Avianca Holdings: United Air partnership and Synergy infusion raise more questions than answers

Avianca Holdings and United have taken a strategic step to bolster their respective competitiveness in the Latin American and US markets, by working to deepen their partnership. United is the only US airline without a prospective joint venture partner in the region, and Avianca needs an anchor partner such as United to broaden its network coverage in North America.

The scope that Avianca and United's deepened partnership will encompass remains unknown. Since mid 2016 Avianca has been searching for a strategic investor, and reportedly drew interest from Delta Air Lines and Copa Holdings before settling on United.

At the same time Avianca outlined plans to develop a strategic partnership with United, Avianca's majority shareholder Synergy pledged to invest USD200 million into the company, which could signal that Synergy remains committed to having sizeable influence over Avianca.

Synergy also plans to obtain necessary regulatory approvals to fold Avianca Brasil into Avianca Holdings. Synergy is the major shareholder of both airlines, but the companies have been run separately for years. The timing is curious, since United also has a minority stake in the Brazilian airline Azul. Synergy's moves raise questions about United and Azul's future partnership, as well as the level of ownership United could take in Avianca Holdings.