Avianca Holdings SA dropped the most since November after Venezuela devalued its currency for airlines, eroding the value of new sales in the country.
American depositary receipts in the carrier, operator of Venezuela’s third-biggest international airline by capacity, tumbled 4.5 percent to $17.35 at the close of trading in New York, the steepest one-day decline since Nov. 6. Copa Holdings SA, the second-biggest, dropped 4.2 percent to $140.93.
Airlines, Venezuelans traveling abroad and foreigners sending remittances home must use a secondary exchange rate determined at weekly auctions, Economy Vice President Rafael Ramirez said yesterday. The rate set at the latest auction was 11.36 bolivars per dollar, compared with the official rate of 6.3. Bogota-based Avianca has $270 million, or half of its cash holdings, in the country, according to a third-quarter report.
“Any kind of headline like that from Venezuela creates a little nervousness,” Rupert Stebbings, managing director of equities and research at Bancolombia SA, said in a phone interview from Medellin. “It’s too early to know what the precise effect is. Venezuela needs international airlines to work with them. It’s a delicate situation for both sides.”
Airlines have an equivalent of $3.3 billion in bolivars measured at the official rate that they can’t expatriate because of exchange controls, according to the International Air Transport Association.
Avianca’s press office didn’t immediately reply to an e-mailed request for comment about the impact of the devaluation. The carrier operates 124 monthly flights to the Venezuelan cities of Caracas and Valencia, according to Colombian regulators.
American Airlines Group Inc. is the biggest foreign airline in Venezuela.
Gustavo Vargas, a spokesman for Panama City-based Copa, said in an e-mailed response to questions that the company is working closely with airline associations and the Venezuelan government “to better understand the consequences of the new regulations and, in particular, how we will function from now on.”
Ecuador’s state-owned Tame Linea Aerea suspended indefinitely all of its seven weekly flights from Caracas today because of payment delays, the company said in a statement.
Since taking office in April, Venezuelan President Nicolas Maduro has struggled to boost growth and rein in inflation in a country with the world’s biggest oil reserves. Venezuela’s international reserves fell to $20.5 billion this month from more than $28 billion a year ago.