianca would continue to operate as an independent airline. Avianca is owned by National Federation of Coffee Growers of Colombia and by Valores Bavaria, a private conglomerate owned by Colombia's powerful Santo Domingo family. http://www.nytimes.com/2004/04/16/business/worldbusiness/16avianca.html?ex=1083122829&ei=1&en=a3e2115d0285779b --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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