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The rebirth of Germán Efromovich
Acquitted for the crimes of corruption and money laundering, Germán Efromovich has entered new businesses and now returns to the airline industry with his bet Aeroitalia. The Colombian-Bolivian businessman tells Forbes details of his life, his facet as a 'Youtuber' and how he is being reborn with the Synergy Group, his investment holding company.
It is noon on September 23, 2021 and Germán Efromovich enters a room full of journalists, cameramen and sound engineers. He goes up to the stage, greets the attendees and without much problem takes off his mask. It is the first time that the businessman gives official statements in Colombia when he is acquitted for the crimes of corruption and money laundering in Brazil.
"They barely let me fly, they returned my passports and I returned," Efromovich says – euphoricly – as he crossed a couple of words with the audience. It is an express trip of the engineer, to whom a judge of the Federal Court of Brasilia has just determined that the indications for which his brother and he are accused do not have "just cause".
Efromovich returns to Colombia light, calm, with a lot of learning and the desire to turn the page. He is already an old acquaintance in the country, but now he is willing to start again. To be reborn among the ashes. And so he has done, apparently, in the last eight months since that day at the Hotel Movich, on Calle 26, in Bogotá, where he announced that he would continue to look for new opportunities.
At 72 years old, the Colombian-Bolivian businessman has returned to the aeronautical scene now with Marc Bourgade, a former French investment banker based in the United Arab Emirates and Gaetano Intrieri, an Italian Harvard graduate who will be the CEO of Aeroitalia, a company that has just started operations in the European country and with which it seeks to break into the business with what Efromovich calls "low cask".
"I have said many times that I do not believe in that word of "low cost", because the "cost", are costs. The correct name there would be "low sales price", not "low cost", explains to Forbes the executive from an office in London. "You have to talk about the company's efficiencies and a better cost per kilometer so that there if you can sell the tickets competitively compared to any other airline."
Aeroitalia is its new airline and has no "relationship or link", as Efromovich says, with the defunct Alitalia, which was subsidized with public money from the Italian state, but stopped operating after accumulating millionaire losses. It is the bet of some veterans who know aviation, costs and commercial strategy, in which the role of the entrepreneur will be to serve as non-executive president without any type of labor restriction.
"We had the happiness of getting the 'dream team' of aviation again. We have managed in four months and a week to be flying with passengers, with the licenses and with the permits of the Italian authorities," he explains.
Based in Rome and with two Boeing 737 aircraft for charter flights, to which six more are expected to be added in the coming months, Aeroitalia has already started engines to serve the European summer. It has almost 5,000 flight hours contracted for the coming weeks and they are working to finalize details of the software, with which they will connect to all reservation systems. It is expected that from November they will start selling regular tickets throughout Europe, Africa and the Middle East.
Efromovich's new flight plan also lists the American continent as a key destination in Aeroitalia's growth. At the moment, he says, he is preparing flight plans for international routes with widebody aircraft, so that by July 2023 they can be flying to Argentina, Brazil, Colombia, Mexico and the United States. "We started with more than 40 crews and the strategy should lead us to reach 2,500 or 3,000 employees," he says.
True to his style of restructuring, his new bet is based on the opportunities that exist in the airline sector after the pandemic. Those who know him and have worked with him emphasize that he is a disciplined, cunning man with a great sense of smell to find good business opportunities. Hence, Bougarde has chosen him to be a fundamental piece of this company, so he seeks to replicate what he once did with Avianca: buy a bankrupt, forgotten company and turn it into one of the largest in the region.
But to talk about Avianca, one of the great episodes in his life, it is better to start from the beginning: from the roots or even from the eggs. Born in Bolivia, Efromovich is the son of two Polish Jewish migrants who arrived in South America in the mid-twentieth century after escaping World War II. Her deepest memories go back to Arika, in Chile, where she grew up and lived part of her childhood and adolescence.
Although his tenacity led him to build an empire over the years, the truth is that his first house was a 24-foot container, in which his bed was a trunk with a piece of foam as a mattress. He remembers that at the age of 10 he had his first job in an import port that his father managed and with the first salary he bought his first car: a match box -Hot Wheels style- that represents the 24 hours of Le Mans, the famous vehicle race.
His first company was at the age of 16, when his schoolmates still cared about the games of the time. "It was a quail company, it produced quail eggs, exported and sold to supermarkets," Efromovich says gracefully. In 1964, he moved with his family to Brazil, where he began studying mechanical engineering. He set up an academy where he taught and years later graduated.
His first official vehicle was bought in 1969 and was a Volkswagen Beattle of the 65 for which he paid 600 cruzeiros, the country's old currency. Far from starting a new business, he opted to look for work, got married in 1975 and became part of a global inspection company. However, a year later, he resigned, convinced that he wanted to start a company.
"My settlement was about 338 dollars at the time and I decided to start a company," says the businessman. For the following years his name began to shine among the oil industry of that country, making his way into new businesses and consolidating a promising career in this industry. In fact, it was at that moment that, together with his brother, he decided to start the Synergy Group, an oil inspection company that operated as a trust. One of the anecdotes is that one day they were paid a bill with a plane, which years later would serve to start Ocean Air, which one day became known as Avianca Brasil.
Efromovich landed in Colombia for the first time in the second half of the 90's, at the height of drug trafficking, with a country full of guerrillas and a state inability to guarantee the legal and operational security of the projects. "We arrived at the end of '98 and the beginning of '99 we arrived by Metapetroleum," which years later would become what would one day become known as Pacífic Rubiales.
In his advance to conquer Colombia and make his way in the Eastern Plains, one day he was offered Avianca, despite the fact that until that moment he only had four planes in Brazil. He did not know the air sector in depth, but his business vision led him to enter what was then a bankrupt airline, with serious financial problems and about to leave Chapter 11, as happened last year.
"It was the oldest company and it was a symbol of Colombia. I didn't know if we had the condition, but they insisted and we looked at the offer," says Efromovich. The Santo Domingo Group, by then led by Julio Mario Santo Domingo, completed the business with the Colombian-Bolivian businessman, although the negotiations that were made with the then president of the National Federation of Coffee Growers, Gabriel Silva, an institution that also had an equity stake in the airline, were key in the equation.
Although by that time Avianca was going through one of the worst turbulence in its history, the agreement was reached and agreed in Houston in what was literally called a "napkin business". Silva and Efromovich wrote on paper some details of the agreement, which were then handed over to lawyers, who defined the acquisition.
Efromovich bought Avianca for $64 million in 2004 and put As CEO the current president of Decameron, Fabio Villegas. Since then, the entrepreneur has added some strategic stakes in the regional airline industry, and even used a brand agreement to rename Ocean Air, as Avianca Brasil. All these moves worked for him, leading the airline to consolidate glorious years with an IPO on the Colombian Stock Exchange and an IPO on Wall Street.
In the upper echelons of business, Efromovich was branded as an expert in restructuring problems and saving companies. Some media called him a "magician" and others "a miracle." The truth is that his bold way of operating led him to reach Colombian nationality.
This even caught the attention of billionaire Roberto Kriete, who, in 2009, along with Efromovich, made public his intention to merge Avianca and Taca. This alliance began that year, although 10 years later it would end in a lawsuit that would escalate to New York, with lawyers in between and an Avianca that was plunged into a difficult financial situation.
Due to variables such as the devaluation, the rise of the 'low cost', some unfulfilled credits and the pilot strike of 2017, Efromovich failed to maneuver the last turbulence of the company and in 2019, after a coverage agreement for a loan to the American United Airlines, he handed over the management of the airline to the minority partner Kingsland, owned by the Kriete family.
In the middle of the pandemic, Efromovich retired from the company and no one heard from him again. However, his name returned to the public light when at the end of 2020 his arrest and that of his brother were ordered in Brazil, accused of paying millionaire bribes to obtain contracts in the company Transpetro, a subsidiary of the oil company Petrobras.
Some debts of the past, the accusations of justice and a series of foreign episodes led him to divest in strategic assets that he had in Colombia in which the Movich hotel chain is located. "Obviously because of the economic problems I had to divest, but people keep me in the management and in the boards. The hotel group did a very good job and survived the pandemic, so I'm pleased to remain united with them," he says.
The new projects
As if he were 16 years old when he started selling eggs or 54 when he took the reins of Avianca, Efromovich seems not to give up and now he is going after the consolidation of new projects and businesses. Not only does he spend his time in meetings and boards of directors, but he also takes some free spaces to make videos through YouTube, giving business lessons and telling some details of his life.
I'm trying to convey my experience and leaving a grain of sand," he says.
Its focus remains on moving Aeroitalia forward, as it did with Avianca in 2004. Along with this project, the engineer, who has a network of contacts around the world, is also working on the restructuring of Avian Líneas Aéreas, an Argentine airline that has just been bought by his friend Bourgade to be restructured and put back to flying.
"The company was bought and is in judicial recovery. I am helping Mr Bourgade, who intends to put her up and running again. That is to say that in the middle of the year that restructured airline could start flying," adds Efromovich.
To these ambitious aerial projects is added its investment in Helicol, a helicopter operator that is part of the Synergy group. Today the company is going through structural challenges in the face of the adjustments of the industry, so the entrepreneur trusts that in the coming months he will be in tune to continue consolidating this business model in the country.
In the midst of these new businesses and the opportunity to land again in South America from Italy, the engineer does not rule out telling his whole story in a book. "We are thinking about it and who knows if in the next two years we will achieve it," he says with a smile on his face. "I am 72 years old and if the man gives me 10 more years of health, I want to give back everything I have had and what I have learned. These are many experiences of a life that I would like to transmit."
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