Avianca Holdings (AVH) has confirmed its majority shareholder Synergy Aerospace has suffered additional breaches of contract, this time relating to the purchase of Avions de Transport Régional turboprop equipment.

The Panama-based holding firm said in its 1Q19 financial statements that at the end of last month, two facility agents in its ECA financings had sent it reservation of rights letters relating to Synergy's purchase of certain ATR turboprops, which are not operated by Avianca.

Though the aircraft were not specified, the ch-aviation fleets module shows Synergy currently owns two ATR42-600s and six ATR72-600s in service with Mexico's Aeromar Airlines (VW, México City Int'l), as well as two ATR72-600s in service for Avian Líneas Aéreas trading as Avianca Argentina.

In the letters, the facility agents said Synergy Aerospace had failed to comply with certain obligations under another transaction that is also supported by the ECAs. To date, AVH said it has not been informed of the precise date of the stated non-compliance.

"The non-compliance of Synergy under its ECA obligations could cause a potential default under Avianca Holdings’ ECA contracts," it warned.

AVH said that the non-compliance with said obligations does not constitute a typical “cross-default”, wherein a failure of a related third party to comply with obligations to a common creditor results in an Event of Default. Therefore, in order for the facility agents to exercise remedies due to the alleged default, they would be required to demonstrate that Synergy Aerospace has not complied with its obligations.

However, AVH said that potential default provisions amount to USD911.9 million out of which USD168.8 million has already been classified under current liabilities. The remaining USD743.1 million could be restated as a current liability should Synergy's ECA noncompliance persist.

"It is worth mentioning that AVH is current under its ECA obligations and no event has been notified to AVH to anticipate any of its obligations," it said.

AVH said it is currently in the process of seeking to better understand the nature of Synergy’s non-compliance with its ECA obligations.

Panama-based Synergy Aerospace controls 78.1% of AVH's voting rights and is itself wholly-owned by Synergy Group, another Panamanian holding which is indirectly owned by Germán and José Efromovich. It is already on the hook for having breached the terms of a USD456 million loan from United Continental Holdings which could see the US carrier holding take control of AVH.