Colombia's Avianca says bankruptcy of Avianca Brasil causing 'reputational harm'

Colombia's Avianca Holdings said Monday it is experiencing "reputational harm" from its association with Avianca Brasil, an air carrier that licenses its name and has cancelled over 1,000 flights amid a bankruptcy restructuring. Both Aviancas belong to the same family-owned business group, led by brothers German and Jose Efromovich, but are maintained as separate companies. Bogota-based Avianca Holdings is the larger, better-known airline and licenses its brand for free to two smaller airlines owned by the Efromovich brothers, one in Brazil and one in Argentina. The disclosures were made by Avianca Holdings in its annual report filed with the US Securities Exchange Commission on Monday. It added in the filing that association with the Argentine and Brazilian carriers "could generally result in an overall decrease in customer confidence, any of which could lead to a significant loss of business." Avianca Holdings and Avianca Brasil had been planning a merger but it was abruptly canceled when the Brazilian airline filed for bankruptcy in December, crippled by high fuel and leasing payments.<br/>