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China's HNA Group eyes South American airline groups Avianca: sources

[NEW YORK] China's HNA Group has expressed interest in acquiring Avianca Holdings SA and Avianca Brasil, the South American airlines controlled by Bolivian-born entrepreneur Germán Efromovich's Synergy Group, people familiar with the matter said.

Both Avianca Holdings and Avianca Brasil are working with investment banks to explore options. They have also attracted interest from US peers United Continental Holdings Inc and Delta Air Lines Inc, the sources said on Friday.

If HNA makes the deal, it would be the second major Latin American investment for the aviation, tourism and logistics conglomerate, which has also snapped up air cargo handlers Swissport and Irish aircraft leasing company Avolon.

The Chinese group agreed in November to pay US$450 million for a 23.7 per cent stake in Azul SA, Brazil's third-largest airline, which is controlled by JetBlue founder David Neeleman.

Avianca's chief financial officer Gerardo Grajales has flown to China, according to a source at the airline. The structure of an eventual deal remained unclear, said the sources familiar with negotiations.

Shares of Panama-based Avianca Holdings, which operates flights in Colombia, Peru, Ecuador, Central America and the Caribbean, were up 16 per cent in Friday trading on news of a potential deal, which was first reported on Thursday.

Efromovich's Synergy Group separately controls Avianca Brasil, the fourth-largest airline in Brazil, where the government is reconsidering laws requiring domestic control of its airlines. Efromovich has Colombian and Brazilian citizenship.

Delta and United shares fell nearly 2 per cent in New York. "We continually evaluate opportunities to strengthen our relationships with partners that will enable us to provide better and more convenient services to our customers. However, we won't discuss rumours or speculation," United said in a statement.

Delta declined to comment. Avianca Holdings and Avianca Brasil did not immediately respond to questions. HNA and Synergy could not be reached for comment.

The sources asked not to be identified because the deliberations are confidential.