Market Overview

Avianca Holdings Reports an Adjusted Operating Profit1 of $37.6 Million for the Second Quarter of 2016


Avianca Holdings S.A. (NYSE: AVH) (BVC: PFAVH) presents the following results pertaining to the second quarter 2016 (2Q 2016). Financial and operational information is provided in millions of US dollars unless stated otherwise. The following information is presented in accordance with International Financial Reporting Standards (IFRS). The reconciliation between IFRS and non-IFRS financial information can be seen in the financial tables section of this report. Except when noted, all comparisons refer to second quarter 2015 (2Q 2015) numbers. Figures and operating metrics of Avianca Holdings S.A. ("Avianca Holdings" or "the Company") are presented on a consolidated basis.



Financial Highlights

(6 months ended June 30th)

($ millions)     1H-15   1H-16
Revenues 2.2Bn 2.0Bn
EBITDAR 329.4 381.2
EBIT 57.8 97.8
EBITDAR1 345.1 393.3
EBIT1 73.5 109.9
Net Income 10.7 -20.0

Net income*1

-2.9 17.4

*Excluding Fx and Derivative Charges

(3 months ended June 30th)

($ millions)     2015   2016
Revenues 1.1Bn 1.0Bn
EBITDAR 135.7 166.3
EBIT 0.8 25.5
EBITDAR1 140.0 178.4
EBIT1 5.1 37.6
Net Income -22.8 -23.2
Net income*1 -24.8 -4.0

*Excluding Fx and Derivative Charges


(6 months ended June 30th)

    1H-15   1H-16
EBITDAR% 15.1% 19.3%
EBIT % 2.7% 5.0%
EBITDAR %1 15.9% 20.0%
EBIT %1 3.4% 5.6%
Net income % 0.5% -1.0%
Net Income%*1



*Excluding Fx and Derivative Charges

(3 months ended June 30th)

    2015   2016
EBITDAR% 12.8% 17.2%
EBIT % 0.1 % 2.6%
EBITDAR %1 13.2% 18.5%
EBIT %1 0.5% 3.9%
Net income % -2.1% -2.4%
Net Income%*1 -2.3% -0.4%

*Excluding Fx and Derivative Charges

Operational Highlights

(6 months ended June 30th)

    1H-15   1H-16
Passengers 13.62M 14.20M
ASKs 21.33Bn 23.08Bn
RPKs 16.82Bn 18.10Bn
Load Factor 78.9% 78.4%
RASK 10.21 8.54
CASK 9.94 8.12

(3 months ended June 30th)

    2015   2016
Passengers 6.9M 7.1M
ASKs 10.8Bn 11.6Bn
RPKs 8.5Bn 9.0Bn
Load Factor 78.7% 78.1%
RASK 9.85 8.35
CASK 9.84 8.13

Second Quarter 2016 Highlights

  • The second quarter of the year proved to be a strong quarter for Avianca, as such, operating income (EBIT1) reached $37.6 million, posting an operating margin1 of 3.9%, a 341 bps increase over the same quarter of last year. Furthermore operating revenues amounted to $966.2 million for the quarter.
  • These results were mainly driven by a 12.1% reduction in total operating costs1 as the Company continued to further capture benefits from lower oil prices, which in hand with the cost saving initiatives have led to a leaner cost structure. These figures were partially offset by a 10.7% decrease in passenger revenues due to a yield dilution of 16.1%, partly compensated by growth in traffic numbers (RPKs).
  • Cost per available seat kilometer (CASK1) decreased 18.1% to 8.02 cents in 2Q 2016, compared to 9.80 cents in 2Q 2015. This figure was mainly driven by lower jet fuel prices which dropped 35% over the quarter. As the cost control initiatives continue to yield efficiencies, CASK ex-fuel1 declined 12.3% to 6.37 cents.
  • EBITDAR1 for the 2Q 2016 was $178.4 million, while the EBITDAR margin1 reached 18.5%, a 528 bps increase when compared to 2015.
  • Adjusted Net income1, excluding special items totaled -$4.0 million. As such, adjusted net income margin for 2Q 2016 reached -0.4%, a 192bps increase over the same period of 2015.
  • Capacity, measured in ASKs (available seat kilometers), increased 7.4% during 2Q 2016, mostly due to the annualized effect of the international capacity deployed to Europe during 2015. Moreover the company continued to see robust traffic numbers in Europe, South America and the Caribbean. Furthermore, passenger traffic, measured in RPKs (revenue passenger kilometers), grew 6.5%, reaching a consolidated load factor of 78.1%.
  • In accordance with the Company's fleet plan, between April and June 2016, the Company took delivery of one A320S, while phasing out three A319's and two E190's. The phase out of these last two aircraft from the Embraer E190 family is part of Avianca's fleet optimization process which seeks to reduce operational complexity. Consequently, Avianca Holdings S.A. and its subsidiaries ended the quarter with a consolidated operating fleet of 174 aircraft.

CEO Message

Dear Shareholders

After over 100 days at the helm of the Company, I would like to share with you the flight plan that we have put together that will take Avianca to new heights. As we continue to strengthen the Company, we acknowledge that growing technology penetration in our markets, allow our customers to better compare different offerings in more detail. As such, our clients demand best in class products and services which Avianca strives to provide throughout its product offerings.

Thus, our new business plan is centered on our customers as the fundamental driver of our strategy. Supported by technology, our aim is to enhance customer experience and boost productivity. In order to set forth this action plan, we have defined four fronts that we will prioritize as follows: strengthen our hubs and core markets, develop a world class technological platform to constantly improve customer satisfaction and operational excellence, promote the full development of other business units and finally, develop long term strategic partnerships that will set the base for profitable business sustainability.

We strongly believe that a new customer centric organization will be the foundation for the new Avianca: "A world class airline based in Latin America that serves the globe with customers at the core of its strategy". Therefore in the month of July, the Board of Directors approved a new organizational model as the foundation of the Avianca of the future. The new structure was designed based on best in class industry practices by all senior management of the Company in collaboration with an international consulting firm. This new model is meant to bring the Company closer to its customers and markets by empowering managers, increasing the number of direct reports and hence reducing organizational layers within the company. Leveraged on new technologies, this new structure aims to align corporate goals, increase team work, and improve productivity as we introduce a dual reporting matrix structure that will enable the Company to make faster and smarter decisions.

Despite seasonality and a traditionally weak second quarter for airlines in the region, the second quarter of the year proved to be strong for Avianca, as traffic numbers across our markets gained traction and the macroeconomic fundamentals continued to stabilize. As such, passenger traffic numbers expressed in RPKs grew by 6.5% over the same period of 2015. The latter mainly driven by stronger domestic markets and incremental traffic numbers in South America, the Caribbean and Europe. As part of our ongoing network optimization process, we continued to selectively grow in specific markets. Accordingly, we are proud to say that Avianca is the first airline to launch an international direct service to Cuzco, with 3 weekly frequencies from our Bogota Hub. Furthermore, over the second quarter of 2016 we managed to maintain a stable load factor of 78.1% across our network.

In line with our objective of developing a state of the art technological platform, we successfully inaugurated a brand new MRO facility near Medellin, with a total area of 42,125 square meters and 19,799 square meters in hangars and aircraft component repair facilities. This facility is one of the most advanced maintenance centers in the world and will enable us to achieve economies of scale in our maintenance operation across the regions we serve.

With the purpose of better serving our clients, we have continued to expand and strengthen our network through our international strategic partnerships, in line with this, we signed a new code share agreement with Etihad Airways. The latter will now enable our travelers to purchase their tickets to Abu Dhabi or Bogota with Avianca on flights operated by both carriers.

As part of our deleveraging strategy, we continued to work on our cost saving initiatives program launched in 2015. As such, we signed a new agreement with Amadeus, one of our key global distribution system providers. This new agreement will not only include new system features that will enable us to better interact with our customers, but also is expected to generate additional savings that will support a leaner cost structure.

Over the quarter, our loyalty program LifeMiles, continued to expand as our cobranded credit card base grew 25.5%, reaching 485,000 credit cards by quarter end. Furthermore the program ended with more than 6.7 million members, which represents a 9.3% increase over the same quarter of 2015.

Moreover, we managed to expand Avianca's profitability as our revenues for the quarter reached more than USD 966 million while operational costs1 dropped by more than 12.0%. As a result, our operating margin1 grew by more than 341 basis points, reaching a consolidated EBIT1 margin of 3.9% for the quarter and 5.6% for the first half of the year. As such we reaffirm our 2016 EBIT margin guidance between 5.5% and 7.5%. Finally we reiterate our commitment with our stake holders to continue to focus on profitability and competitiveness as we put our customers and technology at the core of our strategy.


Hernán Rincón

Chief Executive Officer


Consolidated Financial and Operational

      2Q-15     2Q-16     ∆ Vs. 2Q-15

ASKs (mm)

10,780 11,575 7.4 %

RPKs (mm)

8,488 9,037 6.5 %
Total Passengers (in millions) 6,936 7,073 2.0 %
Load Factor 78.7 % 78.1 % -67bp
Departures 74,082 75,938 2.5 %
Block Hours 134,653 141.440 5.0 %
Stage length (km) 987 1,012 2.5 %
Fuel Consumption Gallons (000's)         112,045         120,446       7.5 %
Yield (cents) 9.8 8.2 -16.1 %
RASK (cents) 9.8 8.3 -15.2 %
PRASK (cents) 7.7 6.4 -16.8 %
CASK (cents) 9.8 8.1 -17.4 %
CASK ex. Fuel (cents) 7.3 6.5 -11.3 %
CASK (Adjusted) (cents) 9.8 8.0 -18.1 %
CASK ex. Fuel (Adjusted) (cents)         7.3         6.4       -12.3 %
Foreign exchange (average) COP/US$ $ 2,501.8 $ 3,249.0 29.9 %
Foreign exchange (end of period) COP/US$ $ 2,585.1 $ 3,022.4 16.9 %
WTI (average) per barrel $ 57.8 $ 45.4 -21.5 %
Jet Fuel Crack (average) per barrel $ 16.1 $ 8.2 -49.2 %
US Gulf Coast ( Jet Fuel average) per barrel $ 74.0 $ 53.6 -27.5 %
Fuel price per Gallon (including hedge)       $ 2.44       $ 1.58       -35.0 %
Operating Revenues ($M) $ 1,061.3 $ 966.2 -9.0 %
EBITDAR ($M) $ 135.7 $ 166.3 22.6 %
EBITDAR Margin 12.8 % 17.2 % 443 bp
EBITDA ($M) $ 53.0 $ 89.4 68.6 %
EBITDA Margin 5.0 % 9.3 % 426 bp
Operating Income ($M) $ 0.8 $ 25.5 3048.2 %
Operating Margin ($M) 0.1 % 2.6 % 257 bp
Net Income ($M) $ (22.8 ) $ (23.2 ) -1.9 %
Net Income Margin -2.1 % -2.4 % -26 bp
EBITDAR (Adjusted) ($M) $ 140.0 $ 178.4 27.5 %
EBITDAR Margin (Adjusted) 13.2 % 18.5 % 528 bp
EBITDA (Adjusted) ($M) $ 57.3 $ 101.5 77.1 %
EBITDA Margin(Adjusted) 5.4 % 10.5 % 510 bp
Operating Income (Adjusted) ($M) $ 5.1 $ 37.6 636.3 %
Operating Margin ($M) (Adjusted) 0.5 % 3.9 % 341 bp
Adjusted Net Income ($M) $ (24.8 ) $ (4.0 ) 83.9 %
Net Income Margin (Adjusted)         -2.3 %       -0.4 %     192 bp

(Adjusted: Excluding non-cash Fx charges, gain or loss on derivative instruments and special items associated to one-time expenses described in footnote (1))


Management Comments on 2Q 2016 Results

The second quarter of the year proved to be a strong quarter for Avianca, the company reached an operating income (EBIT1) of $37.6 million while the operating income (EBIT1) margin came in at 3.9%, an increase of 341 bps over the same period of 2015. These results were mainly driven by a 12.1% reduction in total operating costs1 as the Company continued to capture lower fuel costs and efficiencies from its cost cutting initiatives. As such, CASK ex-fuel1 during 2Q 2016 declined 12.3% to 6.37 cents. The latter was partially offset by a 9.0% decline in total revenues, as passenger revenues continued to be pressured by FX depreciation and consequently lower yields, which dropped at the slowest pace over the last twelve months.

Total operating revenues amounted to approximately $966.2 million during 2Q 2016. This represents a decrease of 9.0% over the same quarter in 2015, primarily due to a 10.7% decline in passenger revenue as yields declined 16.1%. Cargo and other revenues, which represent 23.3% of total revenues, decreased 2.9% to $225.3 million during the quarter. The latter was mainly driven by a 2.3% decline in the average fare as well as a decrease in the total tons of transported associated to a lower volume of imports from North America to Colombia, Brazil and Ecuador. The latter was partially offset by higher courier revenues.

During 2Q 2016 the LifeMiles Loyalty Program continued to deliver positive results, revenues grew 33.5% when compared to the same period of 2015. In terms of membership growth, the quarter ended with more than 6.7 million members, which represents a 9.3% increase over 2Q 2015. During the same period, the retail coalition program continued to expand, as such commercial partners increased 13.2% to 300. Finally, in terms of active co-branded cards, LifeMiles ended the quarter with more than 485,000 cards, which represents a 25.5% growth when compared to 2Q 2015.

Throughout 2Q 2016, the Company carried more than 7.0 million passengers, an increase of 2.0% when compared to 2Q 2015. Traffic figures (RPKs) grew slightly below capacity (ASKs) leading to a consolidated load factor of 78.1% as the capacity deployed in 2015 continued to mature over the first quarter of 2016. As such, during June 2016, routes to Europe reached an average consolidated load factor of 92.8% and 86.6% from Bogota to Los Angeles. Furthermore, traffic numbers to South America and the Caribbean, over the quarter, continued to expand by 7.8% and 10.0% respectively.

Operating expenses1 for 2Q 2016 reached $928.6 million, which represents a decrease of 12.1% when compared to 2Q 2015. The latter was mainly driven by a decline of 30.1% in Fuel Expenses, associated to lower jet fuel prices and a decrease of 23.4% in Sales and Marketing mainly driven by the new agreement with Amadeus and the positive impact of COP depreciation. Furthermore, Aircraft Rentals decreased 6.9% as fleet deliveries over the last twelve months, such as the B787, have been financed through lower yielding financial leases. These results were partially offset by a 22.3% increase in Depreciations and Amortizations as the Company adjusted the selected aircraft family's useful life and salvage value due to changes in market prices, as well as the amortization of pre-operative assets such as the MRO facility.

As part of the Company's on-going fuel hedging strategy by the end of the 2Q 2016, a total of 148.7 million gallons were hedged, out of which 122.1 million gallons correspond to approximately 57.5% of the total expected volume to be consumed over 2016. The remaining volume represents around 3.0% of the total expected volume to be consumed from 2017 to 2018. The average price of the hedges was set at $1.38/gallon. During 2016 hedging expenses are expected to range between $5 to $7 million per quarter allowing us to cap hedging expenses and seize additional benefits from lower fuel prices throughout the year.

In accordance with the Company's fleet plan, between April and June 2016, the Company took delivery of one A320S, while phasing out three A319's and two E190's. The phase out of these last two aircraft from the Embraer E190 family is part of Avianca's fleet optimization process which seeks to reduce operational complexity. Consequently, Avianca Holdings S.A. and its subsidiaries ended the quarter with a consolidated operating fleet of 174 aircraft.

The Company recorded other non-operating expenses of $47.2 million for the 2Q 2016, compared to a non-operating expense of $25.5 million for the same quarter of 2015. Non-operating expenses include interest expenses related to incremental aircraft debt and additional corporate debt as well as FX gain or losses. In addition the Company recorded expenses related to the foreign exchange non-cash translation adjustments of $12.4 million compared to a $4.4 million gain for the same period of 2015. This effect is primarily due to a loss in foreign exchange translation adjustments, consisting of the net non-cash gain (or loss from) of our monetary assets and liabilities denominated in Colombian Pesos, Argentinian Pesos, and Venezuelan Bolivares subject to the USD exchange rate.

The Company's cash and cash equivalents and available-for-sale securities, ended the quarter at $372.3 million. Including short-term certificates and bank deposits, adjusted cash and cash equivalents and available-for-sale securities (other current assets) came in at $406.22 million, equivalent to about 9.8% of revenues for the last twelve months. As of June 30, 2016 the Company valuated its cash balances held in Venezuela at the latest DICOM exchange rate of 628.3 VEF per 1.00 USD, resulting in a total loss of $4.8 million. Accordingly, the carrying amount of cash balances held in Venezuela of $1.6 million have been classified as follows: $0.9 million as cash and cash equivalents, which is expected to be used over the next three months as part of the normal operations in Venezuela; $0.7 million as short-term restricted cash, which is expected to be used in the following 9 months.

In line with the deleveraging strategy, as of June 30, 2016, the Company's leverage position (Net Adjusted debt to EBITDAR3) decreased to 6.3x from 6.8x on December 31, 2015. As such, the Company's total long term debt amounted to $2.93 billion, while total liabilities came in at $5.00 billion.

Full Year 2016 – Outlook

We will continue to execute cost saving initiatives as well as revenue enhancing projects that are expected to yield results over the next two years. As such, the Company maintains its guidance for 2016 as follows:

Outlook Summary


Full Year 2016

Total Passengers Increase from 2015     3.0% - 5.0%

Capacity (ASKs) Increase from 2015

3.0% - 5.0%
Load Factor 78.0% - 80.0%
EBIT Margin     5.5% - 7.5%

Analysis by ASKs (in U.S. cents)

      2Q 2015     2Q 2016     Var%
Operating revenue:


7,69 6,40 -16,8%
Cargo and other 2,15     1,95     -9,6%
Total Operating revenues 9,85 8,35 -15,2%
Operating expenses:
Flight Operations 0,14 0,13 -5,5%
Aircraft fuel 2,53 1,65 -34,9%
Ground Operations 0,95 0,88 -7,3%
Aircraft rentals 0,77 0,66 -13,3%
Passenger services 0,33 0,31 -4,4%
Maintenance and repairs 0,68 0,60 -11,6%
Air traffic 0,48 0,43 -10,8%
Sales and marketing 1,49 1,06 -28,6%
General, administrative, and other 0,37 0,44 19,3%
Salaries, wages and benefits 1,62 1,41 -13,2%
Depreciation and amortization 0,48     0,55     13,9%
Total operating expense 9,84     8,13     -17,4%
Operating income 0,01     0,22     2831,9%
Total CASK 9,84     8,13     -17,4%
CASK ex. Fuel 7,31     6,48     -11,3%
Total Cask (Adjusted) 9,80     8,02     -18,1%
CASK ex. Fuel (Adjusted) 7,27     6,37     -12,3%
Yield 9,77     8,20     -16,1%

Non-IFRS Financial Measure Reconciliation

In USD Millions

2Q2015 2Q2016 Var%
Net Income as Reported (22,8) (23,2) -1,9%
Special items (adjustments):
(-) Gain on Sale of Property and Equipment (F100) - -2,0
(+) Loss on Sale of Property and Equipment (A319) - 6,4
(+) Loss on Adjustment of Aircraft Reasonable Value - 7,7
(+) Foreign Object Damage 4,3 -
(-) Derivative Instruments 1,9 5,3
(-) Foreign exchange gain (loss)       4,4     -12,4      
Net Income Adjusted (24,8) (4,0) 83,9%

Reconciliation of Operating Cost per ASK Excluding Special Items

In US Cents

2Q2015 2Q2016 Var%
Total CASK as reported 9,84 8,13 -17,4%
Aircraft Fuel 2,53 1,65
Total CASK excluding Fuel as reported 7,31 6,48 -11,3%
(-) Gain on Sale of Property and Equipment (F100) - 0,02
(+) Loss on Sale of Property and Equipment (A319) - (0,06)
(+) Loss on Adjustment of Aircraft Reasonable Value - (0,07)
(+) Foreign Object Damage       (0,0)     -      
Total CASK excluding Fuel and special items 7,27 6,37 -12,3%

Adjusted EBITDAR Calculation excluding special items

in US$ Millions

      2Q2015     2Q2016     Var%
Operating Revenues as Reported 1.061,3 966,2
Operating Expenses 787,6 750,0
Aircraft Fuel       272,9     190,7      
Operating Income as reported       0,81     25,5     3048,2%
(-) Gain on Sale of Property and Equipment (F100) - (2,0)
(+) Loss on Sale of Property and Equipment (A319) - 6,4
(+) Loss on Adjustment of Aircraft Reasonable Value - 7,7
(+) Foreign Object Damage       4,3     -      
Operating Income adjusted       5,1     37,6     636,3%
Margin 0,5% 3,9%
(+) Depreciation and amortization       52,2     63,9      
Adjusted EBITDA       57,3     101,5     77,1%
Margin 5,4% 10,5%
(+) Aircraft Rentals       82,6     76,9      
Adjusted EBITDAR       140,0     178,4     27,5%
Margin 13,2% 18,5%

Interim Condensed Consolidated Statement of Comprehensive Income for the Six-month period ended June 30, 2015 and 2016 (Unaudited USD thousands)

      2016     2015
Operating revenue:
Passenger $ 1,532,733 $ 1,728,428
Cargo and other   438,412     448,581  
Total operating revenue 1,971,145 2,177,009
Operating expenses:
Flight Operations 27,810 33,090
Aircraft fuel 356,380 538,008
Ground operations 203,632 205,347
Aircraft rentals 156,515 162,311
Passenger services 71,587 72,037
Maintenance and repairs 142,851 153,270
Air traffic 99,465 100,819
Sales and marketing 278,934 315,029
General, administrative, and other 91,029 85,791
Salaries, wages and benefits 318,250 344,217
Depreciation, amortization   126,912     109,273  
Total operating expenses   1,873,365     2,119,192  
Operating profit   97,780     57,817  
Other non-operating income (expense):
Interest expense (89,573 ) (78,284 )
Interest income 6,457 10,484
Derivative instruments 4,521 1,562
Foreign Exchange   (29,787 )   27,743  
Profit before income tax   (10,602 )   19,322  
Income tax expense- current (13,798 ) (12,859 )
Income tax expense- deferred   4,407     4,195  
Total income tax expense (9,391 ) (8,664 )
Net profit for the period $ (19,992 ) $ 10,658  

Interim Condensed Consolidated Statement of Financial Position (in USD thousands)


As of
June 30,


As of
31, 2015

(Unaudited) (Audited)
Current assets:
Cash and cash equivalents 372,344 479,381
Restricted cash 4,642 5,397
Accounts receivable, net of provision for doubtful accounts 294,431 279,620
Accounts receivable from related parties 27,831 23,073
Expendable spare parts and supplies, net of provision for obsolescence 74,191 68,768
Prepaid expenses 47,036 45,708
Assets held for sale 7,677 3,323
Deposits and other assets 159,736 130,724
Total current assets 987,888 1,035,994
Non-current assets:
Available-for-sale securities 71 793
Deposits and other assets 177,311 246,486
Accounts receivable, net of provision for doubtful accounts 99.176 59.713
Intangible assets 408,404 413,766
Deferred tax assets 17,341 5,847
Property and equipment, net 4,589,054 4,599,346
Total non-current assets 5,291,357 5,325,951
Total assets 6,279,245 6,361,945

Interim Condensed Consolidated Statement of Financial Position (in USD thousands)


As of
June 30,


As of
December 31,

Liabilities and equity
Current liabilities:
Current portion of long-term debt 403,547 412,884
Accounts payable 482,118 480,592
Accounts payable to related parties 10,604 9,449
Accrued expenses 111,776 118,192
Provisions for legal claims 17,761 13,386
Provisions for return conditions 66,970 52,636
Employee benefits 35,372 32,876
Air traffic liability 496,017 433,575
Other liabilities 14,102 12,691
Total current liabilities 1,638,267 1,566,281
Non-current liabilities:
Long-term debt 2,928,059 3,060,110
Accounts payable 3,069 3,599
Provisions for return conditions 104,785 109,231
Employee benefits 158,115 127,720
Deferred tax liabilities 20,438 13,475
Air traffic liability 90,377 93,519
Other liabilities non-current 24,501 15,375
Total non-current liabilities 3,329,344 3,423,029
Total liabilities 4,967,611 4,989,310
Common stock 82,600 82,600
Preferred stock 42,023 42,023
Other capital reserve 458
Additional paid-in capital on common stock 234,567 234,567
Additional paid-in capital on preferred stock 469,273 469,273
Retained earnings 446,713 507,132
Revaluation and other reserves 18,394 18,394
Total equity attributable to the Company 1,294,028 1,353,989
Non-controlling interest 17,606 18,646
Total equity 1,311,634 1,372,635
Total liabilities and equity 6,279,245 6,361,945

Notes with regard to the statement of future expectations

This report contains statements of future expectations.

These may include words such as "expect", "estimate", "anticipate" "forecast", "plan", "believe" and similar expressions. These statements and the statements regarding the Company's beliefs and expectations do not represent historical facts and are based on current plans, projections, estimates, forecasts and therefore you should not place undue reliance on them. Statements regarding future expectations involve certain risks and uncertainties. Forward-looking statements involve inherent known and unknown risks, uncertainties and other factors, many of which are outside of the Company's control and difficult to predict. Avianca Holdings S.A. warns that a significant number of factors may cause the actual results to be materially different from those contained in any statement with regard to future expectations. Statements of this kind refer only to the date on which they are made, and the Company does not take responsibility for publicly updating any of them due to the occurrence of future or other events.

Glossary of Operating Performance Terms

This report contains terms relating to operating performance that are commonly used in the airline industry and are defined as follows:


ASK: Available seat kilometers represents aircraft seating capacity multiplied by the number of kilometers the seats are flown.

ATK: Available ton kilometers represents cargo ton capacity multiplied by the number of kilometers the cargo is flown.


Block Hours: Refers to the elapsed time between an aircraft leaving an airport gate and arriving at an airport gate.


CASK: Cost per available seat kilometer represents operating expenses divided by available seat kilometers (ASKs).

CASK ex-fuel: Represents operating expenses other than fuel divided by available seat kilometers (ASKs).

Code Share Agreement: refers to our code share agreements with other airlines with whom we have business arrangements to share the same flight. A seat can be purchased on one airline but is actually operated by a cooperating airline under a different flight number or code. The term "code" refers to the identifier used in flight schedules, generally the two-character IATA airline designator code and flight number. Code share alliances allow greater access to cities through a given airline's network without having to offer extra flights, and makes connections simpler by allowing single bookings across multiple planes.


Load Factor: Represents the percentage of aircraft seating capacity that is actually utilized and is calculated by dividing revenue passenger kilometers by available seat kilometers (ASKs).


RASK: Operating revenue per available seat kilometer represents operating revenue divided by available seat kilometers.

Revenue Passenger: Represents the total number of paying passengers (which do not include passengers redeeming LifeMiles, frequent flyer miles or other travel awards) flown on all flight segments (with each connecting segment being considered a separate flight segment).

RPK: Revenue passenger kilometers represent the number of kilometers flown by revenue passengers.

RTK: Revenue ton kilometers represents the total cargo tonnage uplifted multiplied by the number of kilometers the cargo is flown.


Technical Dispatch Reliability: Represents the percentage of scheduled flights that are not delayed at departure more than 15 minutes or cancelled, in each case due to technical problems.


Yield: Represents the average amount one passenger pays to fly one kilometer, or passenger revenue divided by revenue passenger kilometers (RPKs).

Second Quarter 2016 Earnings Results Conference

Call Day: August 22


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The Company has reported the 2Q 2016 numbers to the Colombian Financial Superintendence (Superintendencia Financiera de Colombia) and the U.S. Securities and Exchange Commission on August 19th after market close.

For further information please contact the Investor Relations Office at

1 When indicated the figures exclude the following one-time items: $2.0M: Accounting gain on sale of a Fokker 100; $6.4M: Accounting loss on sale of an Airbus A319; $7.7M: Accounting loss on adjustment of Aircraft reasonable value. (6M and 2Q2015 figures exclude one-time expenses informed on previous earnings releases)

2 Cash and cash equivalents + Restricted Cash + Available for sale securities + Short Term Certificates of bank deposits (Financial Statements -Note 8)

3 Net Adjusted Debt to EBITDAR: (Current Portion of Long Term debt + Long Term Debt + (Annual Rents Expense x 7) – (Cash and Cash Equivalents + Restricted Cash + Available for sale securities)) /12M EBITDAR

Avianca Holdings S.A.
Communications and Corporate Affairs
Gilma Úsuga, (57+1) - 587 77 00 ext. 1670 - 1711;
Claudia Arenas, (50+2) 2279-5700, (502) 2279-5600
Investor Relations Office
+571 587 77 00 ext. 1320/1321

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