Avianca Holdings Reports Third Quarter 2016 Adjusted Operating Profit1 Of $83.4 Million

Avianca Holdings S.A. (NYSE: AVH) (BVC: PFAVH) today reported its financial results for the third quarter of 2016 (3Q 2016). All figures are expressed in millions of US dollars unless otherwise stated. The information within 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 third quarter 2015 (3Q 2015) numbers. Figures and operating metrics of Avianca Holdings S.A. ("Avianca Holdings" or "the Company") are presented on a consolidated basis.



Financial Highlights

(9 months ended September 30 th)
($ millions)   9M-15   9M-16
Revenues 3.3Bn 3.0Bn
EBITDAR 542.3 610.3
EBIT 129.9 181.2
EBITDAR 1 567.7 622.4
EBIT 1 155.3 193.3
Net Income 112.7 17.8
Net income* 1 108.8 55.2

*Excluding Fx and Derivative Charges

(3 months ended September 30 th)
($ millions)   2015   2016
Revenues 1.1Bn 1.1Bn
EBITDAR 212.9 229.1
EBIT 72.1 83.4
EBITDAR 1 222.6 229.1
EBIT 1 81.8 83.4
Net Income 102.1 37.8
Net income* 1 65.2 47.6

*Excluding Fx and Derivative Charges


(9 months ended September 30 h)


EBITDAR% 16.5% 20.1%
EBIT % 3.9% 6.0%
EBITDAR % 1 17.7% 20.9%
EBIT % 1 4.8% 6.5%
Net income % 3.4% 0.6%
Net income%* 1 3.4% 1.8%

*Excluding Fx and Derivative Charges

(3 months ended September 30 h)
  2015   2016
EBITDAR% 19.1% 21.6
EBIT % 6.5 % 7.9%
EBITDAR % 1 20.4% 21.6%
EBIT % 1 7.5% 7.9%
Net income % 9.1% 3.6%
Net Income%* 1 6.0% 4.5%

*Excluding Fx and Derivative Charges

Operational Highlights

(9 months ended September 30 h)
  9M-15   9M-16
Passengers 20.99M 21.81M
ASKs 32.95Bn 35.05Bn
RPKs 26.26Bn 28.09Bn
Load Factor 79.7% 80.2%
RASK 10.00 8.65
CASK 9.6 8.1

(3 months ended September 30 h)
  2015   2016
Passengers 7.4M 7.6M
ASKs 11.6Bn 12.0Bn
RPKs 9.4Bn 10.0Bn
Load Factor 81.3% 83.5%
RASK 9.6 8.9
CASK 9.0 8.2

Third Quarter 2016 Highlights
  • Operating income (EBIT) increased in the third quarter 2016, reaching $83.4 million, with an improved operating margin of 7.9%. This represents a 36 bps 1 quarter on quarter increase resulting from efficiencies derived through the Company's expense reduction program and revised hedging policy. Further, operating revenues 1 reached $1.1 billion for the quarter.
  • These results were primarily driven by a 3.1% reduction in total operating costs 1 as the Company benefited from its revised fuel hedging strategy and leaner cost structure. This was partially offset by a 7.6% decrease in non-passenger revenues 1 and a slight reduction in passenger revenues (1.7%).
  • For the 3 rd quarter of 2016 yields reached 8.8 cents, a 7.4% increase when compared to the yield of 2Q 2016. This represents Avianca's first quarter over quarter yield increase since the second quarter 2014. This trend was supported by an increase of 5.9% in third quarter 2016 traffic numbers (RPKs) when compared to the same quarter last year.
  • Cost per available seat kilometer (CASK 1) decreased 6.0% to 8.2 cents in 3Q 2016, compared to 8.7 cents in 3Q 2015. This was primarily driven by lower jet fuel prices, which decreased by 10% during the quarter, as well as by a 16.6% year on year reduction in maintenance and repairs expenses. In addition, Avianca's cost control initiatives continue to yield efficiencies. CASK ex-fuel 1 therefore declined 0.5%, to 6.4 cents.
  • EBITDAR for the 3Q 2016 was $229.1 million, while the EBITDAR margin reached 21.6%; a 118 bps 1 increase when compared to 2015.
  • Adjusted Net income excluding special items totaled $47.6 million. Adjusted net income margin 1 for 3Q 2016 therefore reached 4.5%.
  • Avianca's leverage position (Net Adjusted debt to EBITDAR) decreased to 5.99x from 6.79x on December 31, 2015, as the Company reduced its total debt by $224.6 million in conjunction with an improvement in profitability.
  • Capacity, measured in Available Seat Kilometers (ASKs), increased 3.1% during 3Q 2016, primarily due to the annualized effect of the international capacity deployed to Europe during 2015. The Company continued to see robust traffic numbers on its international routes, particularly to Europe, South America and North America. Passenger traffic, measured in Revenue Passenger Kilometers (RPKs), increased by 5.9%, reaching a consolidated load factor of 83.5% across the network.
  • Between July and September, the Company took delivery of one sharklet-equipped A319 and two new wide-body B787-8 aircraft. Avianca Holdings S.A. and its subsidiaries therefore ended the quarter with a consolidated operating fleet of 177 aircraft.

CEO Message

Dear Shareholders,

While we continue to experience some political and macroeconomic uncertainty in several markets throughout Latin America during the third quarter of 2016, Avianca benefited from welcome oil price stability as well as exchange rate steadiness in key markets. These positive developments allowed Avianca to adjust its pricing strategy, providing our customers with improved predictability in terms of travel expenditures and purchasing power when abroad.

Said stability has fueled renewed demand on both the international and domestic fronts. Growth in terms of ASKs has been leveled throughout our network, at around 3%, as the annualization effect of last year's capacity deployment diminishes. As a result, passenger traffic numbers, measured in RPK, grew by 5.9% when compared to the same period in 2015, driven by steady demand in our home markets and strong sales for our international routes. In particular, the services from Bogota to Buenos Aires, Los Angeles, London and Madrid all registered load factors above 85%. As such, the 83.5% load factor registered this quarter across the network is the strongest since the integration between AVIANCA and TACA. Similarly, due to the particularly strong demand for our routes to and from Spain, we decided to substantially increase frequencies to the Iberian Peninsula, from 21 to 35 weekly frequencies, in order to best respond to our customers' needs.

In line with the fleet plan we established at the beginning of the year, we have incorporated three brand new aircraft: one sharklet-equipped single aisle A319 and two wide body B787-8. We therefore ended the quarter with an operating fleet comprised of 177 aircraft.

Apart from the positive trends we're seeing across our network, we were also able to achieve several important corporate milestones during the third quarter. We began operations at our Maintenance, Repair and Overhaul (MRO) facility in Rio Negro, which positions Avianca at the forefront of international aeronautic maintenance industry. With an investment of more than USD50 million, Avianca's MRO not only allows for simultaneous maintenance of up to five single aisle aircraft but also ensures significant improvement in future cost control.

Avianca also achieved a 3.1% reduction in Operating Costs 1 this quarter, in line with our ongoing effort to streamline our cost structure throughout the organization. Said reduction was mainly driven by a decrease in maintenance and repairs as well as in crew training expenses.

Further, our LifeMiles loyalty program achieved solid results during the third quarter. Its cobranded credit card base increased by 22.3%, reaching a total of 520,000 credit cards by quarter's end. As a result, the program ended the quarter with 6.9 million members, which represents an 8.9% year on year increase. On October 19, 2016, LifeMiles signed a new partnership with Grupo Bancolombia, one of the leading franchises in Colombia and Central America, with over 11 million clients and USD 54.5 billion in total assets. This partnership is an important step in consolidating the loyalty program's position within the region. It allows our new clients from four new markets to accumulate and redeem their miles across the entire Avianca network.

The milestones I have described, combined with our successful strategy, have resulted in a profitable third quarter for Avianca. The Company reported USD 1.1 billion in revenues 1 this quarter, while operational costs 1 decreased by 3.1% to USD 978.8 million. Avianca therefore recorded a 7.9% operating margin (EBIT) for the third quarter 2016. As a consequence of said profitability and in line with the Company's efforts to reduce its debt burden Avianca decreased its total debt by $224.6 million over the last nine months, resulting in an adjusted net debt to EBTIDAR multiple of 5.99x.

Avianca also made important progress related to its organizational restructuring this quarter, eliminating the complexity of our reporting structure and redefining upper and middle management positions. Our new team looks forward to addressing any other new challenges that may lie ahead.

Along these lines, it is with great pleasure that we announce that Roberto Held Otero has joined Avianca Holdings as our new CFO, and assumed his new position on November 1, 2016. Prior to joining Avianca, Roberto was CFO of PROCAFECOL S.A., which markets premium Colombian coffee and manages the Juan Valdez brand worldwide, where he led and improved financial processes automation and efficiency. Before that he spent over 13 years in senior capital markets positions with Citigroup and the Bolsa de Valores of Colombia. Given his considerable work experience and specific skillset in this area, I am confident that Roberto will be an invaluable asset to Avianca.

Gerardo Grajales, who led the Company's Finance team for the past 14 years, will now be heading Avianca's new strategic business unit. Said department will focus on developing and strengthening Avianca's different business units, such as LifeMiles, Avianca Cargo, Deprisa, and Avianca Services among others. I'd like to take this opportunity to thank Gerardo for his commitment and achievements which have transformed Avianca into a strong, well regarded and more profitable company- both domestically and internationally.

Finally, as we prepare for the fourth quarter 2016 peak season, we reconfirm our EBIT margin guidance set out at the beginning of 2016 of 5.5% - 7.5%. While we reaffirm our commitment to providing Avianca's customers with best in class service, we also will continue to focus on generating profitable growth for all of our stakeholders.


Hernán Rincón

Chief Executive Officer
Consolidated Financial and Operational   3Q-15   3Q-16   ¿ Vs. 3Q-15

Highlights (1)
ASK's (mm) 11,618 11,973 3.1%
RPK's (mm) 9,441 9,997 5.9%
Total Passengers (in millions) 7,373 7,609 3.2%
Load Factor 81.3% 83.5% 223bp
Departures 75,603 76,404 1.1%
Block Hours 139,882 143,668 2.7%
Stage length (km) 1,021 1,026 0.4%
Fuel Consumption Gallons (000's)     119,525     123,834   3.6%
Yield (cents) 9.5 8.8 -7.1%
RASK (cents) 9.6 8.9 -7.7%
PRASK (cents) 7.7 7.4 -4.6%
CASK (cents) 9.0 8.2 -9.1%
CASK ex. Fuel (cents) 6.8 6.4 -4.9%
CASK (Adjusted) (cents) 8.7 8.2 -6.0%
CASK ex. Fuel (Adjusted) (cents)     6.5     6.4   -0.5%
Foreign exchange (average) COP/US$ $ 2,935.6 $ 3,249.0 10.7%
Foreign exchange (end of period) COP/US$ $ 3,121.9 $ 3,022.4 -3.2%
WTI (average) per barrel $ 46.4 $ 44.9 -3.4%
Jet Fuel Crack (average) per barrel $ 14.2 $ 9.6 -32.9%
US Gulf Coast ( Jet Fuel average) per barrel $ 60.7 $ 54.4 -10.3%
Fuel price per Gallon (including hedge)   $ 2.17   $ 1.69   -22.1%
Operating Revenues ($M) $ 1,116.8 $ 1,062.2 -4.9%
EBITDAR ($M) $ 212.9 $ 229.1 7.6%
EBITDAR Margin 19.1% 21.6% 250bp
EBITDA ($M) $ 132.9 $ 149.8 12.7%
EBITDA Margin 11.9% 14.1% 220bp
Operating Income ($M) $ 72.1 $ 83.4 15.7%
Operating Margin ($M) 6.5% 7.9% 140bp
Net Income ($M) $ 102.1 $ 37,8 -62.9%
Net Income Margin 9.1% 3.6% (558)bp
EBITDAR (Adjusted) ($M) $ 222.6 $ 229.1 2.9%
EBITDAR Margin (Adjusted) 20.4% 21.6% 118bp
EBITDA (Adjusted) ($M) $ 142.6 $ 149.8 5.0%
EBITDA Margin(Adjusted) 13.1% 14.1% 104bp
Operating Income (Adjusted) ($M) $ 81.8 $ 83.4 2.0%
Operating Margin ($M) (Adjusted) 7.5% 7.9% 36bp
Adjusted Net Income ($M) $ 65.2 $ 47.6 -27.0%
Net Income Margin (Adjusted)     6.0%     4.5%   (149)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 3Q 2016 Results

Third quarter 2016 was a strong quarter for Avianca; the Company reached an operating income (EBIT) of $83.4 million, with an operating income (EBIT 1) margin of 7.9%; a 36 bps 1 year on year increase. These results were mainly driven by a 3.1% reduction in total operating costs 1 as the Company has begun benefiting from its revised hedging policy; reducing expenses by approximately USD 30 million when compared to 3Q 2015. The Company has also generated important efficiencies through cost cutting initiatives, as a result maintenance expenses 1 decreased 16.6% throughout the period. Third quarter 2016 CASK ex-fuel 1 therefore declined 0.5%, to 6.4 cents. This was partially offset by a 2.7% decline in total revenues 1, primarily driven by a 7.6% reduction in Non-Passenger Revenues 1. Passenger revenues decreased by only 1.7% as compared to the same period last year.

Total operating revenues 1 amounted to approximately $1.1 billion during 3Q 2016. This represents a 2.7% year on year decrease, partially due to a 1.7% decline in passenger revenue, a 7.1% yield decline, as well as a 7.6% decrease in cargo and other revenues 1. This represents Avianca's first quarter over quarter yield increase since the second quarter 2014. Cargo and other revenue 1 represented 17.1% of total revenues in the third quarter 2016. The latter was primarily driven by a 1.7% decrease in average fare, as well as a decrease in the total tons transported associated with lower import volumes from North America to Colombia, Brazil and Ecuador.

The LifeMiles Loyalty Program continued to deliver strong results during the 3Q2016, with an 11.7% increase in revenues as compared to the same period of 2015. In terms of membership growth, the quarter ended with more than 6.9 million members, which represents an 8.9% year on year increase. During the same period, the retail partnership program continued to expand, with a 6.7% increase in the number of new commercial partners, to 303. Finally, LifeMiles active co-branded cards ended the quarter with more than 520,000 cards, which represents a 22.3% year on year increase.

Avianca transported more than 7.5 million passengers in the third quarter of 2016; a 3.2% year on year increase. Traffic figures (RPKs) increased above capacity (ASKs) resulting in a consolidated load factor of 83.5% the strongest since the integration between AVIANCA and TACA. Therefore, routes to Europe during September 2016 reached an average consolidated load factor of 90.9%, and of 89.3% from Bogota to Buenos Aires, contributing to the strong 15.9% traffic growth from home markets to South America.

3Q 2016 operating expenses 1 reached $978.8 million; 3.1% year on year decrease. This was primarily driven by a 19.3% decline in Fuel Expenses associated with lower jet fuel prices and changes in Avianca´s hedging policy. Adjusted for cargo discount and for comparison purposes, Sales and Marketing 1 expenses decreased by 3.1% as compared to 3Q 2015. Further, Maintenance and Repairs decreased 16.6% due to the reduction in fleet re-delivery provisions as well as a decline in engine overhaul expenses. These results were partially offset by a 7.5% increase in Salaries and Wages as the Company adjusted for severance payments in line with the organizational restructuring and had an increase in Ground Operation expenses.

As part of the Company's on-going fuel hedging strategy, a total of 104.2 million gallons of fuel were hedged at the end of the third quarter 2016, of which 58.1 million gallons correspond to approximately 55% of the total expected volume to be consumed over 2016. The remaining volume represents approximately 5.0% of the total expected fuel consumption from 2017 to 2018. Coverage levels were set at $1.39 per gallon. During 2016, hedging expenses are expected to range between $5 to $7 million per quarter, allowing the Company to cap its hedging expenses in order to derive additional benefits from lower fuel prices throughout the year.

In accordance with the Company's fleet plan, Avianca took delivery of one sharklet-equipped A319 and two new wide body B787-8 aircraft between July and September 2016. Avianca Holdings S.A. and its subsidiaries therefore ended the quarter with a consolidated operating fleet of 177 aircraft.

The Company recorded other non-operating expenses of $47.8 million for the 3Q 2016, compared to a non-operating income of $8.1 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. The Company also recorded of $10.0 million in expenses related to the foreign exchange non-cash translation adjustments, compared to a $43.9 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 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 $411.3 million. Including short-term certificates and bank deposits, adjusted cash and cash equivalents and available-for-sale securities (other current assets) came in at $420.9 million, equivalent to about 10.3% of revenues for the last twelve months. As of September 30, 2016 the Company valuated its cash balances held in Venezuela at the latest DICOM exchange rate of 658.9 VEF per 1.00 USD, resulting in a cumulative loss of $4.9 million. Accordingly, the carrying amount of cash balances held in Venezuela of $0.4 million have been classified as cash and cash equivalents, which is expected to be used over the next three months as part of the normal operations in Venezuela.

In line with the Company's deleveraging strategy, as of September 30, 2016, Avianca reduced its debt burden by $224.6 million. As such Avianca´s leverage position (Net Adjusted debt to EBITDAR) decreased to 5.99x, from 6.79x on December 31, 2015. Consequently, the Company's total long term debt amounted to $2.85 billion, while total liabilities came in at $4.94 billion.

Full Year 2016 - Outlook

The Company will continue to execute cost saving initiatives and 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 (ASK'S) 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)
  3Q 2015   3Q 2016   Var%
Operating revenue:
Passenger 7.71 7.35 -4.6%
Cargo and other 1.91   1.52   -20.4%
Total Operating revenues 9.61 8.87 -7.7%
Operating expenses:
Flight Operations 0.11 0.12 10.5%
Aircraft fuel 2.24 1.75 -21.7%
Ground Operations 0.86 0.93 7.4%
Aircraft rentals 0.69 0.66 -3.8%
Passenger services 0.32 0.33 3.2%
Maintenance and repairs 0.80 0.58 -27.5%
Air traffic 0.42 0.47 13.1%
Sales and marketing 1.37 1.09 -20.7%
General. administrative. and other 0.30 0.27 -10.7%
Salaries. wages and benefits 1.36 1.42 4.3%
Depreciation and amortization 0.52   0.55   5.9%
Total operating expense 8.99   8.18   -9.1%
Operating income 0.62   0.70   12.2%
Total CASK 8.99   8.18   -9.1%
CASK ex. Fuel 6.76   6.43   -4.9%
Total Cask (Adjusted) 8.69   8.18   -6.0%
CASK ex. Fuel (Adjusted) 6.46   6.43   -0.5%
Yield 9.48   8.81   -7.1%

Non-IFRS Financial Measure Reconciliation

In USD Millions
3Q2015 3Q2016 Var%
Net Income as Reported 102.1 37.8 -62.9%
Special items (adjustments):
(-) Gain on sale of property and equipment (0.3) -
(-) Derivative Instruments 2.7 0.3
(-) Foreign exchange gain (loss)   43.9   (10.0)    
Net Income Adjusted 55.8 47.6 -14.7%

Reconciliation of Operating Cost per ASK Excluding Special Items

In US Cents
3Q2015 3Q2016 Var%
Total CASK as reported 9.0 8.2 -9.1%
Aircraft Fuel 2.2 1.8
Total CASK excluding Fuel as reported 6.8 6.4 -4.9%
Gain on sale of property and equipment   (0.0)   -    
Total CASK excluding Fuel and special items 6.8 6.4 -4.9%

Adjusted EBITDAR Calculation excluding special items

in US$ Millions



Operating Revenues as Reported 1 1,091.9 1,062.2
Operating Expenses 1 760.1 769.3
Aircraft Fuel   259.7   209.5    
Operating Income   72.1   83.4   15.7%
(+) Foreign Object Damage (FOD) 2.0
(+) Maintenance Provisions Fee Schedule update   7.7        
Operating Income Adjusted   81.8   83.4    
Margin 7.5% 7.9%
(+) Depreciation and amortization   60.8   66.4    
Adjusted EBITDA   142.6   149.8   5.0%
Margin 13.1% 14.1%
(+) Aircraft Rentals   80.0   79.3    
Adjusted EBITDAR   222.6   229.1   2.9%
Margin 20.4% 21.6%

Interim Condensed Consolidated Statement of Comprehensive Income for the Nine-month period ended September 30. 2015 and 2016 (Unaudited USD thousands)

  2016     2015  
Operating revenue:
Passenger $ 2,413,119 $ 2,623,595
Cargo and other   620,197     670,248  
Total operating revenue 3,033,316 3,293,843
Operating expenses:
Flight Operations 42,742 46,203
Aircraft fuel 565,903 797,703
Ground operations 314,398 305,408
Aircraft rentals 235,809 242,306
Passenger services 111,072 109,181
Maintenance and repairs 212,190 246,124
Air traffic 156,023 149,355
Sales and marketing 409,129 474,325
General. administrative. and other 122,993 120,519
Salaries. wages and benefits 488,599 502,705
Depreciation. amortization   193,279     170,101  
Total operating expenses   2,852,137     3,163,930  
Operating profit   181,179     129,913  
Other non-operating income (expense):
Interest expense (131,765 ) (121,292 )
Interest income 10,666 14,969
Derivative instruments 4,785 4,212
Foreign Exchange   (39,836 )   71,669  
Profit before income tax   25,029     99,471  
Income tax expense- current (19,582 ) (28,883 )
Income tax expense- deferred   12,382     42,138  
Total income tax expense (7,200 ) 13,255
Net profit for the period $ 17,829   $ 112,726  

Interim Condensed Consolidated Statement of Financial Position (in USD thousands)
  As of   As of
September 30.


31. 2015
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents 411,151 479,381
Restricted cash 11,157 5,397
Accounts receivable. net of provision for doubtful accounts 312,982 279,620
Accounts receivable from related parties 25,434 23,073
Expendable spare parts and supplies. net of provision for obsolescence 79,120 68,768
Prepaid expenses 48,174 45,708
Assets held for sale 5,112 3,323
Deposits and other assets 148,737 130,724
Total current assets 1,041,867 1,035,994
Non-current assets:
Available-for-sale securities 118 793
Deposits and other assets 158,272 246,486
Accounts receivable. net of provision for doubtful accounts 96,735 59,713
Intangible assets 407,363 413,766
Deferred tax assets 23,692 5,847
Property and equipment. net 4,540,392 4,599,346
Total non-current assets 5,226,572 5,325,951
Total assets 6,268,439 6,361,945

Interim Condensed Consolidated Statement of Financial Position (in USD thousands)
  As of   As of
September 30, December 31,
2016 2015
Liabilities and equity
Current liabilities:
Current portion of long-term debt 400,296 412,884
Accounts payable 488,749 480,592
Accounts payable to related parties 5,667 9,449
Accrued expenses 123,332 118,192
Provisions for legal claims 18,031 13,386
Provisions for return conditions 51,203 52,636
Employee benefits 35,769 32,876
Air traffic liability 526,403 433,575
Other liabilities 13,582 12,691
Total current liabilities 1,662,032 1,566,281
Non-current liabilities:
Long-term debt 2,848,147 3,060,110
Accounts payable 2,968 3,599
Provisions for return conditions 125,931 109,231
Employee benefits 173,422 127,720
Deferred tax liabilities 19,208 13,475
Air traffic liability 92,364 93,519
Other liabilities non-current 15,161 15,375
Total non-current liabilities 3,277,201 3,423,029
Total liabilities 4,940,233 4,989,310
Common stock 82,600 82,600
Preferred stock 42,023 42,023
Other capital reserve 646
Additional paid-in capital on common stock 234,567 234,567
Additional paid-in capital on preferred stock 469,273 469,273
Retained earnings 463,353 507,132
Revaluation and other reserves 18,394 18,394
Total equity attributable to the Company 1,310,210 1,353,989
Non-controlling interest 17,996 18,646
Total equity 1,328,206 1,372,635
Total liabilities and equity 6,268,439 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).

1As of the 3Q of 2016 the company improved the classification for some of its accounts in its ERP system which have no effect on nominal profitability and that for comparison purposes affect Cargo & Others as well as sales and Marketing.

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