Avianca Holdings posted a net profit of $44.2 million in 2016, reversing a $139.5 net loss the company reported in 2015.

“Through steadfast focus on implementing our [business] plan, and the benefit of improved microeconomic tailwinds, 2016 was a strong year for Avianca,” Avianca CEO Hernán Rincón said.

Aviana Holdings is the parent of seven Latin American passenger airlines including Colombian flag carrier Avianca and air-freight carrier Avianca Cargo.

Avianca’s operating revenue for the year totaled $4.1 billion, down 5.1% from $ 4.4 billion in 2015. Operating expenses decreased 6.3% to $3.9 billion, compared to $4.1 billion in 2015. The company’s operating profit for the year was $258.5 million, up 18.1% year-over-year (YOY). The company’s full-year operating margin increased 1.3 points YOY to 7.2%.

“In [1Q 2016], I reiterated our commitment to improving Avianca’s capital structure [and] we have made strong strides on this front, through implementing a three pronged approach during the year,” Rincón said. “Firstly, we began by renegotiating aircraft deliveries for the 2016 through 2019 period, resulting in a significant reduction in capital expenditure for the company totaling $1.4 billion. Secondly, we implemented an organizational restructuring in [2Q 2016] streamlining Avianca’s administrative layers and ... finally, we reduced the company’s debt by $198 million.”

Rincón projected Avianca’s capacity growth for 2017 will be in the range of 6.5%-8.5%, while maintaining load factors between 80%-82%. Projected passenger growth in 2107 will be between 4.0% and 6.0%. “As a result, we estimate that our EBIT margin for 2017 will be in the range of 6.0% and 8.0%,” Rincón said.

In 2016, Avianca recorded 29.5 million passengers, up 4.2% YOY. Traffic increased 7.8% YOY to 38.2 billion RPKS and capacity increased 5.9% YOY to 47.1 billion ASKs. Load factor for the year came to 81.1%, up 1.4 points YOY. RASK fell 1 point YOY to 8.8 cents; CASK declined 1.1 points YOY to 8.2 cents.

In January, Avianca entered into negotiations with United Airlines “to create a long-term strategic partnership that will provide our customers with the best possible travel experience when traveling to or from the United States,” Rincón said. “[We] seek to implement as soon as possible an agreement to enhance and deepen our commercial and strategic relationship with United Airlines, our Star Alliance partner.”

Mark Nensel mark.nensel@penton.com