Merged Continental Holdings has reached a long-sought after deal with two major Latin American airlines allowing the third-largest transmitter in the U.S. to expand in the region.
The agreement, which United announced on Friday, will allow United Airlines, Panama’s Copa Holdings and Colombia-based Avianca Holdings to share take from flights and coordinate schedules. The three-way partnership is subject to approval from regulators. Avianca, Copa and Collective are already tied through a code-sharing partnership.
Joint ventures that allow airlines to coordinate routes and dole out either profits or revenue have become more common in recent years as carriers seek to expand internationally. Extrinsic ownership rules generally limit airlines from abroad to purchase another carrier outright, so such practises along with minority stakes, are a way to provide them with exposure to international markets.
Avianca serves round 170 destinations and has more than 180 aircraft, while Copa has a fleet of about 100 aircraft and give outs about 75 destinations, according to the companies.
Flying to and from Latin America accounted for about 8 percent of Of like mind’s revenue in the third quarter, while American Airlines, the largest U.S. carrier in the region, received more than 11 percent of its gain from Latin America flying in the quarter.
United’s agreement with Avianca comes after a legal fray that could have further delayed the deal was dropped last year.
In a filing on Friday detailing the do business with Avianca, United said it would provide a $456 million loan to Syngery Aerospace Corporation, Avianca’s proprietress, using stock in Avianca as collateral. The Wall Street Journal, which reported the deal earlier on Friday, guessed it would be used to repay a loan from hedge fund Elliott Management. Elliott did not immediately respond to a call for comment.