##### Table of Contents

As filed with the Securities and Exchange Commission on April 30, 2015





UNITED STATES

SECURITIES
AND EXCHANGE COMMISSION

Washington, D.C. 20549





FORM 20-F







| ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------------

OR



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended December 31, 2014

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

OR



| ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | -------------------------------------------------------------------------------------------

Commission File Number 001-36142





AVIANCA
HOLDINGS S.A.

(Exact name of registrant as specified in its charter)





Avianca Holdings S.A.

(Translation of registrants name into English)

Republic of Panama

(Jurisdiction of incorporation or organization)

Aquilino de la Guardia Calle No. 8, Panama City,

Republic of Panama

(+507) 205-600

(Address
of principal executive offices)

Andrés Felipe Ruiz Vesga

Tel: (57+1) - 587 77 00 ext. 7575Fax: (57+1) - 423 55 00 ext. 2544/2474

Address: Avenida calle 26 # 59  15 P5, Bogotá, Colombia

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:







|                                                                                                                                                      |  |                                          
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------
|Title of Each Class                                                                                                                                   |  | Name of Each Exchange on Which Registered
|American Depositary Shares (as evidenced by American Depositary Receipts), each representing 8 Preferred Shares, with a par value of $0.125 per share |  | New York Stock Exchange                  





Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of December 31, 2014:

Common Shares  660,800,003

Preferred Shares  336,187,285





Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.    Yes   ̈    No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈ (note: not required of registrant)

Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):



|                            |  |                       |  |                          
|--------------------------- |  | --------------------- |  | -------------------------
|Large accelerated filer    ̈ |  | Accelerated filer   x |  | Non-accelerated filer    ̈

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:



|             |  |                                                                                                          |  |         
|------------ |  | -------------------------------------------------------------------------------------------------------- |  | --------
|U.S. GAAP   ̈ |  | International Financial Reporting Standards as issued by the International Accounting Standards Board  x |  | Other   ̈

If Other has been checked in response to the previous question, indicate by check mark which financial statement
item the registrant has elected to follow.    Item 17   ̈    Item 18   ̈

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x









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##### Table of Contents

TABLE OF CONTENTS



|                                                                                      |  |  |     | 
|------------------------------------------------------------------------------------- |  |  | --- | 
|Presentation of Financial and Other Information                                       |  |  | ii  | 
|                                                                                      | 
|Market Data                                                                           |  |  | iii | 
|                                                                                      | 
|Certain Terms                                                                         |  |  | iii | 
|                                                                                      | 
|Forward Looking Statements                                                            |  |  | iv  | 
|                                                                                      | 
|PART I                                                                                |  |  | 1   | 
|                                                                                      | 
|Item 1. Identity of Directors, Senior Management and Advisers                         |  |  | 1   | 
|                                                                                      | 
|Item 2. Offer Statistics and Expected Timetable                                       |  |  | 1   | 
|                                                                                      | 
|Item 3. Key Information                                                               |  |  | 1   | 
|                                                                                      | 
|Item 4. Information on the Company                                                    |  |  | 34  | 
|                                                                                      | 
|Item 4A. Unresolved Staff Comments                                                    |  |  | 75  | 
|                                                                                      | 
|Item 5. Operating and Financial Review and Prospects                                  |  |  | 75  | 
|                                                                                      | 
|Item 6. Directors, Senior Management and Employees                                    |  |  | 105 | 
|                                                                                      | 
|Item 7. Major Shareholders and Related Party Transactions                             |  |  | 113 | 
|                                                                                      | 
|Item 8. Financial Information                                                         |  |  | 118 | 
|                                                                                      | 
|Item 9. The Offer and Listing                                                         |  |  | 119 | 
|                                                                                      | 
|Item 10. Additional Information                                                       |  |  | 123 | 
|                                                                                      | 
|Item 11. Quantitative and Qualitative Disclosures About Market Risk                   |  |  | 139 | 
|                                                                                      | 
|Item 12. Description of Securities Other than Equity Securities                       |  |  | 140 | 
|                                                                                      | 
|PART II                                                                               |  |  | 142 | 
|                                                                                      | 
|Item 13. Defaults, Dividends Arrearages and Delinquencies                             |  |  | 142 | 
|                                                                                      | 
|Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds |  |  | 142 | 
|                                                                                      | 
|Item 15. Controls and Procedures                                                      |  |  | 142 | 
|                                                                                      | 
|Item 16. Reserved                                                                     |  |  | 143 | 
|                                                                                      | 
|Item 16A. Audit Committee Financial Expert                                            |  |  | 143 | 
|                                                                                      | 
|Item 16B. Code of Ethics                                                              |  |  | 143 | 
|                                                                                      | 
|Item 16C. Principal Accountant Fees and Services                                      |  |  | 144 | 
|                                                                                      | 
|Item 16D. Exemptions from the Listing Standards for Audit Committees                  |  |  | 144 | 
|                                                                                      | 
|Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers      |  |  | 144 | 
|                                                                                      | 
|Item 16F. Change in Registrants Certifying Accountant                                |  |  | 144 | 
|                                                                                      | 
|Item 16G. Corporate Governance                                                        |  |  | 144 | 
|                                                                                      | 
|Item 16H. Mine Safety Disclosure                                                      |  |  | 145 | 
|                                                                                      | 
|PART III                                                                              |  |  | 146 | 
|                                                                                      | 
|Item 17. Financial Statements                                                         |  |  | 146 | 
|                                                                                      | 
|Item 18. Financial Statements                                                         |  |  | 146 | 
|                                                                                      | 
|Item 19. Exhibits                                                                     |  |  | 146 | 
|                                                                                      | 
|Index to Financial Statements                                                         |  |  | F-2 | 



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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

In this annual report, we use the terms we, us, our, the Company and Avianca
Holdings to refer to Avianca Holdings S.A., together with its subsidiaries, except where the context requires otherwise.

IFRS Financial
Statements

On December 11, 2012, our board of directors approved our adoption of International Financial Reporting Standards, or
IFRS, as issued by the International Accounting Standards Board, or IASB. We used a transition date of January 1, 2011, and therefore our consolidated financial statements as of and for the year ended December 31, 2012 were our first
annual audited consolidated financial statements required to be prepared in accordance with IFRS. We have not prepared any financial information in accordance with IFRS as of or for any prior periods. For periods prior to 2012, we prepared our
audited consolidated financial statements solely in accordance with Colombian GAAP.

Our consolidated financial statements prepared in
accordance with IFRS are stated in U.S. dollars. This annual report includes our audited consolidated financial statements as of December 31, 2014 and 2013 and for the years ended December 31, 2012, 2013 and 2014, together with the notes
thereto, prepared in accordance with IFRS. Unless otherwise indicated, all financial information provided in this annual report has been prepared in accordance with IFRS.

Non-IFRS Financial Measures

This annual
report includes certain references to non-IFRS measures such as our Adjusted EBITDAR and Adjusted EBITDAR margin. See Item 3. Key InformationPart A. Selected Financial Data for a discussion of our use of Adjusted EBITDAR in this
annual report, including the reasons why we believe this information is useful to management and to investors, and a reconciliation of Adjusted EBITDAR to net profit. These supplemental financial measures are not prepared in accordance with IFRS.
Accordingly, you are cautioned not to place undue reliance on this information and should note that Adjusted EBITDAR and Adjusted EBITDAR margin, as calculated by us, may differ materially from similarly titled measures reported by other companies,
including our competitors.

Adjusted EBITDAR is commonly used in the airline industry to view operating results before depreciation,
amortization and aircraft operating lease charges, as these costs can vary significantly among airlines due to differences in the way airlines finance their aircraft and other assets. However, Adjusted EBITDAR should not be considered as an
alternative measure to operating profit, as an indicator of operating performance, as an alternative to operating cash flows or as a measure of our liquidity. Adjusted EBITDAR as calculated by us and as presented in this annual report may differ
materially from similarly titled measures reported by other companies due to differences in the way these measures are calculated. Adjusted EBITDAR has important limitations as an analytical tool and should not be considered in isolation from,
or as a substitute for an analysis of, our operating results as reported under IFRS. Some of the limitations are:



| |  |  | Adjusted EBITDAR does not reflect cash expenditures or future requirements for capital expenditures or contractual commitments;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | Adjusted EBITDAR does not reflect changes in, or cash requirements for, working capital needs;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | Adjusted EBITDAR does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on debt;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDAR does not reflect any cash requirements for such
replacements;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Adjusted EBITDAR does not reflect expenses related to leases of flight equipment and other related expenses; and
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | other companies may calculate Adjusted EBITDAR or similarly titled measures differently, limiting its usefulness as a comparative measure.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------

Currency Presentation

In this annual
report, references to dollars, U.S. dollars and $ are to the currency of the United States and references to Colombian pesos, Pesos and COP are to the currency of Colombia. The
meaning of the word billion in the Spanish language is different from that in American English. In the Spanish language, as used in Colombia, a billion is a million millions, which means the number of 1,000,000,000,000, while
in American English a billion is a thousand millions, which means 1,000,000,000. In this annual report, the meaning of billion is as used in American English.



ii



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We have converted certain U.S. dollar amounts presented in this annual report from Colombian peso
amounts solely for the convenience of the reader. We make no representation that the peso or dollar amounts shown in this annual report could have been or could be converted into U.S. dollars or Colombian pesos at the rates shown in this annual
report or at any other rate. The Federal Reserve Bank of New York does not report a noon buying rate for Colombian pesos. The conversion of amounts expressed in Colombian pesos as of a specified date at the then prevailing exchange rate may result
in presentation of U.S. dollar amounts that differ from U.S. dollar amounts that would have been obtained by converting Colombian pesos as of another specified date.

The rates set forth in this annual report for conversion of COP into U.S. dollars are the rates published by the Colombian Central Bank
(Banco de la República, or the Central Bank) as reported by the Colombian Financial Superintendency (Superintendencia Financiera de Colombia, or the SFC).

On March 31, 2015, the exchange rate between the Colombian peso and the U.S. dollar certified by the SFC was COP 2,576.05 per
US$1.00. See Item 10. Additional InformationPart D. Exchange ControlsExchange Rates.

IFRS does not currently
require us to adjust our financial statements for inflation. Colombia experienced inflation rates of 2.4%, 1.9% and 3.7% for the years ended December 31, 2012, 2013 and 2014, respectively, according to the Colombian National Administrative
Department of Statistics (Departamento Administrativo Nacional de Estadística), or DANE.

Rounding

Certain figures included in this annual report have been rounded for ease of presentation. Percentage figures included in this annual report
have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, certain percentage amounts in this annual report may vary from those obtained by performing the same
calculations using the figures in our consolidated financial statements. Certain other amounts that appear in this annual report may not sum due to rounding.

MARKET DATA

This annual report contains certain statistical data regarding our airline routes and our competitive position and market share in, and the
market size of, the Latin American air transportation market. This information has been derived from a variety of sources, including the Civil Aviation Authority of Colombia (Unidad Administrativa Especial de Aeronáutica Civil), the
Civil Aviation Authority of El Salvador (Autoridad de Aviación Civil), the Civil Aviation Authority of Costa Rica (Dirección General de Aviación Civil), the Civil Aviation Authority of Peru (Dirección
General de Aviación Civil), the Civil Aviation Authority of Ecuador (Dirección General de Aviación Civil), the International Air Transport Association, or IATA, the Latin American and Caribbean Air Transport
Association, or ALTA, and other third-party sources, governmental agencies or industry or general publications.

Information for which no
source is cited has been prepared by us on the basis of our knowledge of Latin American airline markets and other information available to us. The methodologies and terminologies used by different sources are not always consistent, and data from
different sources are not readily comparable. In addition, sources other than us use methodologies that are not identical to ours and may produce results that differ from our own estimates. Although we have not independently verified the information
contained herein concerning competitive positions, market shares, market sizes, market growth or other similar data that is based upon third-party sources or industry or general publications, we consider these sources and publications to be
generally reliable.

CERTAIN TERMS

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

Aircraft utilization represents the average number of block hours operated per day per aircraft for an aircraft fleet.

Available seat kilometers, or ASKs, represents aircraft seating capacity multiplied by the number of kilometers the seats are
flown.

Available ton kilometers, or ATKs, 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.



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CASK excluding fuel represents operating expenses other than fuel divided by
available seat kilometers (ASKs).

Code share alliance 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.

Cost per available seat kilometer, or CASK, represents operating expenses
divided by available seat kilometers (ASKs).

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).

Operating revenue
per available seat kilometer, or RASK, represents operating revenue divided by available seat kilometers (ASKs).

Revenue
passenger kilometers, or RPKs, represent the number of kilometers flown by revenue passengers.

Revenue passengers
represents the total number of paying passengers (which do not include passengers redeeming LifeMiles (previously known as AviancaPlus or Distancia) frequent flyer miles or other travel awards) flown on all flight segments (with
each connecting segment being considered a separate flight segment).

Revenue ton kilometers, or RTKs, 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).

FORWARD LOOKING STATEMENTS

This annual report includes forward-looking statements, principally under the captions Item 4. Information on the CompanyBusiness
Overview, Item 3. Key InformationPart D. Risk Factors, and Item 5. Operating and Financial Review and Prospects. We have based these forward-looking statements largely on our current beliefs, expectations and
projections about future events and financial trends affecting our business. Many important factors, in addition to those discussed elsewhere in this annual report, could cause our actual results to differ substantially from those anticipated in our
forward-looking statements, including, among other things:



| |  |  | general economic, political and business conditions in our core markets of Colombia, Peru, Ecuador and Central America and the other geographic markets we serve;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our level of debt and other fixed obligations;
| | - |  | ----------------------------------------------



| |  |  | demand for passenger and cargo air services in the markets in which we operate;
| | - |  | -------------------------------------------------------------------------------



| |  |  | competitive pressures on pricing;
| | - |  | ---------------------------------



| |  |  | our capital expenditures;
| | - |  | -------------------------



| |  |  | changes in the regulatory environment in which we operate;
| | - |  | ----------------------------------------------------------



| |  |  | fluctuations of crude oil prices and its effect on fuel costs;
| | - |  | --------------------------------------------------------------



| |  |  | changes in labor costs, maintenance costs and insurance premiums;
| | - |  | -----------------------------------------------------------------



| |  |  | changes in market prices, customer demand and preferences and competitive conditions;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | terrorist attacks and the possibility or fear of such attacks affecting the airline industry;
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | future threat or outbreak of diseases affecting traveling behavior and/or imports and/or exports;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | natural disasters affecting traveling behavior and/or imports and/or exports;
| | - |  | -----------------------------------------------------------------------------



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| |  |  | cyclical and seasonal fluctuations in our operating results;
| | - |  | ------------------------------------------------------------



| |  |  | defects or mechanical problems with our aircraft;
| | - |  | -------------------------------------------------



| |  |  | our ability to successfully implement our growth strategy and integrate acquisitions;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | our ability to successfully implement our fleet modernization program;
| | - |  | ----------------------------------------------------------------------



| |  |  | our ability to obtain financing and the terms of such financing; and
| | - |  | --------------------------------------------------------------------



| |  |  | the risk factors discussed under Item 3. Key InformationPart D. Risk Factors beginning on page 7.
| | - |  | ----------------------------------------------------------------------------------------------------

The words believe, may, should, aim, estimate, continue,
anticipate, intend, will, expect and similar words are intended to identify forward-looking statements. Forward-looking statements include information concerning our possible or assumed future results
of operations, business strategies, financing plans, competitive position, industry environment, potential growth opportunities, the effects of future regulation and the effects of competition. Forward-looking statements speak only as of the date
they are made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we distribute this annual report because of new information, future events or other factors. In light of the risks and uncertainties
described above, the future events and circumstances discussed in this annual report might not occur or come into existence and forward-looking statements are thus not guarantees of future performance. Considering these limitations, you should not
place undue reliance on forward-looking statements contained in this annual report.



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PART I



|Item 1. | Identity of Directors, Senior Management and Advisers
|------- | -----------------------------------------------------

Not applicable.



|Item 2. | Offer Statistics and Expected Timetable
|------- | ---------------------------------------

Not applicable.



|Item 3. | Key Information
|------- | ---------------



|A. | Selected Financial Data
|-- | -----------------------

The following tables present selected summary consolidated
financial and operating data as of the dates and for the periods indicated. We prepare consolidated financial statements in accordance with IFRS as issued by the IASB in U.S. dollars. You should read this information in conjunction with our
consolidated financial statements together with the notes thereto included in this annual report, Presentation of Financial and Other Information and Item 5. Operating and Financial Review and Prospects.

The selected consolidated financial information as of January 1, 2011 (the date of our transition to IFRS) and December 31, 2011,
2012, 2013 and 2014 and for the years ended December 31, 2011, 2012, 2013 and 2014 has been derived from our audited consolidated financial statements prepared in accordance with IFRS.

On December 11, 2012, our board of directors approved our adoption of IFRS. We used a transition date of January 1, 2011, and
therefore our consolidated financial statements as of and for the year ended December 31, 2012 were our first annual audited consolidated financial statements required to be prepared in accordance with IFRS. We have not prepared any financial
information in accordance with IFRS as of or for any prior periods. For periods prior to 2012, we prepared our audited consolidated financial statements solely in accordance with Colombian GAAP.



|                                                                       |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|---------------------------------------------------------------------- |  | ------------------ | --------- |  | ------------------ | - | --------- | ---- |  | - | --------- |  |  | ---- | --------- |  |  | - | --------- | 
|                                                                       |  | As of December 31, |           |  | As ofJanuary 1,    |  
|                                                                       |  | 2014               |           |  | 2013               |   |           | 2012 |  |   | 2011      |  |  | 2011 |          
|                                                                       |  |                    |           |  | (in US$ thousands) |   |           |      |  |   |           | 
|BALANCE SHEET DATA                                                     |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Assets                                                                 |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Current assets:                                                        |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Cash and cash equivalents                                              |  | $                  | 640,891   |  |                    | $ | 735,577   |      |  | $ | 402,997   |  |  | $    | 288,726   |  |  | $ | 274,171   | 
|Restricted cash                                                        |  |                    | 1,987     |  |                    |   | 23,538    |      |  |   | 6,547     |  |  |      | 1,815     |  |  |   | 7,753     | 
|Available-for-sale securities                                          |  |                    | 1,218     |  |                    |   |          |      |  |   | 19,460    |  |  |      |          |  |  |   | 6,500     | 
|Accounts receivable, net of provision for doubtful accounts            |  |                    | 355,168   |  |                    |   | 276,963   |      |  |   | 202,962   |  |  |      | 186,353   |  |  |   | 161,349   | 
|Accounts receivable from related parties                               |  |                    | 27,386    |  |                    |   | 26,425    |      |  |   | 29,427    |  |  |      | 7,836     |  |  |   | 9,716     | 
|Expendable spare parts and supplies, net of provision for obsolescence |  |                    | 65,614    |  |                    |   | 53,158    |      |  |   | 48,796    |  |  |      | 45,235    |  |  |   | 48,079    | 
|Prepaid expenses                                                       |  |                    | 56,065    |  |                    |   | 46,745    |      |  |   | 54,512    |  |  |      | 51,603    |  |  |   | 43,333    | 
|Assets held for sale                                                   |  |                    | 1,369     |  |                    |   | 7,448     |      |  |   | 9,832     |  |  |      | 28,339    |  |  |   | 9,091     | 
|Deposits and other assets                                              |  |                    | 174,128   |  |                    |   | 125,334   |      |  |   | 105,028   |  |  |      | 295,609   |  |  |   | 194,102   | 
|                                                                       |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Total current assets                                                   |  |                    | 1,323,826 |  |                    |   | 1,295,188 |      |  |   | 879,561   |  |  |      | 905,516   |  |  |   | 754,094   | 
|Non-current assets:                                                    |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Available-for-sale securities                                          |  |                    | 237       |  |                    |   | 14,878    |      |  |   | 13,165    |  |  |      | 30,052    |  |  |   | 25,123    | 
|Deposits and other assets                                              |  |                    | 218,010   |  |                    |   | 189,176   |      |  |   | 221,558   |  |  |      | 221,712   |  |  |   | 181,644   | 
|Accounts receivable, net of provision for doubtful accounts            |  |                    | 42,407    |  |                    |   | 32,441    |      |  |   | 64,540    |  |  |      | 41,755    |  |  |   | 34,950    | 
|Accounts receivable from related parties                               |  |                    | 11,247    |  |                    |   |          |      |  |   | 24,001    |  |  |      | 56,167    |  |  |   | 55,890    | 
|Intangible assets                                                      |  |                    | 416,070   |  |                    |   | 363,103   |      |  |   | 344,908   |  |  |      | 340,496   |  |  |   | 331,515   | 
|Deferred tax assets                                                    |  |                    | 35,664    |  |                    |   | 50,893    |      |  |   | 73,644    |  |  |      | 70,513    |  |  |   | 76,693    | 
|Property and equipment, net                                            |  |                    | 4,128,051 |  |                    |   | 3,233,358 |      |  |   | 2,699,546 |  |  |      | 2,309,477 |  |  |   | 2,156,795 | 
|                                                                       |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Total non-current assets                                               |  |                    | 4,851,686 |  |                    |   | 3,883,849 |      |  |   | 3,441,362 |  |  |      | 3,070,172 |  |  |   | 2,862,610 | 
|                                                                       |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Total assets                                                           |  | $                  | 6,175,512 |  |                    | $ | 5,179,037 |      |  | $ | 4,320,923 |  |  | $    | 3,975,688 |  |  | $ | 3,616,704 | 





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|                                              |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|--------------------------------------------- |  | ------------------ | --------- |  | ------------------ | - | --------- | ---- |  | - | --------- |  |  | ---- | --------- |  |  | - | --------- | 
|                                              |  | As of December 31, |           |  | As ofJanuary 1,    |  
|                                              |  | 2014               |           |  | 2013               |   |           | 2012 |  |   | 2011      |  |  | 2011 |          
|                                              |  |                    |           |  | (in US$ thousands) |   |           |      |  |   |           | 
|Liabilities and equity                        |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Current liabilities:                          |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Current portion of long-term debt             |  | $                  | 458,679   |  |                    | $ | 314,165   |      |  | $ | 282,145   |  |  | $    | 283,520   |  |  | $ | 285,000   | 
|Accounts payable                              |  |                    | 547,494   |  |                    |   | 509,129   |      |  |   | 488,568   |  |  |      | 449,695   |  |  |   | 366,460   | 
|Accounts payable to related parties           |  |                    | 13,797    |  |                    |   | 7,553     |      |  |   | 7,309     |  |  |      | 13,746    |  |  |   | 2,909     | 
|Accrued expenses                              |  |                    | 138,262   |  |                    |   | 134,938   |      |  |   | 181,802   |  |  |      | 119,235   |  |  |   | 101,674   | 
|Provisions for legal claims                   |  |                    | 14,157    |  |                    |   | 14,984    |      |  |   | 7,903     |  |  |      | 11,060    |  |  |   | 43,021    | 
|Provisions for return conditions              |  |                    | 61,425    |  |                    |   | 33,033    |      |  |   | 7,598     |  |  |      | 10,987    |  |  |   | 10,939    | 
|Employee benefits                             |  |                    | 49,193    |  |                    |   | 52,392    |      |  |   | 57,241    |  |  |      | 44,390    |  |  |   | 45,675    | 
|Air traffic liability                         |  |                    | 461,118   |  |                    |   | 491,752   |      |  |   | 405,295   |  |  |      | 356,049   |  |  |   | 389,957   | 
|Other liabilities                             |  |                    | 127,496   |  |                    |   | 27,432    |      |  |   | 29,470    |  |  |      | 38,333    |  |  |   | 40,914    | 
|                                              |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Total current liabilities                     |  |                    | 1,871,621 |  |                    |   | 1,585,378 |      |  |   | 1,467,331 |  |  |      | 1,327,015 |  |  |   | 1,286,549 | 
|Non-current liabilities:                      |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Long-term debt                                |  |                    | 2,711,898 |  |                    |   | 1,951,330 |      |  |   | 1,572,299 |  |  |      | 1,375,994 |  |  |   | 1,505,912 | 
|Accounts payable                              |  |                    | 21,167    |  |                    |   | 2,735     |      |  |   | 3,041     |  |  |      | 19,596    |  |  |   | 35,052    | 
|Provisions for return conditions              |  |                    | 70,459    |  |                    |   | 56,065    |      |  |   | 59,297    |  |  |      | 57,792    |  |  |   | 27,807    | 
|Employee benefits                             |  |                    | 173,460   |  |                    |   | 276,284   |      |  |   | 400,831   |  |  |      | 340,366   |  |  |   | 317,016   | 
|Deferred tax liabilities                      |  |                    | 15,760    |  |                    |   | 7,940     |      |  |   | 2,528     |  |  |      | 2,134     |  |  |   | 1,008     | 
|Air traffic liability(1)                      |  |                    | 85,934    |  |                    |   | 72,853    |      |  |   | 63,494    |  |  |      | 61,696    |  |  |   |          | 
|Other liabilities non-current                 |  |                    | 8,466     |  |                    |   | 11,706    |      |  |   |          |  |  |      |          |  |  |   |          | 
|                                              |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Total non-current liabilities                 |  |                    | 3,087,144 |  |                    |   | 2,378,913 |      |  |   | 2,101,490 |  |  |      | 1,857,578 |  |  |   | 1,886,795 | 
|                                              |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Total liabilities                             |  |                    | 4,958,765 |  |                    |   | 3,964,291 |      |  |   | 3,568,821 |  |  |      | 3,184,593 |  |  |   | 3,173,344 | 
|Equity:                                       |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Common stock                                  |  |                    | 82,600    |  |                    |   | 83,225    |      |  |   | 92,675    |  |  |      | 92,675    |  |  |   | 100,163   | 
|Preferred stock                               |  |                    | 42,023    |  |                    |   | 41,398    |      |  |   | 19,473    |  |  |      | 19,988    |  |  |   |          | 
|Additional paid-in capital on common stock    |  |                    | 234,567   |  |                    |   | 236,342   |      |  |   | 263,178   |  |  |      | 263,178   |  |  |   | 284,444   | 
|Additional paid-in capital on preferred stock |  |                    | 469,273   |  |                    |   | 467,498   |      |  |   | 270,061   |  |  |      | 279,112   |  |  |   |          | 
|Retained earnings                             |  |                    | 355,671   |  |                    |   | 351,102   |      |  |   | 68,153    |  |  |      | 96,167    |  |  |   | 21,317    | 
|Revaluation and other reserves                |  |                    | 24,550    |  |                    |   | 28,857    |      |  |   | 25,418    |  |  |      | 27,059    |  |  |   | 25,510    | 
|                                              |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Total equity attributable to the Company      |  |                    | 1,208,684 |  |                    |   | 1,208,422 |      |  |   | 738,958   |  |  |      | 778,179   |  |  |   | 431,434   | 
|Non-controlling interest                      |  |                    | 8,063     |  |                    |   | 6,324     |      |  |   | 13,144    |  |  |      | 12,916    |  |  |   | 11,926    | 
|                                              |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Total equity                                  |  |                    | 1,216,747 |  |                    |   | 1,214,746 |      |  |   | 752,102   |  |  |      | 791,095   |  |  |   | 443,360   | 
|                                              |  |                    |           |  |                    |   |           |      |  |   |           |  |  |      |           |  |  |   |           | 
|Total liabilities and equity                  |  | $                  | 6,175,512 |  |                    | $ | 5,179,037 |      |  | $ | 4,320,923 |  |  | $    | 3,975,688 |  |  | $ | 3,616,704 | 



2



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|                                                                                      |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|------------------------------------------------------------------------------------- |  | ----------------------------------------- | ------------ | - | ---- | - | ----------- | ---- |  | - | ----------- | - |  | - | ----------- | -
|                                                                                      |  | For the Year EndedDecember 31,            |             
|                                                                                      |  | 2014                                      |              |   | 2013 |   |             | 2012 |  |   | 2011        |  
|                                                                                      |  | (in US$ thousands, except per share data) |             
|INCOME STATEMENT DATA                                                                 |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|Operating revenue:                                                                    |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|Passenger                                                                             |  | $                                         | 3,862,721    |   |      | $ | 3,862,397   |      |  | $ | 3,550,559   |   |  | $ | 3,182,953   |  
|Cargo and other(2)                                                                    |  |                                           | 840,850      |   |      |   | 747,207     |      |  |   | 719,097     |   |  |   | 611,475     |  
|Total operating revenue                                                               |  |                                           | 4,703,571    |   |      |   | 4,609,604   |      |  |   | 4,269,656   |   |  |   | 3,794,428   |  
|Operating expenses:                                                                   |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|Flight operations                                                                     |  |                                           | 56,695       |   |      |   | 82,872      |      |  |   | 84,774      |   |  |   | 79,934      |  
|Aircraft fuel                                                                         |  |                                           | 1,345,755    |   |      |   | 1,325,763   |      |  |   | 1,305,396   |   |  |   | 1,123,547   |  
|Ground operations                                                                     |  |                                           | 397,625      |   |      |   | 343,812     |      |  |   | 321,552     |   |  |   | 279,607     |  
|Aircraft rentals                                                                      |  |                                           | 299,220      |   |      |   | 273,643     |      |  |   | 255,566     |   |  |   | 214,861     |  
|Passenger services                                                                    |  |                                           | 154,464      |   |      |   | 143,512     |      |  |   | 132,823     |   |  |   | 115,049     |  
|Maintenance and repairs                                                               |  |                                           | 268,894      |   |      |   | 188,659     |      |  |   | 222,705     |   |  |   | 228,280     |  
|Air traffic                                                                           |  |                                           | 206,151      |   |      |   | 180,140     |      |  |   | 169,650     |   |  |   | 177,407     |  
|Sales and marketing                                                                   |  |                                           | 605,674      |   |      |   | 584,468     |      |  |   | 522,645     |   |  |   | 500,822     |  
|General, administrative and other                                                     |  |                                           | 165,172      |   |      |   | 257,273     |      |  |   | 206,666     |   |  |   | 184,700     |  
|Salaries, wages and benefits                                                          |  |                                           | 725,793      |   |      |   | 674,951     |      |  |   | 644,901     |   |  |   | 561,331     |  
|Depreciation, amortization, and impairment                                            |  |                                           | 198,660      |   |      |   | 169,580     |      |  |   | 122,080     |   |  |   | 126,507     |  
|                                                                                      |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|Total operating expenses                                                              |  |                                           | 4,424,103    |   |      |   | 4,224,673   |      |  |   | 3,988,758   |   |  |   | 3,592,045   |  
|                                                                                      |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|Operating profit                                                                      |  |                                           | 279,468      |   |      |   | 384,931     |      |  |   | 280,898     |   |  |   | 202,383     |  
|Interest expense                                                                      |  |                                           | (133,989     | ) |      |   | (113,330    | )    |  |   | (122,112    | ) |  |   | (90,778     | )
|Interest income                                                                       |  |                                           | 17,099       |   |      |   | 11,565      |      |  |   | 25,006      |   |  |   | 33,649      |  
|Derivative instruments                                                                |  |                                           | 5,924        |   |      |   | (11,402     | )    |  |   | (24,042     | ) |  |   | (3,164      | )
|Foreign exchange                                                                      |  |                                           | 10,272       |   |      |   | 23,517      |      |  |   | (56,788     | ) |  |   | 1,600       |  
|                                                                                      |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|Profit before income tax                                                              |  |                                           | 178,774      |   |      |   | 295,281     |      |  |   | 102,962     |   |  |   | 143,690     |  
|Total income tax expense                                                              |  |                                           | (50,280      | ) |      |   | (46,460     | )    |  |   | (64,705     | ) |  |   | (43,814     | )
|                                                                                      |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|Net profit for the year                                                               |  | $                                         | 128,494      |   |      | $ | 248,821     |      |  | $ | 38,257      |   |  | $ | 99,876      |  
|Net profit attributable to equity holders of the parent                               |  |                                           | 129,270      |   |      |   | 257,493     |      |  |   | 35,141      |   |  |   | 98,886      |  
|Net profit attributable to non-controlling interest                                   |  |                                           | (776         | ) |      |   | (8,672      | )    |  |   | 3,116       |   |  |   | 990         |  
|Basic and diluted earnings per share (common and preferred)                           |  |                                           | 0.13         |   |      |   | 0.27        |      |  |   | 0.04        |   |  |   | 0.11        |  
|Basic and diluted earnings per ADS                                                    |  |                                           | 1.04         |   |      |   | 2.16        |      |  |   |            |   |  |   |            |  
|Common and preferred share dividends per share (COP/US$)(3)                           |  |                                           | 160.1 / 0.07 |   |      |   | 75 / 0.04   |      |  |   | 75 / 0.04   |   |  |   | 50 / 0.03   |  
|Common shares at period end                                                           |  |                                           | 660,800,003  |   |      |   | 665,800,003 |      |  |   | 741,400,000 |   |  |   | 741,400,000 |  
|Preferred shares at period end                                                        |  |                                           | 336,187,285  |   |      |   | 331,187,285 |      |  |   | 155,784,429 |   |  |   | 159,907,920 |  
|Weighted average of common shares used in computing earnings per share (thousands)    |  |                                           | 665,383      |   |      |   | 728,800     |      |  |   | 741,400     |   |  |   | 761,369     |  
|Weighted average of preferred shares used in computing earnings per share (thousands) |  |                                           | 331,604      |   |      |   | 184,854     |      |  |   | 158,081     |   |  |   | 114,939     |  
|CASH FLOW DATA                                                                        |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|Net cash provided by operating activities                                             |  | $                                         | 257,130      |   |      | $ | 544,642     |      |  | $ | 391,226     |   |  | $ | 330,312     |  
|Net cash provided by (used in) investing activities                                   |  |                                           | (246,889     | ) |      |   | (483,259    | )    |  |   | (300,805    | ) |  |   | (371,179    | )
|Net cash (used in) provided by financing activities                                   |  |                                           | (52,820      | ) |      |   | 289,294     |      |  |   | 16,744      |   |  |   | 57,001      |  
|OTHER FINANCIAL DATA                                                                  |  |                                           |              |   |      |   |             |      |  |   |             |   |  |   |             |  
|Adjusted EBITDAR(4)                                                                   |  | $                                         | 777,348      |   |      | $ | 828,154     |      |  | $ | 658,544     |   |  | $ | 543,751     |  
|Operating margin(5)                                                                   |  |                                           | 5.9          | % |      |   | 8.4         | %    |  |   | 6.6         | % |  |   | 5.3         | %
|Adjusted EBITDAR margin(6)                                                            |  |                                           | 16.5         | % |      |   | 18.0        | %    |  |   | 15.4        | % |  |   | 14.3        | %



3



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|                                                                 |  |                                |         |   |      |  |         |      |  |  |         |   |  |  |         |  
|---------------------------------------------------------------- |  | ------------------------------ | ------- | - | ---- |  | ------- | ---- |  |  | ------- | - |  |  | ------- | -
|                                                                 |  | For the Year EndedDecember 31, |        
|                                                                 |  | 2014                           |         |   | 2013 |  |         | 2012 |  |  | 2011    |  
|OPERATING DATA (Unaudited)(7)(8)                                 |  |                                |         |   |      |  |         |      |  |  |         |   |  |  |         |  
|Total passengers carried (in thousands)                          |  |                                | 26,230  |   |      |  | 24,625  |      |  |  | 23,093  |   |  |  | 20,455  |  
|Revenue passengers carried (in thousands)(9)                     |  |                                | 25,382  |   |      |  | 23,865  |      |  |  | 22,425  |   |  |  | 19,909  |  
|Revenue passenger kilometers (RPK) (in millions)(10)             |  |                                | 32,602  |   |      |  | 31,186  |      |  |  | 29,072  |   |  |  | 26,368  |  
|Available seat kilometers (ASK) (in millions)(11)                |  |                                | 41,052  |   |      |  | 38,762  |      |  |  | 36,545  |   |  |  | 33,136  |  
|Load factor(12)                                                  |  |                                | 79.4%   |   |      |  | 80.5%   |      |  |  | 79.6%   |   |  |  | 79.6%   |  
|Block hours(13)                                                  |  |                                | 517,943 |   |      |  | 483,204 |      |  |  | 466,439 |   |  |  | 429,712 |  
|Average daily aircraft utilization(14)                           |  |                                | 10.3    |   |      |  | 10.1    |      |  |  | 10.2    |   |  |  | 9.9     |  
|Average one-way passenger fare                                   |  |                                | 152.2   |   |      |  | 161.8   |      |  |  | 158.0   |   |  |  | 160.0   |  
|Yield(15)                                                        |  |                                | 11.8    |   |      |  | 12.4    |      |  |  | 12.2    |   |  |  | 12.1    |  
|Passenger revenue per ASK (PRASK)(16)                            |  |                                | 9.4     |   |      |  | 10.0    |      |  |  | 9.7     |   |  |  | 9.6     |  
|Operating revenue per ASK (RASK)(17)                             |  |                                | 11.5    |   |      |  | 11.9    |      |  |  | 11.7    |   |  |  | 11.5    |  
|Cost per ASK (CASK)(18)                                          |  |                                | 10.8    |   |      |  | 10.9    |      |  |  | 10.9    |   |  |  | 10.8    |  
|CASK excluding fuel                                              |  |                                | 7.5     |   |      |  | 7.5     |      |  |  | 7.3     |   |  |  | 7.4     |  
|Revenue ton kilometers (RTK)(19)                                 |  |                                | 1,052   |   |      |  | 838     |      |  |  | 748     |   |  |  | 695     |  
|Available ton kilometers (ATK)(20)                               |  |                                | 1,633   |   |      |  | 1,403   |      |  |  | 1,198   |   |  |  | 1,087   |  
|Gallons of fuel consumed (in thousands)                          |  |                                | 427,785 |   |      |  | 406,143 |      |  |  | 388,066 |   |  |  | 350,122 |  
|Average price of jet fuel into plane (net of hedge) (US$/gallon) |  |                                | 3.15    |   |      |  | 3.27    |      |  |  | 3.33    |   |  |  | 3.15    |  
|Average stage length (kilometers)(21)                            |  |                                | 972     |   |      |  | 1,025   |      |  |  | 1,056   |   |  |  | 1,063   |  
|On-time domestic performance(22)                                 |  |                                | 71.9    | % |      |  | 67.4    | %    |  |  | 66.4    | % |  |  | 70.1    | %
|On-time international performance(23)                            |  |                                | 80.9    | % |      |  | 80.4    | %    |  |  | 79.2    | % |  |  | 79.3    | %
|Completion rate(24)                                              |  |                                | 98.1    | % |      |  | 98.0    | %    |  |  | 98.3    | % |  |  | 98.3    | %
|Technical dispatch reliability(25)                               |  |                                | 99.4    | % |      |  | 99.4    | %    |  |  | 99.5    | % |  |  | 99.3    | %
|Departures                                                       |  |                                | 282,475 |   |      |  | 253,967 |      |  |  | 247,365 |   |  |  | 228,056 |  
|Average daily departures                                         |  |                                | 774     |   |      |  | 696     |      |  |  | 678     |   |  |  | 627     |  
|Airports served at period end                                    |  |                                | 102     |   |      |  | 98      |      |  |  | 98      |   |  |  | 110     |  
|Routes served at period end                                      |  |                                | 168     |   |      |  | 170     |      |  |  | 169     |   |  |  | 168     |  
|Direct sales as % of total sales(26)                             |  |                                | 33.6    | % |      |  | 31.0    | %    |  |  | 33.3    | % |  |  | 32.1    | %
|Full-time employees and cooperative members at period end        |  |                                | 20,545  |   |      |  | 19,153  |      |  |  | 18,071  |   |  |  | 17,360  |  
|Revenue per full-time employee plus cooperative members (US$)    |  |                                | 229     |   |      |  | 241     |      |  |  | 236     |   |  |  | 219     |  



|(1) | We previously recognized deferred miles related to our LifeMilesrewards program as current air traffic liability. We now recognize such deferred miles as current and non-current air traffic liability. A similar
adjustment in this presentation has been made for prior years. Avianca launched LifeMiles in March 2011. As a result, we had no non-current air traffic liability as of January 1, 2014.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes Aerounion revenues for the months of November and December 2014.
|--- | -------------------------------------------------------------------------

|(3) | Dividends of $0.06691 per share were declared in March 2015 and will be paid no later than October 2015 based on profits for the year 2014. The COP equivalent of such dividends will be determined the date prior to the
payment date. The COP equivalent shown represents the COP/US$ exchange rate in effect on December 31, 2014. Dividends of 75/0.04 COP/US$ per share were declared in March 2014 and paid in April 2014 based on profits for the year 2013. Dividends of
75/0.04 COP/US$ per share were declared in March 2013 and paid in April 2013 based on profits for the year 2012. Dividends of 50/0.03 COP/US$ per share were declared in March 2012 and paid in April 2012 based on profits for the year 2011.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | 
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|(4) | Adjusted EBITDAR represents our consolidated net profit for the year plus the sum of income tax expense, depreciation, amortization, and impairment and aircraft rentals, minus interest expense, minus interest income,
minus derivative instruments, minus foreign exchange. Adjusted EBITDAR is presented as supplemental information, because we believe it is a useful indicator of our operating performance and is useful in comparing our operating performance with other
companies in the airline industry. However, Adjusted EBITDAR should not be considered in isolation, as a substitute for net profit determined in accordance with IFRS or as a measure of a companys profitability. In addition, our calculation of
Adjusted EBITDAR may not be comparable to other companies similarly titled measures. The following table presents a reconciliation of our net profit to Adjusted EBITDAR for the specified periods:
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                |  |                         |          |   |      |   |          |      |  |   |          |   |  |   |         |  
|----------------------------------------------- |  | ----------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                                |  | Year Ended December 31, |         
|                                                |  | 2014                    |          |   | 2013 |   |          | 2012 |  |   | 2011     |  
|Net profit for the year                         |  | $                       | 128,494  |   |      | $ | 248,821  |      |  | $ | 38,257   |   |  | $ | 99,876  |  
|Add: Income tax expense                         |  |                         | 50,280   |   |      |   | 46,460   |      |  |   | 64,705   |   |  |   | 43,814  |  
|Add: Depreciation, amortization, and impairment |  | $                       | 198,660  |   |      |   | 169,580  |      |  |   | 122,080  |   |  |   | 126,507 |  
|Add: Aircraft rentals                           |  |                         | 299,220  |   |      |   | 273,643  |      |  |   | 255,566  |   |  |   | 214,861 |  
|Minus: Interest expense                         |  |                         | (133,989 | ) |      |   | (113,330 | )    |  |   | (122,112 | ) |  |   | (90,778 | )
|Minus: Interest income                          |  |                         | 17,099   |   |      |   | 11,565   |      |  |   | 25,006   |   |  |   | 33,649  |  
|Minus: Derivative instruments                   |  |                         | 5,924    |   |      |   | (11,402  | )    |  |   | (24,042  | ) |  |   | (3,164  | )
|Minus: Foreign exchange                         |  |                         | 10,272   |   |      |   | 23,517   |      |  |   | (56,788  | ) |  |   | 1,600   |  
|                                                |  |                         |          |   |      |   |          |      |  |   |          |   |  |   |         |  
|Adjusted EBITDAR                                |  | $                       | 777,348  |   |      | $ | 828,154  |      |  | $ | 658,544  |   |  | $ | 543,751 |  



|(5) | Operating margin represents operating profit divided by total operating revenue.
|--- | --------------------------------------------------------------------------------

|(6) | Adjusted EBITDAR margin represents Adjusted EBITDAR divided by total operating revenue.
|--- | ---------------------------------------------------------------------------------------

|(7) | Operating data does not include cargo operations except for block hours, departures, average daily aircraft utilization, gallons of fuel consumed, average price of jet fuel into plane (net of hedge), average number of
aircraft, full-time employees and cooperative members at period end, revenue per full-time employee plus cooperative members, RTK and ATK.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | Operating data does not include regional operations in Central America except for airports served at period end, full-time employees and cooperative members at period end, revenue per full-time employee plus cooperative
members.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | Total number of paying passengers (excluding all passengers redeeming LifeMilesfrequent flyer miles and other travel awards) flown on all flight segments (with each connecting segment being considered a separate
flight segment).
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | Revenue passenger kilometers (RPKs) represent the number of kilometers flown by scheduled revenue passengers.
|---- | -------------------------------------------------------------------------------------------------------------

|(11) | Aircraft seating capacity multiplied by the number of kilometers the seats are flown.
|---- | -------------------------------------------------------------------------------------

|(12) | Percentage of aircraft seating capacity that is actually utilized. Load factors are calculated by dividing revenue passenger kilometers by available seat kilometers.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(13) | The number of hours from the time an airplane moves off the departure gate for a revenue flight until it is parked at the gate of the arrival airport.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------

|(14) | Average number of block hours operated per day per average number of passenger aircraft.
|---- | ----------------------------------------------------------------------------------------

|(15) | Average amount (in U.S. cents) one passenger pays to fly one kilometer.
|---- | -----------------------------------------------------------------------

|(16) | Passenger revenue (in U.S. cents) divided by the number of available seat kilometers.
|---- | -------------------------------------------------------------------------------------

|(17) | Operating revenue per available seat kilometer (RASK) represents operating revenue (in U.S. cents) divided by available seat kilometers.
|---- | ------------------------------------------------------------------------------------------------------------------------------------------

|(18) | Cost per available seat kilometer (CASK) represents service rendering costs and operating expenses (in U.S. cents) divided by available seat kilometers.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|(19) | Revenue ton kilometers (RTKs) represent the total cargo tonnage uplifted multiplied by the number of kilometers the cargo is flown.
|---- | -------------------------------------------------------------------------------------------------------------------------------------

|(20) | Available ton kilometers (ATKs) represent cargo ton capacity multiplied by the number of kilometers the cargo is flown.
|---- | -------------------------------------------------------------------------------------------------------------------------

|(21) | The average number of kilometers flown per flight.
|---- | --------------------------------------------------

|(22) | Percentage of domestic scheduled flights that arrive at the gate within 15 minutes of the scheduled arrival.
|---- | ------------------------------------------------------------------------------------------------------------

|(23) | Percentage of international scheduled flights that arrive at the gate within 15 minutes of the scheduled arrival.
|---- | -----------------------------------------------------------------------------------------------------------------

|(24) | Percentage of scheduled flights that arrive at the destination gate (other than flights cancelled with at least 168 hours notice).
|---- | -----------------------------------------------------------------------------------------------------------------------------------

|(25) | Percentage of scheduled flights that are not delayed at departure more than 15 minutes or cancelled, in each case, due to technical problems.
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(26) | Direct sales include sales from our ticket offices, our call centers, direct agents and our website.
|---- | ----------------------------------------------------------------------------------------------------



|B. | Capitalization and Indebtedness
|-- | -------------------------------

Not applicable.



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|C. | Reasons for the Offer and Use of Proceeds
|-- | -----------------------------------------

Not applicable.



|D. | Risk Factors
|-- | ------------

An investment in the American Depositary Shares, or ADSs, involves a
high degree of risk. You should carefully consider the risks described below before making an investment decision. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. The
trading price of the ADSs could decline due to any of these risks, and you may lose all or part of your investment. The risks described below are those known to us that we currently believe may materially affect us.

Risks Relating to Our Company

Our recent growth
and profitability may not be sustainable.

Since our February 1, 2010 combination of Aerovías del Continente Americano
S.A. Avianca or Avianca, and Grupo Taca Holdings Limited, or Taca, we have grown our operations and have been profitable. Since that date, we have benefited from favorable external circumstances that may not continue, including, among others, growth
in the overall market for air travel in Latin America and favorable political and economic conditions in Colombia, Peru and much of Central America. Prospective investors should understand that our future results of operations are subject to
significant uncertainties, and that our past results (and improvements in market share) may not be indicative of our future performance.

We seek to continue to grow by expanding our service to new markets and by increasing the frequency of our flights to some of the markets we
currently serve. For example, we plan to begin operating a new route between Bogotá and Los Angeles in July 2015 and to expand our Bogotá  London route into a daily flight in July 2015. We cannot assure you, however, that any
such future growth will improve our overall profitability and may, in fact, damage our profitability. When we commence a new route, our load factors tend to be lower than those on our established routes, and our advertising and other promotional
costs tend to be higher, which may result in initial losses that would have a negative impact on our consolidated results of operations as well as require a substantial amount of cash to fund. We also periodically offer special promotional fares,
particularly in connection with the opening of new routes. Promotional fares may have the effect of increasing load factors while reducing our yield on such routes during the period that they are in effect.

Our growth and profitability depend on the number of markets we serve and our flight frequencies, which in turn depend on our ability to
identify the appropriate geographic markets upon which to focus and to gain suitable airport access and route approval in these markets. According to ALTA, air travel in Latin America grew at rates of 13.5%, 5.4%, 8.2%, 6.9% and 5.1% in 2010, 2011,
2012, 2013 and 2014, respectively. We cannot give you any assurance that this growth will continue in the future or that any new markets we enter will provide passenger traffic that is sufficient to make our operations in those new markets
profitable. Any condition that would prevent or delay our access to key airports or routes, including limitations on the ability to carry more passengers, the imposition of flight capacity restrictions, the inability to secure additional route
rights under bilateral agreements or the inability to maintain our existing slots and obtain additional slots, could constrain the expansion of our operations. For example, due to difficulties in repatriating funds from Venezuela, in 2014, we
significantly reduced our service to Venezuela. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to Colombia, Peru, Venezuela, Central America and Other Countries in which We OperateWe have significant local
currency cash balances in Venezuela, which we may be unable to repatriate or exchange into U.S. dollars or any other currency. There are other variables that are also affecting the Latin American airline industry and that may affect our
performance. For example, the International Monetary Fund recently forecasted moderate GDP growth for emerging markets due to the decline in oil and commodity prices as well currency depreciation. In light of these factors, we cannot assure you that
we will be able to successfully maintain profitability, establish new markets or expand our existing markets, and our failure to do so could harm our business and results of operations, as well as the value of the ADSs.

We may not be able to achieve all the anticipated benefits of the combination of Avianca and Taca.

We became the parent company of Avianca and Taca in February 2010 in connection with the combination of Avianca and Taca, two large and complex
airlines that had previously operated as competitors. The success of the combination of Avianca and Taca depends in large part on our ability to achieve anticipated synergies from the streamlining of operations and personnel, increased economies of
scale, new product and service offerings and organic growth. We have successfully implemented the initial phase of our integration, which consisted of the commercial integration of our fleets, networks and certain revenue management practices,
however we still face challenges in implementing the second phase of operational integration, which focuses on achieving improved operating efficiencies from synergies and economies of scale. There is a risk that we may not be able to complete this
integration in a manner that achieves the revenue synergies, cost savings and growth opportunities in the time, manner or amounts that we seek, if at all.



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Challenges we face in the ongoing integration process include, among others, the following:



| |  |  | integrating differing customer service practices and corporate cultures in order to provide a unified and superior client experience in each of the jurisdictions in which we now operate;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | streamlining human resources and differing management structures while retaining highly qualified personnel;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | integrating different accounting, information technology and management systems; and
| | - |  | ------------------------------------------------------------------------------------



| |  |  | encountering unforeseen expenses, delays or liabilities that could exceed the savings that we seek to achieve from the elimination of duplicative expenses and the realization of greater efficiencies from increased scale
and market integration, other efficiencies and cost savings.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In addition, the integration process itself presents
significant management challenges and is time consuming and disruptive, as it requires coordination of geographically diverse organizations. As a result, the integration process may divert our managements attention from the day-to-day
operation of our core businesses. Any such diversion could adversely affect our ability to maintain good relations with our customers, suppliers, employees, regulators and other constituencies or otherwise adversely affect our businesses, financial
condition, results of operations and or business prospects.

In order to achieve the anticipated benefits of the combination of Avianca
and Taca, the operations of both companies will need to continue to be reorganized, and their resources will need to be combined in a timely and efficient manner. We cannot assure you that we will be able to do so as anticipated. If we fail to
implement the integration effectively and within the time frame currently contemplated, or if for any other reason the anticipated cost savings and growth opportunities fail to materialize, our business, financial condition, results of operation and
business prospects could be materially and adversely affected.

If our new aircraft are not delivered or placed into service on time, our
competitive position and results of operations are likely to be harmed.

We have entered into several agreements to acquire up to
50 Airbus and 11 Boeing for delivery between 2015 and 2019, and, in connection with our fleet modernization plan, signed a new A320 family Memorandum of Understanding (MOU) in December 2014, for a total of 100 new engine option
(neo) aircrafts, for which we expect to enter into a definitive purchase agreement in the second quarter of 2015. The timely delivery of these new aircraft by Airbus and Boeing is subject to a number of uncertainties including
(i) the fact that Airbus or Boeing may be unable or unwilling to fulfill their contractual delivery obligations as a result of production capacity constraints or otherwise, (ii) the aircraft delivered to us may encounter unexpected safety
or other operational problems and could be grounded, as has happened in the past to B787 aircraft operated by other airlines and (iii) our inability to obtain necessary aircraft financing for any reason.

Even if our new aircraft are delivered on time, certain additional risks may delay our ability to put them into service immediately,
including:



| |  |  | difficulties or delays in obtaining the necessary certifications from the aviation regulatory authorities of the countries to which we fly;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties in obtaining the required documentation to complete the registration of the aircraft before each local aviation authority;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties with local customs authorities in the process of reporting the entrance and import of the aircraft into the countries in which we fly;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties in obtaining parts and other buyer-furnished equipment (such as in-flight entertainment systems); and
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | the failure of the new aircraft and their components to comply with agreed specifications and performance standards.
| | - |  | --------------------------------------------------------------------------------------------------------------------

These and other such risks may significantly delay our ability to implement the critically important continuing modernization of our passenger
and cargo fleet. While our jet passenger operative fleet had an average age of 5.5 years as of December 31, 2014, our total operative fleet had an average age (including both passenger and cargo and jet and turboprop aircraft) of approximately
6.4 years. Our ability to remain competitive and to achieve improvements in operating efficiencies is heavily dependent on the prompt modernization of our fleet, and any disruptions of, or delays in, our proposed modernization program may
significantly harm our business by eroding our competitive position, delaying our ability to reduce operating costs and complicating our ability to retire our older aircraft on schedule.



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Underperformance of aircraft ordered from Airbus, Boeing and ATR may adversely impact our operations and
financial results.

We expect our fleet renewal plan to result in increased fuel efficiency, crew productivity, and lower training
costs leading to higher operational efficiency and flexibility. However, if the aircraft do not perform as expected, their introduction may not result in the aforementioned benefits, and additional cost will be incurred associated with their
purchase and with the replacement of older aircrafts. Although our agreements with Airbus, Boeing and ATR would permit us to receive compensation under certain circumstances in the event these aircraft fail to meet their agreed specifications, we
can offer no assurance that compensation received, if any, would adequately compensate us for the loss of the anticipated benefits of the new aircraft. The incurrence of the additional financing costs to purchase these aircraft and the additional
cost of retiring portions of our current fleet without achieving the related increase in efficiency and cost reductions could have a negative impact on our business, operations and financial performance.

Integration of new aircraft and return of old aircraft into our fleet may be costly in terms of financial and human resources.

We currently expect to integrate approximately 62 new aircraft into our fleet between 2015 and 2019 and may exercise purchase rights for
additional new aircraft. We may experience difficulties in integrating these new aircraft into our fleet. In addition, we face risks in integrating new types of aircraft into our existing infrastructure and operations, including, among other things,
the additional costs, resources, space, personnel and time needed to hire and train new pilots, technicians and other skilled support personnel. We may also face significant difficulties selling the aircraft we own in a short period of time at
favorable prices and returning our leased aircraft and engines on reasonable terms due to rigorous pre-return inspections by the lessors, which can lead to lengthy and costly negotiations during which we are obliged to continue making lease payments
for unutilized equipment. Our failure to integrate these newly purchased aircraft into our fleet as planned might require us to seek extensions of the terms for some leased aircraft. Such unanticipated extensions may require us to operate existing
aircraft beyond the point at which it is economically optimal to retire them, resulting in increased maintenance costs. If new aircraft orders are not filled on a timely basis, we could face higher monthly rental rates. We also have a large
inventory of spare parts and components for our current fleet and we may not be able to sell this inventory at favorable prices.

We may not be able
to obtain the capital we need to finance our growth and modernization strategy.

We seek to implement our growth and modernization
strategy by providing new service and increased frequencies to markets where we believe demand for air travel exceeds availability of flights, replacing our existing fleet with a new fleet and expanding our cargo activities, among other
capital-intensive initiatives. The majority of our aircraft are subject to favorable long-term operating leases or are financed on favorable terms. We may be unable to obtain similarly favorable financing for our new fleet. We intend to rely upon
internally-generated cash from our operations and additional debt financing in the domestic and international capital markets to fund our growth and modernization strategy. There can be no assurance, however, that we will be able to generate
sufficient cash flow from operations or obtain sufficient funds from external sources with favorable financing terms. Failure to generate sufficient cash flow or to obtain such financing could result in us paying higher financing rates or being
unable to accept delivery of the new aircraft, which may result in defaults under our aircraft purchase contracts with Airbus, Boeing and ATR or in the delay or abandonment of some or all of our planned expenditures, which, in turn, could adversely
affect our competitive position and our business, financial condition, results of operations, cash flows and prospects.

We have significant
indebtedness and financing costs and expect to incur additional indebtedness and financing costs as we modernize our fleet and seek to grow our business.

We have substantial and increasing fixed financial costs in connection with our aircraft financing obligations. As of December 31, 2014,
we had $3,170.6 million of total debt outstanding. Our interest expense was $134.0 million in 2014. For the year ended December 31, 2014, our aircraft rental expense under aircraft operating leases aggregated $299.2 million, and our facility
rental costs aggregated more than $36.7 million. In addition, we have entered into agreements to acquire up to 50 Airbus, 11 Boeing and one ATR aircraft for delivery between 2015 and 2019. We have also entered into an MOU whereby we expect to enter
into a purchase agreement to acquire 100 A320 neos for delivery between 2019 and 2024, which will require significant additional financing costs. See Item 5. Operating and Financial Review and ProspectsPart F. Contractual
Obligations for information on the magnitude of such financial commitments.

A high level of leverage may have significant negative
effects on our future operations, including:



| |  |  | impairing our ability to obtain additional financing in the future (or to obtain such financing on acceptable terms) for working capital, capital expenditures, acquisitions or other important needs;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | requiring us to dedicate a substantial portion of our cash flow to the payment of principal and interest on our indebtedness, which could impair our liquidity and reduce the availability of our cash flow to fund working
capital, capital expenditures, acquisitions and other important needs;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increasing the possibility of an event of default under the financial and operating covenants contained in our debt instruments; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limiting our ability to adjust to rapidly changing conditions in the market or the airline industry, reducing our ability to withstand competitive pressures and making us more vulnerable to a downturn in general
economic conditions or business than our competitors with less debt.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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If we are unable to generate sufficient cash flow from operations to service our debt, we may be
required to refinance all or a portion of our existing debt or obtain additional financing. We cannot assure you that any such refinancing would be possible or that any additional financing could be obtained. Our inability to obtain such refinancing
or financing may have a material adverse effect on our business, financial condition and results of operations. Fitch Ratings revised its outlook for us from stable to negative. If this change in outlook eventually results in
a downgrade of our credit rating, it may become more difficult for us to obtain financing.

We have significant off-balance sheet arrangements.

We have significant off-balance sheet arrangements, which must be taken in to account in evaluating our overall level of leverage
and financial health. As of December 31, 2014, the balance of our aircraft off-balance sheet arrangements was $1,089.6 million, primarily related to obligations under our operating leases for aircraft in our fleet. See Item 5. Operating
and Financial Review and ProspectsPart E. Off-Balance Sheet Arrangements. The amount of these off-balance sheet arrangements may grow in the future as we incorporate new aircraft into our fleet under our fleet modernization plan, many of
which could be through operating leases.

Our existing debt and lease financing arrangements contain restrictive covenants and events of default
that impose significant operating and financial restrictions on us.

Several of our financing arrangements and several aircraft
leases contain a number of covenants and restrictions including limits on our ability and our subsidiaries ability to incur additional debt and make certain investments. Some of these covenants require that we comply with specified financial
ratios and other financial and operating tests. Our access to certain borrowings under our financing arrangements is conditioned upon our maintenance of minimum debt service coverage and capitalization ratios and a maximum leverage ratio. See
Item 5. Operating and Financial Review and ProspectsPart B. Liquidity and Capital ResourcesDebt and Other Financing Agreements.

Complying with these covenants may cause us to take actions that make it more difficult to execute our business strategy successfully and we
may face competition from companies not subject to such restrictions. Moreover, our failure to comply with these covenants could result in an event of default or refusal by our creditors to renew certain of our loans.

We have in the past and may in the future fall out of compliance with financial covenants in our debt agreements. Currently, we are not in
compliance with some of the financial covenants in our debt agreements. Although we have obtained waivers for these incidences of non-compliance currently and in the past, we cannot give you any assurance that we will be able to obtain waivers for
any future failures to meet financial covenants, or that our lenders will not declare defaults or accelerate the repayment of our debt as a result of such failures.

We recently began preparing our financial statements in accordance with IFRS and, as a result, our available financial data is limited.

As of December 11, 2012, our board of directors approved the adoption of IFRS. We used a transition date of January 1, 2011, and as a
result our consolidated financial statements as of and for the year ended December 31, 2012 were our first annual audited consolidated financial statements required to be prepared in accordance with IFRS. We have not prepared any financial
information in accordance with IFRS for any prior periods. This makes it more difficult for you to compare our consolidated results of operations for prior years to our results of operations for the more recent years and to discern trends that would
otherwise be more apparent if we were to present financial information in accordance with IFRS for years prior to 2012. The lack of financial information from which to draw comparisons of our financial data may make it difficult for you to gain a
full and accurate understanding of trends affecting our results of operations, financial condition and business prospects.

Our maintenance costs
will increase as our fleet ages.

Because the average age of our operative fleet was approximately 6.4 years as of
December 31, 2014, our fleet requires less maintenance now than it will in the future. As of December 31, 2014, our jet passenger operative fleet had an average age of 5.5 years, our cargo fleet had an average age of 16.8 years and our
turboprop operative fleet had an average age of 6.3 years. Our maintenance costs can be expected to increase significantly, both on an absolute basis and as a percentage of our operating expenses, if our fleet ages and such fleet is not replaced or
the warranties covering such fleet expire and are not renewed.



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We depend on strategic alliances or commercial relationships, such as our membership in Star Alliance, in
many of the countries in which we operate and our business may suffer if any of our strategic alliances or commercial relationships terminate.

In many of the jurisdictions in which we operate, we have found it in our interest to maintain a number of alliances and other commercial
relationships. We depend on these alliances and/or commercial relationships to enhance our network and, in some cases, to offer our customers alternative services that we could not otherwise offer. If any of our strategic alliances and commercial
relationships, in particular with Star Alliance or its members, deteriorates, or any of these agreements are terminated, our business, financial condition and results of operations could be negatively affected.

We depend on a limited number of suppliers for our aircraft and engines.

One of the elements of our business strategy is to save costs by operating a simplified fleet. At December 31, 2014, 136 of the 193
aircraft that comprised our total fleet (including nine aircraft we lease or sublease to an entity indirectly controlled by José Efromovich, OceanAir, which conducts business under the trade name Avianca Brazil, and three inactive aircraft)
were Airbus. Our jet fleet also includes 12 Embraer aircraft, and we have also entered into agreements to acquire up to 15 Boeing 787 Dreamliners to implement our long-haul strategy. As of December 31, 2014, four B787 have been received. We
also completely replaced our regional turboprop fleet of Fokker 50s and are still in the process of replacing the ATR42s with 14 new ATR72s delivered between 2014 and 2015. As a result, we are vulnerable to significant problems associated with the
Airbus, Embraer, Boeing or ATR aircraft or the engines that power them, including design defects, mechanical problems, contractual performance by the manufacturers or adverse perception by the public that would result in customer avoidance or in
actions by the FAA or other regulators resulting in a reduced ability to operate our aircraft.

If any of Airbus, Embraer, Boeing or ATR
or the manufacturers of the engines that power them were unable to perform their contractual obligations, or if we are unable to acquire or lease new aircraft or engines from aircraft or engine manufacturers or lessors on acceptable terms, we would
have to find another supplier for a similar type of aircraft or engine. If we have to lease or purchase aircraft from another supplier, we could lose the benefits we derive from our current fleet composition. We cannot assure you that any
replacement aircraft would have the same operating advantages as the Airbus, Embraer, Boeing or the ATR aircraft that currently comprise our fleet that would be replaced or that we could lease or purchase engines that would be as reliable and
efficient as the engines that currently power them. We may also incur substantial transition costs, including costs associated with retraining our employees, replacing our manuals and adapting our facilities. Our operations could also be harmed by
the failure or inability of Airbus, Embraer, Boeing or ATR or the manufacturers of our engines to provide sufficient parts or related support services on a timely basis.

Our business would be significantly harmed if a design defect or mechanical problem with any of the types of aircraft that we operate were
discovered that would ground any of our aircraft while the defect or problem was corrected, assuming it could be corrected at all. The use of our aircraft could be suspended or restricted by regulatory authorities in the event of any actual or
perceived mechanical or design problems. Our business would also be significantly harmed if the public began to avoid flying with us due to an adverse perception of the types of aircraft that we operate stemming from safety concerns or other
problems, whether real or perceived, or in the event of an accident involving those types of aircraft. Carriers that operate a more diversified fleet are better positioned than we are to manage such events.

We are dependent on our hub at Bogotás El Dorado International Airport and Puente Aéreo.

Our business is heavily dependent on our operations at our Bogotá hub consisting of El Dorado International Airport and Puente
Aéreo. During 2014, approximately 76% of our domestic flights and approximately 31% of our total international flights either departed from or arrived at our Bogotá hub. As a result, any significant interruption or disruption in
service at El Dorado International Airport, or any other condition adversely affecting the international competitiveness of the Bogotá hub, could have a serious impact on our business, financial condition and operating results.

The hub-and-spoke structure of many of our operations is particularly dependent on the on-time arrival of tightly coordinated groupings of
flights to ensure that passengers can make timely connections to continuing flights. Like other airlines, we are subject to delays caused by factors beyond our control, including air traffic congestion at airports, adverse weather conditions and
increased security measures. El Dorado International Airport currently faces significant traffic congestion due to aircraft-flow management problems. IATA is currently providing advisory services to the Colombian Civil Aviation Authority to improve
overall runway capacity and ground movement patterns at El Dorado International Airport, but we cannot give any assurance that IATAs solutions will in fact be implemented as planned, or that, if implemented, they will be successful in
alleviating the current congestion.



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If the expansion of El Dorado International Airport is not carried out timely, this will likely
constrain significantly our ability to grow and adversely affect our ability to maintain the competitiveness of our business model. Delays inconvenience passengers, reduce aircraft utilization and increase costs, all of which negatively affect our
profitability. During periods of fog, rain, storms or other adverse weather conditions, flights may be cancelled or significantly delayed. Cancellations or delays due to weather conditions, traffic control problems and breaches in security could
harm our operating results and financial condition. In addition, the number of gates at El Dorado International Airport need to be increased to accommodate demand, which currently exceeds the airports capacity.

In June of 2014, we moved some of our domestic operations from Puente Aéreo domestic terminal to El Dorado International Airport
in order to improve connectivity between our international and domestic flights. We implemented a second phase on October 26, 2014, and now operate 56% of our daily domestic flights from El Dorado International Airport. Although the new airport
benefits our customer experience, a new operation scheme may also present challenges in coordination, planning and costs.

Recently, the
Colombian government announced the expansion of the El Dorado International Airport due to lack of space in the actual facilities and the increasing growth of passenger demand in the country. In the next two years, the airport capacity will increase
by 48%, with an anticipated capacity of 40 million passengers. The expansion project seeks to increase size, improve infrastructure, process and customer service and benefit operations. This expansion includes: increase of operations per hour,
addition of 27 new gates (for a total of 54 at the airport), more space for passenger terminals (such as areas related to customer service, new commercial and food court areas) and new VIP lounges. We may experience difficulties in our operations
during this expansion process and we cannot assure that the expansion will be successful or be completed within the expected time frame.

We are in
the process of incorporating new information technology systems, the phase-in of which may have a negative impact on our general ledger systems and other related IT systems we use to process our accounting transactions.

We are in the process of incorporating new information technology systems to improve our maintenance and flight operations and integrate our
legacy Avianca and Taca systems. Although we seek to implement our new flight operations systems during 2015 and 2016, we cannot assure you we will be able to do so. Our incorporation of these new systems is intended to help us increase revenue,
reduce costs, enhance customer satisfaction and increase operating efficiencies, however, these new systems may not deliver the benefits we seek. In addition, in the short term, the phase-in of these new systems may result in lower service and
operating performance, which could adversely affect how our customers perceive us. Also, in transitioning to new systems, we may lose data or experience interruptions in service, which could harm our business.

Additionally, in July 2014, we implemented a new Enterprise Resource Planning (ERP) system to handle business, human resources and financial
processes, as well as a new a MRO software solution (Aircraft Maintenance) and encountered several challenges during such implementation. In particular, we identified a material weakness in our internal controls over financial reporting with respect
to our ITGCs. We did not implement and maintain effective ITGCs over our general ledger systems and other related IT systems we use to process our accounting transactions. Although our management has initiated steps to remediate this issue and we
believe the planned process improvements will adequately remediate the material weakness described above and will strengthen our internal controls over financial reporting, these steps may prove unsuccessful and we may be unable to effectively
implement ITGCs that restrict access to our applications and data to appropriate internal personnel. This and any further issues with the implementation of our ERP system may increase our costs and affect our results of operations.

We face significant challenges which may limit our ability to grow our cargo business.

Our cargo business is highly sensitive to macroeconomic conditions and to significant competitive pressures. The air cargo business is
generally volatile and reacts quickly and often disproportionately to changes in economic conditions. For example, a decrease of a certain percentage in GDP or consumer demand often results in a disproportionately larger decrease in demand for air
cargo services, as cargo customers elect to suspend restocking orders and reduce existing inventories and/or to use cheaper forms of transportation for their goods. Although global air freight growth was healthier in 2014 compared to 2013, such
growth in Latin America increased only by 0.1%. Certain Latin American countries, in particular Argentina, Brazil and Venezuela, may continue to face economic challenges that may impact both import and exports of goods.

A competitive environment and excess capacity in most markets continuously puts pressure on yields. This situation may be worsened by recent
the decrease in fuel prices which may cause increased capacity in certain routes by competitor airlines, adversely affecting yields and market share and therefore expected profitability.

Cargo demand and flows are unidirectional, and dependent on a small number of product categories. This structural imbalance between inbound
and outbound flows poses a challenge to freighter operations as lack of demand in a particular direction may force airlines to rely on different markets in order to maximize loads on return flights. Product concentration may also enhance this
challenge, as the volume of goods that we transport on a specific direction may be strongly affected by any event that negatively affects the production of these goods (for example fresh flowers from Ecuador and Colombia).



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In 2014, mostly during the last quarter, many Latin American countries faced depreciation of
local currencies compared to U.S. dollars. The Euro also showed this depreciation trend. This type of foreign exchange rate behavior may impact imports and exports of certain sensitive cargo products.

Regarding our recent investment in Aerounión, if we fail to achieve the expected synergies from this acquisition in a timely manner, we
may not meet the expected return of investment within the timeframe originally contemplated.

We rely on third parties to provide us with parts and
services.

We have entered into agreements with, and depend upon, a number of suppliers for our parts and engines for both
provisioning and maintenance. We also have entered into agreements with third-party contractors to provide us with call-center services, catering, ground handling, cargo and baggage handling and below the wing aircraft services. It is
our general policy that our agreements with suppliers and third-party contractors are subject to termination on short notice. In some cases, we would be forced to pay penalties for terminating contracts on short notice and our contractors have also
the right to terminate on short notice the agreements entered into with us. The termination of these agreements or our inability to renew these agreements or to negotiate new agreements with other providers at comparable rates could harm our
business and results of operations. Further, our reliance on third parties to provide essential supplies and services on our behalf gives us less control over the costs, efficiency, timeliness and quality of those supplies and services. We expect to
be dependent on such agreements for the foreseeable future, and, if we enter any new market, we will need to enter into additional similar agreements.

Our business is highly regulated and changes in the regulatory environmental in which we operate may adversely affect our business and results of
operations.

Our business is highly regulated and substantially depends upon the regulatory environment in the countries in which
we operate or intend to operate. For example, price controls on fares may limit our ability to effectively apply customer segmentation profit maximization techniques (management techniques that use passenger demanding forecasting and fare-mix
optimization techniques to maximize profit for an airline) and adjust prices to reflect cost pressures. High levels of government regulation may limit the scope of our operations and our growth plans, especially in the event of deterioration of the
relations between the countries in which we operate or the public perception of foreign companies in local markets. Accordingly, regulatory issues could adversely affect our business and results of operations.

Our business, financial condition and results of operations could be adversely affected if we fail to maintain the required governmental
authorizations in the various jurisdictions where we operate necessary for our operations. In order to maintain the necessary authorizations issued by the different civil aviation authorities in jurisdictions where we operate, we must continue to
comply with applicable statutes, rules and regulations pertaining to the airline industry, including any rules and regulations that may be adopted in the future. We cannot predict or control any actions that the civil aviation authorities or other
aviation regulators may take in the future, which could include restricting our operations or imposing new and costly regulations.

We are
also subject to international bilateral air transport agreements that provide for the exchange of air traffic rights between the different countries, and we must obtain permission from applicable governments to provide service to international
destinations. Bilateral aviation agreements as well as local aviation approvals frequently involve political and other considerations beyond our control. A modification, suspension or revocation of one or more bilateral agreements could have a
material adverse effect on our business, financial condition and results of operations. The suspension of our permission to operate in certain airports or destinations or the imposition of other sanctions could also have a material adverse effect. A
change in the administration of current laws and regulations or the adoption of new laws and regulations in any of the countries in which we operate that restricts our route, airport or other access may have a material adverse effect on our
business, financial condition and results of operations. We cannot give you any assurance that existing bilateral agreements among the countries in which we are based and to which we fly, and permits from local and foreign governments, will
continue, or that we will be able to obtain more traffic rights to accommodate our future expansion plans.

Further, if we are unable to
obtain favorable take-off and landing authorizations at certain high-density airports, our business, financial condition and results of operations could be adversely affected. There can be no assurance that we will be able to obtain all requested
authorizations and slots in the future because, among other factors, government policies regulating the distribution of the authorizations and slots are subject to change.



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In addition, certain of the bilateral air transport agreements, including, among others,
agreements of Colombia with Bolivia, Ecuador, Peru, Panama, Chile, Argentina, the Dominican Republic, Cuba, the Netherlands and Costa Rica contain the requirement that our relevant operating subsidiaries must be incorporated and have their principal
domicile, management, operations, technical maintenance and offices in certain designated countries. Also, all of the agreements negotiated by El Salvador (except for the agreements with Ecuador, Colombia, Emirates, Qatar and Chile) contain a clause
that our airline in El Salvador (Taca International) remains substantially owned and effectively controlled by Salvadoran nationals. A substantial part of the agreements negotiated by Costa Rica also contain ownership and control requirements.

Other bilateral air transport agreements, including, among others, agreements with the United States, Brazil and Mexico, contain requirements
that we remain substantially owned and effectively controlled by a national governmental entity or its nationals. We cannot assure you that national citizens, directly or indirectly, will continue to own and control a majority of our capital stock
indefinitely. For example, if for any reason Germán Efromovich, José Efromovich and/or Roberto Kriete, who each have different citizenships and are the beneficial owners of all of our common stock, cease to have substantial ownership
of our capital stock, or the effective control of our management and operations ceases to be exercised by nationals, or if we fail to continue to have our corporate domicile, administrative headquarters, and our base of operations within each
territory, we may no longer comply with the requirements of bilateral agreements and, as a result, our route and landing rights in a number of important countries may be adversely affected, which could have a material adverse effect on our business,
financial condition and results of operations. A modification, suspension or revocation of one or more bilateral agreements and other permission from applicable foreign governments could have a material adverse effect on our business, financial
condition and results of operations. See Item 4. Information on the CompanyPart B. Business OverviewRegulation.

As of December 31, 2014, approximately 74.6% of our total fleet was U.S.-registered. The U.S. Federal Aviation Administration, or FAA,
and the European Aviation Safety Agency, or EASA, are our most significant foreign government regulators. For example, the FAA from time to time issues directives and other regulations relating to the maintenance and operation of aircraft that
require significant expenditures. FAA requirements, which apply to our U.S.-registered aircraft, cover, among other things, collision avoidance systems, airborne wind shear avoidance systems, noise abatement and other environmental issues, and
increased inspections and maintenance procedures to be conducted on older aircraft. We expect to continue incurring expenses to comply with these and other international government regulations, and any increase in the cost of compliance could have
an adverse effect on our financial condition and results of operations. Additional new regulations continue to be regularly implemented by various U.S. and European agencies, including, among others, the U.S. Transportation Safety Administration, or
TSA, and the U.S. Drug Enforcement Agency. We cannot assure you that the laws and regulations of the jurisdictions to which we fly (including, without limitation, immigration and security regulations, which directly affect passengers) will not
change or that new laws adverse to us will not be enacted, and any such events may adversely affect our business, financial condition and results of operations.

Our reputation and financial condition would be harmed in the event of an accident or major incident involving our aircraft or aircraft of the types we
use.

Between 1988 and 1993 Avianca had four serious accidents involving significant fatalities. More recently, in 2008, one of
Tacas aircraft had an accident involving five fatalities after landing in Tegucigalpa, Honduras. An accident or major incident in the future involving one of our aircraft could result in significant claims by injured passengers and others, as
well as significant costs related to the repair or replacement of a damaged aircraft and its temporary or permanent removal from service.

We are required by our creditors and the lessors of our aircraft under our operating lease agreements to carry liability insurance, but the
amount of such liability insurance coverage may not be adequate, and we may be forced to bear substantial losses in the event of any future incident. Our insurance premiums may also increase significantly due to an accident or incident affecting one
of our aircraft. Substantial claims resulting from an accident in excess of our related insurance coverage or increased premiums would harm our business and financial results. Moreover, any aircraft accident or incident, even if fully insured, could
cause the public to perceive us as less safe or reliable than other airlines, which could materially and adversely affect our results of operations and business prospects. Our business would also be significantly harmed if the public were to avoid
flying with us due to an adverse perception of an aircraft type, safety concerns or other problems, whether real or perceived, or in the event of an accident involving an aircraft of a type that we operate.

We are subject to litigation that could negatively affect our profitability and cash flow or have a material adverse effect on our business, financial
condition or results of operations.

Our future profitability and cash flows could be affected by an adverse ruling in any of the
potentially significant lawsuits currently pending against us or that may be filed against us in the future. We cannot give you any assurance that we will be successful in any of such lawsuits.



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Some of our subsidiaries are currently defendants to several lawsuits of a civil, commercial or
labor nature originating from alleged acts or omissions related to their activities as carriers or as employers, with varying claims for damages on legal and contractual bases. See Item 8. Financial InformationPart A. Consolidated
Statements and Other Financial InformationLitigation and Note 32Provisions for legal claims to our audited financial statements as of and for the year ended December 31, 2014.

Additionally, there are several proceedings in which our subsidiaries are plaintiffs demanding that certain decisions of administrative
authorities be declared null. In the event that our subsidiaries do not prevail in such proceedings, not only will the decisions of the authorities remain effective, but our subsidiaries may also be required to pay penalties, sanctions or other
additional amounts.

Additionally, some tax returns filed on time with the different authorities are pending review in accordance with the
applicable statute of limitations. The auditing of those tax returns may result in additional taxes, or interest, or penalties which could give rise to administrative proceedings with applicable authorities. Our business also makes us and our
subsidiaries subject to potential lawsuits which have not yet materialized, but in the future could negatively impact our business.

Failure to
comply with applicable environmental regulations could adversely affect our business and reputation.

Our operations are covered by
environmental regulations at the local and national levels, in our hubs, focus markets and in foreign countries. These regulations cover, among other things, emissions into the atmosphere, disposal of solid waste and aqueous effluents, management
and disposal of hazardous wastes, aircraft noise and other activities incident to our business. Future operations and financial results may vary as a result of such regulations. Compliance with these regulations and new or existing regulations that
may be applicable to us in the future could increase our cost base and adversely affect our operations and financial results.

The
European Union (EU) has adopted a directive under which the existing emissions trading scheme (the ETS) in each EU member state would be extended to airlines. This directive would require us to submit annual emission
allowances in order to operate routes to and from EU member states. The ETSs application to flights was scheduled to begin in 2012, however, its implementation to international flights has been delayed by the EU. The EU did not collect
allowances from airlines in 2013 and only enforced the directive with respect to airlines that conducted intra-European flights during 2012.

Although it is uncertain when and if the ETS will be implemented, it is increasingly likely that we will be required to participate in some
form of an international aircraft emissions program in the future. Currently, we operate three routes to and from Europe, and service additional destinations through our code-share agreements. The cost of compliance with any international emissions
program, including the ETS, is difficult to estimate; however, these costs could be significant and could require us to reduce our emissions, purchase allowances or otherwise pay for our emissions, which could have a significant impact on our
operating costs or impact the frequency of our flights to and from EU member states, we may be required to participate in some form of an international aircraft emissions program in the future. Costs associated with compliance with any international
emissions program, including the ETS, could be significant and require us to reduce our emissions, purchase allowances or otherwise pay for our emissions, which could have a significant impact on our operating costs or impact the frequency of our
flights to and from EU member states.

In addition, failure to comply with these regulations could adversely affect us in a variety of
other ways, including adverse effects on our reputation. Remediation obligations can result in significant costs associated with the investigation and clean-up of contaminated properties, as well as damage claims arising out of the contamination of
properties or any impact on natural resources.

Our ability to fly to the United States and the benefits of our strategic alliances or commercial
relationships are dependent on the FAAs continued favorable safety assessment of each of the three countries in which we have hubs.

The FAA periodically audits the aviation regulatory authorities of other countries. As a result of its audits, each country is given an
International Aviation Safety Assessment, or IASA, rating. The IASA rating of each of Colombia, Peru, El Salvador, Ecuador and Costa Rica is currently Category 1, which means that each such country complies with the International Civil
Aviation Organization, or ICAO, safety requirements. As a result, we may continue our service from our hubs in such countries to the United States in a normal manner and take part in reciprocal code-sharing arrangements with U.S. carriers.
Nevertheless, any of these ratings may be downgraded for a variety of safety and other reasons. If a downgrading occurs, we will be prevented from offering flights to any new destinations in the United States and from certifying new aircraft for
flights to the United States; in addition, our U.S. air carrier code share partners will be required to suspend placement of their codes on our flights.

If any of the countries in which we have a hub or focus is downgraded to Category 2, our ability to fly to the United States from
such hub would likely be significantly restricted. We cannot assure you that the governments of Colombia, Peru, El Salvador, Ecuador and Costa Rica and their respective civil aviation authorities in particular, will continue to meet international
safety



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standards, and we have no direct control over their compliance with IASA guidelines. If the IASA rating of any of
Colombia, Peru, El Salvador, Ecuador or Costa Rica were to be downgraded in the future, this could materially and adversely affect our service to the United States, causing us to lose revenue, including revenue from code sharing, as a result of
reducing flight options to our customers.

We rely on automated systems to operate our business, and any failure of such systems could harm our
business.

We are dependent on automated systems and technology to operate our business, enhance customer service and reduce
operating costs. The performance and reliability of our automated systems and data center is critical to our ability to operate our business and compete effectively. These systems include our computerized airline reservation system, flight
operations system, telecommunications systems, website, maintenance systems, check-in kiosks, in-flight entertainment systems and our primary and redundant data centers. Our website and reservation system must be able to accommodate a high volume of
traffic and deliver important flight information. These systems require upgrades or replacement periodically, which involve implementation and other operational risks. Our business may be harmed if we fail to operate, replace or upgrade our systems
or data center infrastructure successfully.

We rely on the third party providers of our current automated systems and data center
infrastructure for technical support. If the current provider were to fail to adequately provide technical support for any one of our key existing systems or if new or updated components were not integrated smoothly, we could experience service
disruptions, which, if they were to occur, could result in the loss of important data, increase our expenses, decrease our revenues and generally harm our business and reputation. Furthermore, our automated systems cannot be completely protected
against events that are beyond our control, including natural disasters, computer viruses, other security breaches, or telecommunications failures. Substantial or sustained system failures could impact customer service and ticket sales. We have
implemented security and disaster recovery measures and change control procedures and have disaster recovery plans; however, we cannot assure you that these measures are adequate to prevent disruptions, which, if they were to occur, could result in
the loss of important data, increase our expenses, decrease our revenues and generally harm our business and reputation.

We may incur substantial
compliance costs and face sanctions if we fail to comply with U.S. and other international drug trafficking laws.

We are required
to comply with strict drug trafficking laws mainly in Colombia, the United States and the European Union and are subject to substantial government oversight in connection with the enforcement of such laws. For example, the U.S. Foreign Narcotics
Kingpin Designation Act and Executive Order 12978 contain a list of persons designated by the United States government as drug traffickers. This list is periodically updated. Pursuant to these regulations, we may be subject to severe sanctions and
reputational harm if we are found by the U.S. government to have intentionally or inadvertently assisted in the international narcotics trafficking activities of a designated person. Although we monitor this list in an effort to determine that we do
not conduct business with any designated person, no assurance can be given that the counterparties with whom we do business in the future will not be subject to these regulations. In the event a counterparty of ours became a designated person, such
party might face severe sanctions and as a result be unable to perform under their agreements with us.

We cannot assure you that we will
succeed in complying at all times with such laws. For example, in August 2004, the U.S. Attorney for the Southern District of New York advised us that, because of several seizures from our aircraft of baggage, catering and cargo containing
narcotics, our security practices and procedures were inadequate. We were required to engage an internationally recognized security consulting firm in order to identify and implement additional aircraft security measures and were also required to
make additional investments in the area of aircraft and facility security. As part of our efforts to improve our practices, we developed a new security division which reports directly to our CEO, elevated our security standards with respect to
hiring and operating procedures and increased training and supervision. The requirement to maintain this consulting arrangement was lifted two years after it was initiated by the U.S. Attorney for the Southern District of New York. In the event,
however, that we violate any U.S. or other foreign narcotics restriction in the future, we may be subject to sanctions, severe fines, seizures of our planes or the cancellation of our flights.

Our results of operations fluctuate due to seasonality and other factors.

We expect our quarterly operating results to fluctuate due to seasonality including high vacation and leisure demand occurring during the
summer months of July and August and again during December and January. Actions of our competitors may also contribute to fluctuations in our results. As a result of this, our first quarter results are usually higher than our second quarter results.
We are more susceptible to adverse weather conditions, including hurricanes, as a result of our operations being concentrated in Colombia, Central America and the Caribbean, than some of our competitors. As we enter new markets we could be subject
to additional seasonal variations along with any competitive responses to our entry by other airlines. Price changes in aircraft fuel as well as the timing and amount of maintenance and advertising expenditures also impact our operations. As a
result of these factors, quarter-to-quarter comparisons of our operating results may not be a good indicator of our future performance. In addition, it is possible that in any future period our operating results could be below the expectations of
investors and any published reports or analyses regarding us.



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We are dependent on key personnel and we may be unable to attract and retain qualified, skilled employees
necessary to operate our business.

Our success depends to a significant extent upon the efforts and abilities of our senior
management team and key financial, operational and commercial personnel. Our employment agreements with members of our senior management team may be terminated by them at any time, without prior notice and without penalties. Furthermore, in certain
countries we are not permitted to have non-competition agreements in place with members of our senior management team after termination of employment. In addition, our business is labor-intensive and our operations require us to employ a large
number of highly-skilled personnel including pilots, maintenance technicians and other skilled operating personnel. In the countries in which we operate, there is a significant shortage of qualified pilots and maintenance technicians or other
qualified personnel, and we have faced considerable turnover of our skilled employees, many of whom have left us to work in other countries where compensation is higher. Our business is also dependent on customer-service skilled employees. The loss
of any executive officer, senior manager, key employee or other highly skilled personnel without adequate replacement or the inability to attract new qualified personnel could have a material adverse effect upon our business, operating results and
financial condition. Further, should the turnover of such employees (particularly pilots and maintenance technicians) increase, our training costs would be significantly higher. We cannot assure you that we will be able to recruit, train and retain
the managers, pilots, technicians and other qualified employees that we need to continue our current operations or replace departing employees. A failure to hire and retain such qualified employees at a reasonable cost could materially adversely
affect our business, financial condition and results of operations.

Labor disputes may result in a material adverse effect on our results of
operations.

Approximately 7% of our overall employees and 22% of our pilots belong to a labor union. There are currently fifteen
unions covering our employees. Seven of these unions are in Colombia: the National Workers Union of Avianca, the National Union of Aircraft Industry Workers, the Colombian Association of Flight Attendants, the Colombian Association of Civil
Aviators, the Colombian Association of Aircraft Mechanics, the Colombian Association of Flight Engineers and the Colombian Union of Air Transportation Workers. We also have employees covered by two labor unions in Argentina, one in Uruguay, one in
Mexico, two in Peru, one in Brazil and one in Ecuador.

In October 2013, we were negotiating a new collective bargaining agreement with
the Colombian Association of Civil Aviators (ACDAC), which as of December 31, 2014 represents approximately 38% of our pilots in Colombia, but we were not able to reach an agreement. The prior collective bargaining agreement we had with ACDAC
expired in March 2013 and was automatically extended for a six month period according to Colombian regulations. Pursuant to a judicial order, we were required to resume our suspended negotiations with ACDAC on March 21, 2014. No agreement was
reached during these negotiations, which expired on April 10, 2014, and we are waiting for the matter to be submitted to binding arbitration to resolve this dispute. Nevertheless, the judicial order does not require us to resume conversations
with ACDAC. Certain pilots in ACDAC have stopped following certain of our cost-saving and time-saving operating practices and have started to fly and taxi at the minimum speeds permitted by their respective labor contracts, increasing our block
hours and flying times, and have ceased implementing certain cost-saving practices such as taxiing with only one engine and requesting direct landing approaches to air controllers and therefore increasing flying time.

We cannot predict the duration of the labor dispute with ACDAC or the terms of our future collective bargaining agreements so cannot
accurately predict the impact of this labor dispute on our financial condition or results of operations. If this situation were to continue unresolved for a significant period or if it is resolved on terms that we deem to be unfavorable, it could
have a material adverse effect on our results of operations.

We commenced negotiation sessions with the Workers (flight attendants,
airport agents and instructors) Union of Trans American Airlines, S.A. on April 10, 2015. The results of the negotiations with the Workers Union of Trans American Airlines, S.A. may affect the negotiations with the members of the Colombian
Association of Flight Attendants. The negotiations with the National Union of Air Transportation Industry Workers, the Colombian Association of Aircraft Mechanics and the Colombian Association of Flight Engineers, and the Association of Tampa Cargo
workers are expected to take place during the second quarter of 2015. Typically, our collective bargaining agreements in Colombia, Peru and Mexico last two to five years. In addition, we signed an agreement with the Pilots Union of Trans
American Airlines S.A. on April 9, 2015, which will remain in place 3.5 years and we expect negotiations will resume in August 2017. The relations during this negotiation were carried out in very professional terms and no disruptions arose
during these months. Because we provide an essential public service, strikes and work interruptions are forbidden by law in Colombia; however, a slow-down or stoppage or any prolonged dispute with our employees who are represented by any of these
unions, or any other sizable number of our employees, could have an adverse impact on our operations. These risks are typically exacerbated during periods of renegotiation with the unions.



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As of December 31, 2014, we had 4,613 individuals hired through nonprofit cooperative
organizations. However, in 2010, the Colombian Congress passed Law 1429, which modified the legal regime of labor relationships for full-time employees in Colombia. As a consequence of these changes, we have been directly hiring all administrative
personnel while continuing to use the cooperatives for services and maintenance personnel. Even though we believe we were and continue to be in compliance with applicable laws, individuals hired through cooperatives may potentially file claims
against us in connection with alleged labor benefits earned during the time they were hired through the cooperatives. An adverse decision under these claims could force us to make substantial payments, which could adversely affect our financial
condition.

A significant percentage of our sales depends on our relationships with travel agencies and tour operators.

Approximately 67%, 69% and 65% of our sales were derived from tickets sold by travel agencies or tour operators in 2012, 2013 and 2014,
respectively. We cannot assure you that we will be able to maintain favorable relationships with these ticket agencies and operators. In addition, our contractual arrangements with these sellers may be terminated on short notice. Our revenue could
be adversely impacted if travel agencies or tour operators were to elect to favor other airlines or to disfavor us. Our relationships with travel agencies and tour operators may be affected by:



| |  |  | the size of commissions offered by us when compared to those offered by other airlines;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | changes in our arrangements with other distributors of airline tickets;
| | - |  | -----------------------------------------------------------------------



| |  |  | the introduction and growth of new methods of selling tickets, including sales through the internet, which may minimize the roles of travel agencies in the future and may affect our sales revenues; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in government regulations, including regulations which would increase the commissions we pay to travel agencies and tour operators.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------

We may not be able to maintain or grow our ancillary revenues.

Our business strategy includes expanding our portfolio of ancillary products and services, such as LifeMiles. There can be no assurance
that passengers will pay for additional ancillary products and services or that passengers will continue to choose to pay for the ancillary products and services we currently offer. Failure to maintain our non-ticket revenues could have a negative
effect on our results of operations and financial condition.

If we are unable to protect our intellectual property rights, specifically our
trademarks and service marks, our ability to compete could be negatively impacted.

We own the rights to certain trademarks and
trade names used in connection with our business including Avianca and LifeMiles. We believe that our names, trademarks and other related intellectual property are important to the success of our business. We protect
our intellectual property rights through a variety of methods, including, but not limited to, applying for and obtaining trademark protection in Colombia, Central America, the United States and certain other countries throughout the world in which
we operate our business. Any violation of our intellectual property rights or refusal to grant record of such rights in foreign jurisdictions may result in having to devote our time and resources to protect these rights through litigation or
otherwise, which could be expensive and time consuming. If we fail to protect our intellectual property rights for whatever reason, it could have an adverse impact on our operations and financial condition.

We are exposed to increases in landing charges and other airport access fees and cannot be assured access to adequate facilities and landing rights
necessary to achieve our expansion plans.

We must pay fees to airport operators for the use of their facilities. Passenger taxes
and airport charges have increased in recent years, in some cases substantially. We cannot assure you that the airports we use will not impose, or further increase, passenger taxes and airport charges in the future. Any substantial increase in
airport charges could have a material adverse impact on our results of operations.

Moreover, some of the airports to which we fly impose
various restrictions, including limits on aircraft noise levels, limits on the number of average daily departures and curfews on runway use. In addition, we cannot assure you that the airports at which there are currently no such restrictions will
not implement restrictions in the future or that, where such restrictions exist, they may not become more onerous. Such restrictions may limit our ability to continue to provide or to increase services at such airports.



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Certain airports that we serve (or that we plan to serve in the future) are subject to capacity
constraints and impose slot restrictions during certain periods of the day. In addition, we cannot assure you that we will be able to obtain a sufficient number of slots, gates and other facilities at airports to expand our services in the manner in
which we are proposing to do so. It is also possible that airports not currently subject to capacity constraints may become so in the future. In addition, an airline must use its slots on a regular and timely basis or risk having those slots
re-allocated to others. Where slots or other airport resources are not available or their availability is restricted in some way, we may have to amend our schedules, change routes or reduce aircraft utilization. If we are unable to obtain or
maintain favorable take-off and landing authorizations, slots, gates or other facilities at certain high-density airports, our business, financial condition and results of operations could be materially adversely affected.

We are a holding company with no independent operations or assets, and our ability to repay our debt and pay dividends to holders of the ADSs is
dependent on cash flow generated by our subsidiaries, which are subject to limitations on their ability to make dividend payments to us.

We conduct no operations, and our only material asset is our equity interests in our operating subsidiaries. Accordingly, our ability to repay
our indebtedness and pay dividends to holders of the ADSs is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. Our subsidiaries ability
to generate sufficient cash from operations to make distributions to us will depend upon their future operating performance, which will be affected by general economic, financial, competitive, legislative, regulatory, business and other factors
beyond their control.

In addition, our subsidiaries may not be able to, or may not be permitted to, make distributions to us in order to
enable us to make payments in respect of our indebtedness or to pay dividends. Restrictions in our subsidiaries debt instruments and under applicable law limit their ability to provide funds to us, and if our subsidiaries are not able to make
funds available to us by dividend, debt repayment or otherwise, we may not have sufficient funds to fulfill our obligations under our indebtedness or pay dividends to our shareholders, including holders of the ADSs. For example, our local bonds
restrict Avianca S.A.s ability to pay dividends prior to December 31, 2015 unless certain covenants are satisfied. As of December 31, 2014, Avianca S.A. was not meeting the ratio necessary to pay dividends to us under its local
bonds.

We may be liable for the potential under-funding of a pilots pension fund.

We are obligated to make contributions to a pilots pension fund for the Colombian Association of Civil Aviators known as La Caja de
Auxilios y de Prestaciones de la Asociación Colombiana de Aviadores Civiles, or CAXDAC, on behalf of certain of our eligible pilots. The pensioners affiliated with CAXDAC include not only some of our current pilots and former pilots, but
also pilots employed and formerly employed by other Colombian airlines. The assets that we have contributed to CAXDAC are segregated into a separate account that is restricted for the payments of retirement benefits payments of our employees. The
amount in the common CAXDAC fund used to pay the pensions may not be sufficient to cover all accrued pension liabilities since other Colombian airlines have gone bankrupt or have been liquidated and have failed to pay their ratable contributions to
the pension fund. Although CAXDAC, as a pension fund manager, is the only entity obligated to pay retirement pensions to those pensioners legally affiliated with CAXDAC, it is uncertain how the expected deficiency will ultimately be funded, and
whether or not pensioners and other third parties may bring actions against contributing airlines, including ourselves, seeking contributions to cover such deficiency, in which case we will be required to defend our position that we are not liable
for this deficiency and face the uncertainty of judicial review. However, the obligation of pension contribution to CAXDAC shall terminate at the time we transfer the full value of actuarial calculation, which, under Colombian law, should occur no
later than the end of 2023.

Risks Relating to the Airline Industry

The airline industry is highly competitive.

We face intense competition throughout our domestic and international route networks, which can affect our yields and otherwise adversely
impact our results of operations. Overall airline industry profit margins are low and industry earnings are volatile. Airlines compete in the areas of pricing, scheduling (frequency and flight times), on-time performance, on-board experience,
frequent flyer programs and other services.

During 2012, 2013 and 2014, respectively, domestic air travel in Colombia, Peru and Ecuador
accounted for approximately 31.0%, 29.8% and 31.6% of our passenger revenue and approximately 57.1%, 58.0% and 60.8% of our revenue passengers. As a result, our financial performance is highly sensitive to competitive conditions in the Colombian,
Peruvian and Ecuadorian domestic air travel markets. Our primary competitors in the Colombian domestic market are EasyFly, LATAM Airlines Group, Satena and VivaColombia. We may face significantly stronger domestic competition in the future because
of these competitors and new competitors, therefore, our prior results and market share may not be indicative of future performance in the Colombian domestic market. Our primary competitors in the Peruvian domestic market are Star Peru, LATAM
Airlines Group and Peruvian and



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in the Ecuadorian domestic market our primary competitors are LATAM Airlines Group and TAME. In addition to
traditional competition among airline companies, we face competition from companies that provide ground transportation, especially in our domestic cargo and passenger business, as well as companies that provide sea transportation in our cargo
business.

We also compete with a number of large airlines that serve the same international routes that we fly, including, among others,
Copa Airlines, LATAM Airlines Group, American Airlines, United Airlines, Iberia, Delta Air Lines, Aeroméxico, Interjet, Jet Blue Airways, Spirit Airlines, Aerolineas Argentinas, and, recently, VECA and VivaColombia. See Item 4.
Information on the CompanyPart B. Business OverviewCompetition. Some of our competitors, including American Airlines, United Airlines and LATAM Airlines Group, have larger customer bases and greater brand recognition in the markets
we serve outside of Colombia, and most of our international competitors have significantly greater financial and marketing resources than we do. Recently, due to the possibility of the elimination of the Schengen Visa (which permits free travel
without immigration checks between participating European countries) for Colombian and Peruvian citizens, many European airlines are willing to enter into these markets causing some pressure to reduce market fares. Airlines based in other countries
may also receive subsidies, tax incentives or other state aid from their respective governments, which are not provided to us by the governments in the countries in which we operate. The commencement of, or any increase in, service on the routes we
serve by existing or new competitors could negatively impact our operating results. Likewise, competitors service on routes that we are targeting for expansion may make those expansion plans less attractive.

We must constantly react to changes in prices and services offered by our competitors to remain competitive. The airline industry is highly
susceptible to price discounting, particularly because airlines incur very low marginal costs for providing service to passengers occupying otherwise unsold seats. Carriers use discount fares to stimulate traffic during periods of lower demand in
order to generate cash flow and increase market share. Any lower fares offered by one airline are often matched by competing airlines, which often results in lower industry yields with little or no increase in traffic levels. Price competition among
airlines in the future could lead to lower fares or passenger traffic on some or all of our routes, which could negatively impact our profitability. Such activity by other airlines could lead to reductions in the fares or passenger traffic on our
routes, to the point where profitable operations could not be maintained. Due to our smaller size and financial resources compared to some of our international competitors, we may be less able to withstand aggressive marketing tactics or fare wars
engaged in by or with our competitors should such events occur.

Volatility in our fuel costs or disruptions in our fuel supply would materially and
adversely affect our operating results.

Aircraft fuel costs constitute a significant portion of our total operating expenses,
representing approximately 32.7%, 31.4% and 30. 4%, respectively, of our operating expenses in the years ended December 31, 2012, 2013 and 2014. Therefore, substantial increases in fuel costs would materially and adversely affect our operating
results. Fuel costs have been subject to wide fluctuations as a result of increases in demand and sudden disruptions in, and other concerns about, global supply, as well as market speculation. Both the cost and availability of fuel are subject to
many economic and political factors and events occurring throughout the world that we can neither control nor accurately predict, such as political instability in major oil-exporting countries in the Middle East, Latin America and Africa. As a
result of factors such as this, fuel costs continue to exhibit substantial volatility.

We are vulnerable to any future increases in the
cost of fuel. We cannot assure you that fuel costs will not increase significantly above their current levels. Our aircraft fuel purchase agreements do not protect us against price increases or guarantee the availability of fuel. Additionally, some
of our competitors may have more leverage than we do in obtaining fuel. We have and may continue to develop our corporate risk policy to protect against significant increases in fuel prices; however, the hedge contracts and agreements we use do not
completely protect us against price volatility, are limited in volume and duration and may carry counterparty risk. Under the fuel hedge contracts we may enter from time to time, counterparties to those contracts may require us to fund the margin
associated with any loss position on the contracts if the price of crude oils falls below specified benchmarks. Meeting our obligations to fund these margin calls could adversely affect our liquidity. When fuel prices fall, we are typically exposed
to losses on our hedge contracts, which can partially offset savings in fuel cost expense that we experience in our operations.

Due to
the competitive nature of the airline industry, at times we have not been able to adequately increase our fares to offset the increases in fuel prices and we may not be able to do so in the future. Future fuel price increases, continued high fuel
price volatility or fuel supply shortages may result in a curtailment of scheduled services and could have a material adverse effect on our financial condition and results of operations. During 2008, fuel prices experienced significant volatility,
with West Texas Intermediate, or WTI, crude prices, a benchmark widely used for crude oil prices that is measured in barrels and quoted in U.S. dollars, in excess of $140 per barrel during the summer before dropping to $44.60 to close the year.
Prices then increased to approximately $72 per barrel in the second half of 2009. During 2010, prices gradually increased and closed the year at approximately $91 per barrel and by the end of 2011, prices had reached approximately $99 per barrel.
From 2012 and to August 2014, prices were approximately $97 per barrel. Prices then started to decrease, and, by the end of 2014 had reached approximately $53.45 per barrel. The average price of WTI as of April 6, 2015 was $52.08.



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In addition, should Ecopetrol S.A. (Colombias government-controlled oil company) experience
any disruption or slow-down in its fuel production or pumping capacity, particularly in Bogotá, we may be unable to obtain fuel or may be forced to pay significantly higher prices to do so. This risk is heightened by the low oil storage
levels that we understand are maintained by Ecopetrol S.A. and its distributors in Bogotá. We currently have an exclusive agreement with a single fuel distributor in Bogotá, Organización Terpel S.A., or Terpel, pursuant to which
Terpel supplied us with approximately 90.2%, 90.4% and 97.7% of our fuel needs in Colombia for each of 2012, 2013 and 2014, respectively. During 2012, 2013 and 2014, respectively, it supplied approximately 35.6%, 36.8% and 41.0% of our total fuel
consumption. In the event such arrangements were to terminate, we could be forced to renegotiate our fuel supply in a market with a limited number of suppliers, which might result in higher costs for us.

We expect to face increasing competition from low-cost carriers offering discounted fares.

Airlines in the United States and Europe have in recent years faced substantial and increasing competitive pressure from low-cost carriers
offering discounted fares. The low-cost carriers operations are typically characterized by point-to-point route networks focusing on the highest-demand city pairs, high aircraft utilization, single-class service and fewer in-flight amenities.
As has been evidenced by the operations of competitors such as Gol Linhas Aéreas Inteligentes, or Gol, in Brazil, and other Latin American countries and several new low-cost carriers which have started service in Mexico, Colombia and other
markets, such as Interjet, Viva Aerobus, Volaris and VivaColombia, the low-cost carrier business model is gaining acceptance in the Latin American aviation industry. For example, in October 2010 EasyFly started operations in Colombia with deeply
discounted fares, VivaColombia started operations in the domestic market in 2012 and in international markets in August 2014, JetBlue Airways initiated operations between the U.S. and Colombia in 2009 and also operates routes between the U.S. and
Central America, and, as of November 2013, began operations between the U.S. and Peru, and Spirit Airlines, another U.S. low cost carrier, operates routes between the U.S. and Colombia, the U.S. and Central America and the U.S. and Peru. More
recently, in January 2015, VECA started operations in El Salvador with routes into Central America with deeply discounted fares as well.

Our business model is significantly different from that of low-cost carriers and is predicated on providing a level of service that we
consider superior and charging higher prices for such service. As low-cost carriers continue to penetrate our home markets, they could have a material adverse effect on our financial condition and results of operations; therefore, we may be forced
to reconsider our business model and adapt it to evolving passenger preferences. In any event, we may face new and substantial competition from low-cost carriers in the future which could result in significant and lasting downward pressure on the
fares we charge for flights on our routes. We must constantly react to changes in prices and services offered by our competitors to remain competitive. Price competition among airlines in the future could lead to lower fares or passenger traffic on
some or all of our routes, which could adversely affect our profitability.

We face increasing competition from other international airlines due to
the continuing liberalization of restrictions traditionally affecting the global airline industry.

Over the last 25 years the
global airline industry has been shifting to increasing acceptance of liberalized and open skies air transport agreements among nations. For example, open skies agreements currently exist among the countries of the European
Union, and between Europe and the United States. In Latin America, open skies agreements exist among Colombia, Ecuador, Peru and Bolivia and among each of these countries and the United States, Chile, Panama, Venezuela and the countries
of Central America. El Salvador also has an open skies policy. As a general matter, these liberalized or open skies air transport agreements serve to (i) reduce (or, in the case of open skies, eliminate)
restrictions on route rights, designated carriers, aircraft capacity or flight frequencies and (ii) promote competitive pricing.

As
a result of this continuing trend toward liberalized air transport agreements, a number of countries to which we fly have been negotiating with each local government to liberalize or provide more flexibility to its bilateral agreements with such
countries and to permit more flights to and from each local country. For example, the United States and Spain have each requested the adoption of an unrestricted open skies regime with Colombia. We cannot assure you that each
governments political position will not change or that additional flights will not be granted when requested by carriers from any other country.

It is likely that the different governments will continue to liberalize the current restrictions on international travel to and from each
country, among other things, granting new route rights and flights to competing airlines and generally promoting increased numbers of market participants on routes we serve. As a result of such liberalization, we could face substantial new
competition, which may erode our pricing and market share and have a material adverse effect on our consolidated financial position and consolidated results of operations.



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We face increased competition from certain airlines that have recently been restructured or emerged from
bankruptcy and further consolidation of the Latin American airline industry may adversely affect our business and results of operations.

In recent years, a number of air carriers have sought to reorganize in bankruptcy, including some of our principal competitors, including
American Airlines and Delta. The successful completion of reorganizations could present us with competitors with significantly lower operating costs derived from favorable labor, supply and financing contracts renegotiated under the protection of
the applicable bankruptcy laws. In addition, many air carriers involved in reorganizations have historically undertaken substantial fare discounting in order to maintain cash flows and to enhance continued customer loyalty. Such fare discounting
could further lower yields for all carriers, including us.

Further consolidation of the Latin American airline industry may increase
competition in the markets we serve. For example, in 2012, LAN Airlines completed its combination with TAM, creating the LATAM Airlines Group, which is the largest airline in Latin America in terms of fleet size, passengers carried, and destinations
served. As a result of the competitive environment, there may be further consolidation in the Latin American and global airline industry, whether by means of acquisitions, joint ventures, partnerships or strategic alliances. We cannot predict the
effects of further consolidation on the industry. Furthermore, consolidation in the airline industry and changes in international alliances will continue to affect the competitive landscape in the industry and may result in the formation of airlines
and alliances with increased financial resources, more extensive global networks and reduced cost structures.

Some of our competitors may receive
external support which could negatively impact our competitive position.

Some of our competitors may receive support from external
sources, such as their national governments, which may be unavailable to us. Support may include, among others, subsidies, regulatory facilities, financial aid or tax waivers. This support could place us at a competitive disadvantage and adversely
affect our operations and financial performance.

The airline industrys financial performance is characterized by low profit margins and high
fixed costs, and we may be unable to compete effectively against other airlines with greater financial resources or lower operating costs.

The airline industry is characterized generally by low profit margins and high fixed costs, primarily consisting of wages and salaries of crew
and other personnel, fuel costs and aircraft and engine lease payments and other financing costs related to aircraft equipment. Revenues per flight are primarily driven by the number of passengers transported and fares, which may vary significantly
depending on several factors which are generally outside of our control, including general economic conditions, weather and our competitors pricing strategies. However, the operating expenses of flying an aircraft do not vary significantly
with the number of passengers transported and cannot be adjusted quickly to respond to changes in revenue and a deficit in expected revenue levels. As a result, fluctuations in the number of passengers per flight or in pricing could have a
significant effect on our operating and financial results.

We rely on maintaining a high daily aircraft utilization rate, which makes us vulnerable
to delays.

We seek to maintain a high daily aircraft utilization rate (the number of hours we use our aircraft per day). High
daily aircraft utilization allows us to generate more revenue from our aircraft and is achieved in part by reducing turnaround time at airports so we can fly more hours on average in a day. Nevertheless, aircraft utilization is reduced by delays and
cancellations arising from a number of different factors, many of which are beyond our control, including, among others, air traffic and airport congestion, adverse weather conditions, security requirements, unscheduled maintenance and delays by
third-party service providers relating to matters such as fueling and ground handling. High aircraft utilization also increases the risk that, if an aircraft falls behind schedule during a given day, it could remain behind schedule for several
additional days. Such delays could result in a disruption of our operating performance, leading to customer dissatisfaction due to delayed or cancelled flights and missed connections, which could in turn adversely affect our reputation, business,
financial condition and results of operations.

On February 3, 2014, we took preventative action to ground our fleet of ten Fokker 50
turboprop aircraft (including four that were inactive) following an engine malfunction in one of the Fokker 50 aircraft in Cali, Colombia. We have since replaced our entire fleet of Fokker 50s with ATR72s.

Terrorist attacks or hostilities could adversely affect the airline industry by decreasing demand and increasing costs.

The terrorist attacks in the United States on September 11, 2001 had an adverse impact on the airline industry. Airline traffic in the
United States fell dramatically after the attacks, while it decreased less severely in Latin America. Our revenue depends on the number of passengers traveling on our flights. Therefore, any future terrorist attacks or threat of attacks, whether or
not involving commercial aircraft, any increase in hostilities relating to reprisals against terrorist organizations or otherwise and any related economic impact could result in decreased passenger traffic and materially and negatively affect our
business, financial condition and results of operations.



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Following the 2001 terrorist attacks, airlines have experienced increased costs resulting from
additional security measures that may be made even more rigorous in the future. In addition to measures imposed by the U.S. Department of Homeland Security and the TSA, IATA and certain foreign governments have also begun to institute additional
security measures at foreign airports we serve. A substantial portion of the costs of these security measures is borne by the airlines and their passengers. Security measures imposed by the U.S. and foreign governments after September 11, 2001
have increased our costs and may adversely affect us and our financial results, and additional measures taken in the future may result in similar adverse effects.

Premiums for insurance against aircraft damage and liability to third parties increased substantially following the 2001 terrorist attacks,
and insurers could reduce their coverage or increase their premiums even further in the event of additional terrorist attacks, hijackings, airline crashes or other events adversely affecting the airline industry abroad or in Latin America. In the
future, certain aviation insurance could become unaffordable, unavailable or available only with amounts of coverage that are insufficient to comply with the levels of insurance coverage required by aircraft lenders and lessors or applicable
government regulations. While governments in other countries have agreed to indemnify airlines for liabilities that they might incur from terrorist attacks or provide low-cost insurance for terrorism risks, the Colombian government has not indicated
any intention to provide similar benefits to us. Increases in the cost of insurance may result in both higher airline ticket prices and decreased demand for air travel generally, which could materially and negatively affect our business, financial
condition and results of operations.

The outbreak or the threat of an outbreak of a contagious disease may have a negative impact on the airline
industry.

In recent years, concerns about the possibility of an outbreak of a disease that can be spread by commercial airline
passengers (such as avian flu, swine flu, Severe Acute Respiratory Syndrome, tuberculosis or other contagious illnesses) has had a negative impact on the publics willingness to travel by air. It is impossible to determine when and where
threats of contagious diseases may arise, but if and to the extent they do, the publics willingness to travel by air may significantly decline, which could materially and negatively affect our business, financial condition and results of
operations.

Risks Relating to Colombia, Peru, Venezuela, Central America and Other Countries in which We Operate

Our performance is heavily dependent on economic and political conditions in the countries in which we do business.

Passenger demand is heavily cyclical and highly dependent on global and local economic growth, economic expectations and foreign exchange rate
variations. In the past, we have been negatively impacted by poor economic performance in certain countries in which we operate. Any of the following developments in the countries in which we operate could adversely affect our business, financial
condition and results of operations:



| |  |  | changes in economic or other governmental policies;
| | - |  | ---------------------------------------------------



| |  |  | changes in regulatory, legal or administrative practices;
| | - |  | ---------------------------------------------------------



| |  |  | other political or economic developments over which we have no control;
| | - |  | -----------------------------------------------------------------------



| |  |  | governments of the countries where we have assets may expropriate those assets under certain circumstances; or
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | potential instability may cause expropriation, nationalization, renegotiation or nullification of existing contracts.
| | - |  | ---------------------------------------------------------------------------------------------------------------------

Additionally, a significant portion of our revenue is derived from discretionary travel and leisure travel, which are especially sensitive to
economic downturns. A worsening of economic conditions could result in a reduction in passenger traffic, and leisure travel in particular, which in turn would materially and negatively affect our financial condition and results of operations. Any
perceived weakening of economic conditions in the Andean region and/or Central America could likewise negatively affect our ability to obtain financing to meet our future capital needs in international capital markets.

Our three main hubs are located in Colombia, El Salvador and Peru, we have focus markets in Costa Rica and Ecuador and we are organized under
the laws of the Republic of Panama. Accordingly, our financial condition and results of operations are significantly dependent on the macroeconomic, social and political conditions prevailing in these countries and in the other jurisdictions in
which we operate. As a result, decreases in the growth rate, periods of negative growth, increases in inflation, changes in policy, or future judicial interpretations of policies involving exchange controls and other matters such as (but not limited
to) currency depreciation, inflation, interest rates, taxation, banking laws and regulations and other political or economic developments in or affecting Colombia, El Salvador, Costa Rica, Peru, Panama and/or the other jurisdictions where we operate
may affect the overall business environment and may in turn impact our financial condition and results of operations.



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Our performance is heavily dependent on economic and political conditions in Colombia.

Our financial condition and results of operations depend significantly on macroeconomic and political conditions prevailing in Colombia.
Decreases in the growth rate, periods of negative growth, increases in inflation, changes in law, regulation, policy, or future judicial rulings and interpretations of policies involving exchange controls and other matters such as (but not limited
to) currency depreciation, inflation, interest rates, taxation, banking laws and regulations and other political or economic developments in or affecting Colombia may affect the overall business environment and may, in turn, impact our financial
condition and results of operations.

Colombias central government fiscal deficit and growing public debt could adversely affect the
Colombian economy. The Colombian fiscal deficit was 3.9% of GDP in 2010, 2.8% of GDP in 2011, 2.3% of GDP in 2012, 2.4% of GDP in 2013 and 2.3% of GDP in 2014.

The Colombian government frequently intervenes in Colombias economy and from time to time makes significant changes in monetary, fiscal
and regulatory policy. Our business and results of operations or financial condition may be adversely affected by changes in government or fiscal policies, and other political, diplomatic, social and economic developments that may affect Colombia.
We cannot predict what policies will be adopted by the Colombian government and whether those policies would have a negative impact on the Colombian economy or our business and financial performance.

We cannot assure you as to whether current stability in the Colombian economy will be sustained. If the condition of the Colombian economy
were to deteriorate, we would likely be adversely affected.

The Colombian government and the Central Bank may seek to implement new
policies aimed at controlling further fluctuation of the Colombian peso against the U.S. Dollar and fostering domestic price stability. The Central Bank may impose certain mandatory deposit requirements in connection with foreign-currency
denominated loans obtained by Colombian residents, including us. We cannot predict or control future actions by the Central Bank in respect of such deposit requirements, which may involve the establishment of a different mandatory deposit
percentage. The use of such measures by the Central Bank may be a disincentive for us to obtain loans denominated in a foreign currency. The U.S. dollar/Colombian peso exchange rate has shown some instability in recent years. We cannot assure you
that measures adopted by the Colombian government and the Central Bank will suffice to control this instability or that the Colombian peso will not depreciate or appreciate relative to other currencies in the future.

We also cannot predict the effects that such policies will have on the Colombian economy. Colombia has suffered from periods of widespread
criminal violence over the past four decades, primarily due to the activities of guerrilla groups such as the Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia), or FARC, paramilitary groups and drug cartels.
In regions of the country with limited governmental presence, these groups have exerted influence over the local population and funded their activities by protecting, and rendering services to drug traffickers. In response, the Colombian government
has implemented various security measures and has strengthened its military and police forces by creating specialized units. Since 2012, the Colombian Government began peace process negotiations with FARC. Nevertheless, despite these efforts,
guerilla, paramilitary and criminal activities, particularly in the form of terrorism attacks, homicides, kidnappings and extortion, persist in Colombia. These continuing activities, their possible escalation and the violence associated with them
may have a material adverse effect on the Colombian economy and/or on us in the future. We cannot assure you that preventative measures we have taken will protect us, our customers, employees or assets from violence or other actions that are
detrimental to us.

Our performance is heavily dependent on economic and political conditions in El Salvador.

El Salvador has a history of political instability marked by long periods of civil unrest and military rule. From 1979 until 1991, El
Salvador was mired in guerrilla activities which were ended by a United Nations-brokered peace accord in January of 1992. Since the peace accords were signed, El Salvador has experienced political stability. The Nationalist Republican
Alliance Party, or ARENA, controlled the presidency from 1989 to 2009, at which time the FMLN (a former guerrilla organization now turned into a political party) won the presidential elections. Salvador Sánchez Cerén, an FMLN
member, was recently elected by a narrow margin and became president on June 1, 2014. We are uncertain what this new leaders policies may be and how they will affect our business and operations. Future government policies in response
to social unrest could include, among other things, increased taxation, as well as expropriation of assets. These policies could materially and adversely affect the Salvadorian economy and, as a result, our business, financial condition and results
of operations.

El Salvadors economy has recently been growing at a moderate pace, yet its unemployment and poverty rates remain
high. Despite reforms and initiatives, El Salvador still ranks among the ten poorest countries in Latin America and suffers from inequality in the distribution of income. We cannot assure you that El Salvador will not face political, economic or
social problems in the future, and we may be seriously affected by such problems.



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Our performance is heavily dependent on economic and political conditions in Peru.

In the past, Peru has experienced periods of severe economic recession, large currency devaluation and high inflation. In addition, Peru has
experienced periods of political instability, which have led to adverse economic consequences. We cannot assure you that Peru will not experience similar adverse developments in the future.

While Peru has experienced economic growth in the recent past, political tensions, high levels of poverty and unemployment, and social
conflicts within local communities continue to be pervasive problems in Peru. In the past, certain areas in the south and the northern highlands of Peru with significant mining developments have experienced strikes and protests related mainly to the
environmental impact of metallic mining activities, which have resulted in political tensions, commercial disruptions and a climate of uncertainty with respect to future mining projects. Future government policies in response to social unrest could
include, among other things, increased taxation, as well as expropriation of assets. These policies could materially and adversely affect the Peruvian economy and, as a result, our business, financial condition and results of operations.

For example, prior to 1991, Peru exercised control over foreign exchange markets by imposing restrictions to multiple exchange rates and
restrictions to the possession and use of foreign currencies. Currently, foreign exchange rates are determined by market conditions, with regular operations by the Central Reserve Bank in the foreign exchange market in order to reduce volatility in
the value of Perus currency against the U.S. dollar. The Peruvian government may institute restrictive exchange rate policies in the future. Any such restrictive exchange rate policy could affect our ability to engage in foreign exchange
activities, and could also have a material adverse effect on our business, financial condition and results of operations.

Moreover,
although Perus current president, Ollanta Humala, has substantially maintained the moderate economic policies that sustained and fostered economic growth, while controlling the inflation rate at historically low levels, we cannot assure you
that the current or any future administration will maintain business-friendly and open-market economic policies or policies that stimulate economic growth and social stability. Any changes in the Peruvian economy or the Peruvian governments
economic policies may have a negative effect on our business, financial condition and results of operations.

Our performance is heavily dependent
on economic and political conditions in Costa Rica.

While Costa Rica is one of Latin Americas oldest democracies, we cannot
assure you that these conditions will continue. In 2014, Costa Rica faced a poverty level estimated at 22%, sizeable internal and external deficits resulting in high inflation, and an outdated tax system. Additionally, Costa Ricas
traditionally strong social safety net is eroding as a result of fiscal constraints, as well as increasing pressure from both legal and illegal immigration from other Central American countries.

Our performance is heavily dependent on economic and political conditions in Ecuador.

The Ecuadorian economy is heavily dependent on the oil industry and was severely impacted by the 2009 financial crisis, which adversely
affected the countrys economic growth. While Ecuadors economic growth has since improved, it faces a poverty level estimated at approximately 26% in 2014. In addition, Ecuador defaulted on a sovereign debt obligation in 2008 and its
economic policies have created a great deal of uncertainty about its future. The decline of oil prices in 2014 may also prove to have a significant impact on the Ecuadorian economy.

Our performance is heavily dependent on economic and political conditions in Panama.

We are organized under the laws of the Republic of Panama and as a result may be affected by economic and political conditions prevailing from
time to time in Panama. Panamas economic conditions are highly dependent on the continued profitability and economic impact of the Panama Canal. Control of the Panama Canal and many other assets were transferred from the United States to
Panama in 1999 after nearly a century of U.S. control. Although the Panamanian government is democratically elected and the Panamanian political climate is currently stable, we cannot assure you that current conditions will continue. If the
Panamanian economy experiences a recession or a reduction in its economic growth rate, or if Panama experiences significant political disruptions, our business, financial condition and results of operations could be materially and negatively
affected.

We cannot assure you that any crises such as those described above or similar events will not negatively affect the economies
of Colombia, El Salvador, Costa Rica, Peru, Panama or the other jurisdictions where we operate. Future developments in the countries in which operate could impair our business or financial condition.

We have significant local currency cash balances in Venezuela, which we may be unable to repatriate or exchange into U.S. dollars or any other currency.



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After the death of former President Hugo Chavez in March 2013, political and economic conditions
in Venezuela have worsened and continue to be uncertain, and his successor has adopted policies that are unfavorable to our operations in Venezuela. We continue to face difficulties in repatriating significant amounts of cash generated by our
operations in Venezuela.

Since 2003, the Venezuelan government decreed that all remittances abroad require the prior approval of CADIVI.
During the years ended December 31, 2013 and 2014, we did not obtain approval for remittance of the total amount of funds requested and, as of December 31, 2014, there was a pending amount to be authorized equal to $249.8 million related
to 2013 and $30.8 million related to 2014.

For the year ended December 31, 2013, the Company incurred losses of $46.0 related to
devaluation of the Venezuelan bolivar, after the government announced that it would change the CADIVI exchange rate from US$1:VEF 4.3 to US$1:VEF 6.3 for requests submitted in 2013.

As of December 31, 2014, our unremitted cash in Venezuela had accumulated to approximately VEF 1,944 million (approximately US$281.2
million) and available-for-sale securities represented US$1.5 million. The available cash in Venezuela represented 43.9% of our total cash and cash equivalents, based on the applicable official exchange rates at such date.

During 2014, the applicable exchange rate for repatriation requests submitted in 2014 was set at US$1:VEF 12.0. As a result, during the twelve
month period ended December 31, 2014, we recorded total losses due to exchange rate fluctuations in Venezuela amounting to $37.0 million.

Despite the uncertainty of the current exchange control in Venezuela, the government has announced a new currency system on February 12,
2015 called the Marginal Currency System or SIMADI which consists of a mechanism from which both businesses and individuals are allowed to purchase and sell foreign currency at the price set by the market (as of March 2015, this rate sells US$1 at
VEF 192.95). According to this announcement, the system known as SICAD II was annulled and combined with the former rate SICAD 1, creating a new exchange rate named SICAD exclusively for non-essential goods at which US$1 is sold at VEF 12.00.
Although this rate remains static as of March, it is expected to fluctuate as the government decides to stimulate specific industries. On the other hand, the official exchange rate remains unchanged (US$1:VEF 6.30) and it is still used for
preferential goods only. Although we had a total amount of VEF 370 million as of December 2014 awaiting repatriation at a rate of the new SICAD, the larger amount of VEF 1,574 million is still expected to be remitted at a rate of 6.30 VEF
to 1.00 USD.

Pursuant to Providencia No. 6,122 of January 23, 2014, changes to the effective remittance exchange rate should
not apply to amounts that had already been submitted for remittance, but we cannot assure you that this will be the case, because political and regulatory conditions in Venezuela are evolving rapidly, and there is substantial uncertainty as to what
exchange rate(s) might apply to any future conversion and remittance of our local currency cash balances. As of December 31, 2014, we held VEF 1.94 billion in Venezuela in cash, which at the exchange rates in effect at the relevant times of
submission for repatriation and as of December 31, 2014 was the equivalent of $281.2 million. If we convert these funds into dollars at exchange rates less favorable to us than those we used in the preparation of our balance sheet at
December 31, 2014, the adverse impact on the value of our funds in Venezuela could be significant. For example, if the SICADs December 31, 2014 auction exchange rate were to apply to this entire amount, the equivalent would be
reduced to $162.0 million. If the most recent SICAD II rate or SIMADI rate were applied to our entire cash balances in Venezuela, the equivalent would be reduced to $38.9 million or $10.0 million, respectively, resulting in a very significant
exchange loss to us. See note 6(g) in our audited financial statements for more information.

We have engaged in negotiations with the
Venezuelan government, including the Civil Aviation Authority (Instituto Nacional de Aeronáutica Civil) and the Ministry of Aquatic and Air Transport (Ministerio del Poder Popular para Transporte Acuático y Aéro),
in an effort to resolve our inability to convert and remit our substantial local currency cash balances, but to date we have been unsuccessful. To reduce our exposure to further accumulations of unremitted cash in Venezuela, we suspended the sale of
tickets in local currency from July 2014 on, but allow the purchase in U.S. dollars only.

Developments and the perception of risk in other
countries, especially emerging market countries, may adversely affect the market price of many Latin American securities, including the ADSs.

The market value of securities issued by companies with operations in the Andean region and Central America may be affected to varying degrees
by economic, political and market conditions in other countries, including other Latin American and emerging market countries. Although macroeconomic conditions in such Latin American and other emerging market countries may differ significantly from
macroeconomic conditions in Colombia and the other countries in which we operate, investors reactions to developments in these other countries may have an adverse effect on the market values of our securities. For example, as a result of
economic problems in various emerging market countries in recent years (such as the Asian financial crisis of 1997, the Russian



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financial crisis of 1998 and the Argentine financial crisis of 2001), investors have viewed investments in
emerging markets with heightened caution. Crises in world financial markets, such as those of 2008, could affect investors views of securities issued by companies that operate in emerging markets. Crises in other emerging market countries may
hamper investor enthusiasm for securities of Panamanian issuers, including the ADSs, which could adversely affect the market price of the ADSs. This could also make it more difficult for us and our subsidiaries to access the capital markets and
finance our operations in the future on acceptable terms, or at all.

Natural disasters in the countries in which we operate could disrupt our
businesses and affect our results of operations and financial condition.

We are exposed to natural disasters in each of the
countries in which we operate, such as earthquakes, volcanic eruptions, tornadoes, tropical storms and hurricanes. For example, heavy rains in Colombia have resulted in severe flooding and mudslides. El Salvador has experienced many significant
earthquakes, including in 1982, 1986 and 2001, that in each case resulted in numerous fatalities. Peru has also experienced numerous significant earthquakes, including in 2001, 2005, 2007 and 2011. Moreover, the Central American isthmus, in
particular El Salvador, Costa Rica, Guatemala and Nicaragua, is home to one of the worlds largest concentrations of active volcanos. Colombia has also experienced significant volcanic activity, affecting important cities covered by our
domestic operation. Such volcanic ash clouds would not only affect airport operations, but also the route conditions of flights operating near the affected zone.

In the event of a natural disaster, there is a risk of damage to our airport hubs and other facilities, and our disaster recovery plans may
prove to be ineffective, which could have a material adverse effect on our ability to conduct our businesses, particularly if such an occurrence affects computer-based data processing, transmission, storage and retrieval systems or destroys customer
or other data. In any such event, our property damage and business interruption insurance might not be sufficient to fully offset our losses, which could adversely affect our results of operations and financial condition. In addition, if a
significant number of our employees and senior managers were unavailable because of a natural disaster, our ability to conduct our businesses could be compromised.

Government policies and actions, and judicial decisions, in Colombia, Peru, Venezuela, Ecuador or Central America could significantly affect the local
economy and, as a result, our results of operations and financial condition.

The Colombian government and the Colombian Central
Bank have historically exercised and continue to exercise, substantial influence over the Colombian economy; they occasionally make significant changes in monetary, fiscal and regulatory policy. Changes in macroeconomic policies could materially and
adversely affect our business and the market value of the ADSs.

Our results of operations and financial condition may be adversely
affected by changes in governmental policies and actions, and judicial decisions, involving a broad range of matters, including interest rates, exchange rates, exchange controls, inflation rates, taxation, banking, labor and pension fund regulations
and other political or economic developments affecting Colombia, Peru, Venezuela, Ecuador and Central America. The governments in these countries have historically exercised substantial influence over their respective economies, and their policies
are likely to continue to have a significant effect on companies operating in such countries, including us. Our business and results of operations or financial condition may be adversely affected by changes in government or fiscal policies, and
other political, diplomatic, social and economic developments that may affect Colombia, Peru, Venezuela, Ecuador and/or Central America. We cannot predict what policies will be adopted by the governments in these countries and consequently cannot
assure you that future development in government policies or in the economies of these countries will not impair our business or financial condition or the market value of the ADSs.

Any additional taxes resulting from changes to tax regulations or the interpretation thereof in Panama, Colombia or other countries where we operate
could adversely affect our consolidated results.

Uncertainty relating to applicable tax legislation poses a constant risk to us.
Changes in legislation, regulation and jurisprudence can affect tax burdens by increasing tax rates and fees, creating new taxes, limiting eligible expenses and deductions, and eliminating incentives and non-taxed income. Currently, Panama imposes
no income tax on revenues generated from a source outside Panama and subjects dividends paid to a withholding tax of only 10% of the portion of the dividend that is attributable to Panamanian sourced income (as defined pursuant to the territoriality
principles that govern Panamanian tax law) and to a withholding tax of 5% of the portion of the dividend that is attributable to foreign sourced income. Currently Panama does not impose a withholding tax on dividends distributed by entities that do
not earn income from Panamanian sources. Nevertheless, we cannot assure you that Panamanian and Colombian tax laws will not change or may be interpreted differently by authorities as a result of the implementation of IFRS, and any change could
result in the imposition of significant additional taxes. Moreover, the Colombian and Salvadoran governments have significant fiscal deficits that may result in future tax increases. Additional tax regulations could be implemented that could require
us to make additional tax payments, negatively affecting our results of operations and cash flow. In addition, national or local taxing authorities may not interpret tax regulations in the same way that we do. Differing interpretations could result
in future tax litigation and associated costs.



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High rates of inflation may have an adverse impact on our business, results of operations, financial
condition and prospects, and the market price of the ADSs.

Rates of inflation in the countries in which we operate, like some
other countries in Latin America have been historically high, and we cannot assure you inflation will not return to high levels. Inflationary pressures may adversely affect our ability to access foreign financial markets, leading to adverse effects
on our capital expenditure plans. In addition, inflationary pressures may, among other things, reduce consumers purchasing power or lead certain anti-inflationary policies to be instituted by the relevant governments, such as an increase in
interest rates. Recently, inflation has increased, and there is no assurance that measures taken by the relevant governments will suffice to curb inflation. Inflationary pressures may harm our business, results of operations, financial condition and
prospects, or adversely affect the price of our ADSs.

Fluctuations in foreign exchange rates and restrictions on currency exchange could negatively
affect our financial performance and the market price of the ADSs.

The currency used by us is the U.S. dollar in terms of setting
prices for our services, the composition of our statement of financial position and effects on our operating income. We sell most of our services in U.S. dollars or price equivalent to the U.S. dollar, and a large part of our expenses are also
denominated in U.S. dollars or equivalents to the U.S. dollar, particularly fuel costs, aircraft leases, insurance and aircraft components and accessories.

In 2014, approximately 64.1% of our costs and expenses and 64.5% of our revenues were denominated in, or linked to, U.S. dollars. The
remainder of our expenses and revenues were denominated in currencies of the countries in which we operate, of which the most significant is the Colombian peso. Changes in the exchange rate between the Colombian peso and the U.S. dollar or other
currencies in the countries in which we operate could adversely affect our business, financial condition and results of operations. In particular, during times when our non-U.S. dollar-denominated revenues exceed our non-U.S. dollar-denominated
expenses, the depreciation of non-U.S. currencies against the U.S. dollar could have an adverse effect on our results, because conversion of these amounts into U.S. dollars will decrease our net income. We operate in numerous countries and face the
risk of variation in foreign currency exchange rates against the U.S. dollar or between the currencies of these various countries.

In
addition, a significant amount of our liabilities are denominated in Colombian pesos. At times when the Colombian peso appreciates against the U.S. dollar, the value of these liabilities will increase in U.S. dollar terms, resulting in an increase
in our non-operating expenses, which can have a negative effect on our consolidated financial statements and can have a real or perceived impact on our financial performance, which could negatively affect the market price of the ADSs. Our $56.8
million foreign exchange loss in 2012 was principally the result of the appreciation of the Colombian peso in 2012, our $23.5 million foreign exchange gain in 2013 was principally the result of the depreciation of the Colombian peso against the U.S.
dollar in 2013, and our $10.3 million currency exchange gain in 2014 was principally the result of the depreciation of the Colombian peso against the U.S dollar, coupled with the depreciation of the Brazilian real and Argentinian peso in which we
also maintain active positions against the U.S. dollar, in 2014. Depreciation of the Colombian peso against the U.S. dollar can cause the dollar-equivalent value of our revenues earned in Colombian pesos to decrease. We also have a significant cash
balance in bolivares, which currency is currently subject to Venezuelan exchange controls. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to Colombia, Peru, Venezuela, Central America and Other Countries in
which We OperateWe have significant local currency cash balances in Venezuela, which we may be unable to repatriate or exchange into U.S. dollars or any other currency. Variations in the values of other currencies may have similar
effects.

Variations in interest rates may have adverse effects on our business, financial condition, results of operations and prospects and the
market price of the ADSs.

We are exposed to the risk of interest rate variations. Our Colombian peso-denominated debt is mainly
exposed to variations in long-term interest rates and the Colombian 90-day deposit rate for commercial banks (establecimientos bancarios), financial corporations (corporaciones financieras) and financing companies (companies de
financiamiento), or DTF, as published by the Colombian Central Bank. Our non-Colombian peso-denominated debt is mainly exposed to variations in the London Interbank Offer Rate, or LIBOR. Any increase in inflation or other macroeconomic pressures
may lead to increases in these rates. As of December 31, 2014, we had approximately $716 million in aggregate principal amount of variable-rate debt.

Increases in the above mentioned rates may result in higher debt service payments under our loans, and we may not be able to adjust the prices
we charge to offset the impact of these increases. If we are unable to adequately adjust our prices, our revenue might not be sufficient to offset the increased payments due under our loans and this would adversely affect our results of operations.
Accordingly, such increases may adversely affect our business, financial condition, results of operations and prospects and the market price of the ADSs.



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Risks Relating to the ADSs and our Preferred Shares

Our two principal shareholders have veto power over certain strategic and operating transactions, and their interests may differ significantly from the
interests of our other shareholders.

We and our controlling shareholders, Synergy Aerospace Corp., or Synergy, and Kingsland
Holdings Limited, or Kingsland, are parties to a joint action agreement, or the Joint Action Agreement, that gives Synergy and Kingsland veto power over most significant strategic and operating transactions. See Item 7. Major Shareholders and
Related Party TransactionsPart B. Related Party TransactionsJoint Action Agreement. As of March 31, 2015, Synergys investment in us is approximately 78.1% of our common shares and 51.8% of our total outstanding shares
and Kingslands investment in us is approximately 21.9% of our common shares and 14.5% of our total outstanding shares. The Joint Action Agreement gives Synergy and Kingsland veto power over significant strategic and operating transactions
including, among others:



| |  |  | mergers and consolidations;
| | - |  | ---------------------------



| |  |  | certain acquisitions or investments in excess of $30 million in any single instance and $75 million in the aggregate during any fiscal year, except as already contemplated in our annual budget;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our business plan and annual budget;
| | - |  | ------------------------------------



| |  |  | capital expenditures in excess of $120 million, except as already contemplated in our annual budget;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | changes to our charter and bylaws or other similar document;
| | - |  | ------------------------------------------------------------



| |  |  | issuance of voting stock; and
| | - |  | -----------------------------



| |  |  | related party transactions.
| | - |  | ---------------------------

As a result of the foregoing veto rights, as well as the Synergy
Purchase Right and Kingsland Tag-along Right (see Item 7. Major Shareholders and Related Party TransactionsPart B. Related Party TransactionsJoint Action Agreement), Synergy and Kingsland have the ability to prevent us from
taking strategic and other actions that may be in your best interests, including strategic transactions that might enhance the long-term value of the ADSs and/or provide you with an opportunity to realize a premium on your investment in our ADSs.
Mr. José Efromovich, who together with his brother Germán Efromovich indirectly control Synergy, controls OceanAir, which operates under the trade name Avianca Brazil and provides passenger services primarily in the Brazilian
market. In addition, the Kriete family, the beneficial owners of Kingsland, have a significant interest in Volaris, a growing Mexican airline that provides passenger service to markets including North America. We cannot predict the extent to which
we may compete with OceanAir or Volaris in the future in Brazil, Mexico and elsewhere, and as a result cannot assure you that the interests of Synergy and Kingsland will be aligned with those of the holders of the ADSs and cannot give you any
assurance that Synergy and Kingsland will exercise their respective rights under the Joint Action Agreement in a manner that is favorable to your interests as a holder of ADSs.

Our controlling shareholders have the ability to direct our affairs, and their interests could conflict with those of ADS holders.

Our controlling shareholders beneficially own all of our outstanding common shares. Holders of our preferred shares and the ADSs are not
entitled to attend or vote at any of our general shareholders meetings except under very limited circumstances including:



| |  |  | changes to our by-laws which would impair the rights of holders of preferred shares;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | conversions of preferred shares into common shares;
| | - |  | ---------------------------------------------------



| |  |  | our dissolution, transformation or change of corporate purpose; and
| | - |  | -------------------------------------------------------------------



| |  |  | the delisting of our preferred shares on the Colombia Stock Exchange.
| | - |  | ---------------------------------------------------------------------

Holders of our preferred
shares and ADSs are not entitled to vote on other matters, many of which may be significant and may adversely affect the value of our preferred shares and ADSs. As a result, our controlling shareholders have the ability to determine the outcome of
substantially all matters submitted for a vote to our shareholders and thus exercise control over our business policies and affairs, including, among others, the following:



| |  |  | the composition of our board of directors and, consequently, any determinations of our board with respect to our business direction and policy, including the appointment and removal of our executive officers;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | determinations with respect to mergers, other business combinations and other transactions, including those that may result in a change of control;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | whether dividends are paid or other distributions are made and the amount of any such dividends or distributions;
| | - |  | -----------------------------------------------------------------------------------------------------------------



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| |  |  | whether we offer preemptive and accretion rights to holders of our preferred or common shares in the event of a capital increase;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | sales and dispositions of our assets; and
| | - |  | -----------------------------------------



| |  |  | the amount of debt financing that we incur.
| | - |  | -------------------------------------------

Our controlling shareholders may direct us to
take actions that could be contrary to your interests and may be able to prevent other shareholders, including you, from blocking these actions or from causing different actions to be taken. Also, our controlling shareholders may prevent change of
control transactions that might otherwise provide you with an opportunity to dispose of or realize a premium on your investment in our ADSs. In addition, we have entered into various transactions with OceanAir, an entity indirectly controlled by
Mr. José Efromovich and Synergy, including, among other things, licensing our Avianca trademark for use by OceanAir in Brazil, leasing and subleasing aircraft to OceanAir and entering into various agency agreements. See
Item 7. Major Shareholders and Related Party TransactionsPart B. Related Party Transactions. We cannot assure you that our controlling shareholders will act in a manner consistent with your best interests.

Holders of the ADSs have even more limited rights than holders of our preferred shares and may encounter difficulties in exercising some of such rights.

Holders of the ADSs may encounter difficulties in exercising some of their rights as shareholders for as long as they hold the
ADSs rather than the underlying preferred shares. For example, holders of the ADSs are not entitled to vote at shareholders meetings, and they are only able to exercise their limited voting rights by giving timely instructions to the
depositary in advance of a shareholders meeting, and only in respect of certain matters. Moreover, holders of the ADSs are only entitled to exercise inspection rights through a representative designated for that purpose and such rights may
only be exercised 15 business days prior to an ordinary shareholders meeting.

The depositary is the holder of the preferred shares
underlying the ADSs and holders may exercise voting rights with respect to the preferred shares represented by the ADSs only in accordance with the deposit agreement relating to the ADSs. To the limited extent permitted by the deposit agreement, the
holders of the ADSs should be able to direct the depositary to vote the underlying preferred shares in accordance with their individual instructions. Nevertheless, holders of ADSs may not receive voting materials in time to instruct the depositary
to vote the preferred shares underlying their ADSs. Also, the depositary and its agents are not responsible for failing to carry out voting instructions of the holders of ADS or for the manner of carrying out such instructions, unless such failure
can be attributed to gross negligence, bad faith or willful misconduct on the part of the depositary or its agents. Accordingly, holders of ADSs may not be able to exercise voting rights, and they will have little, if any, recourse if the underlying
preferred shares are not voted as requested.

American Depositary Shares on our preferred shares are subject to certain foreign exchange regulations
from the Colombian Central Bank that may impose registration requirements upon certain events of the ADS Program

The International
Investment Statute of Colombia regulates the manner in which foreign investors may participate in the Colombian securities markets, prescribes registration with the Colombian Central Bank of certain foreign exchange transactions and specifies
procedures under which certain types of foreign investments are to be authorized and administered. A holder of ADSs who withdraws preferred shares from the ADS deposit facility under certain circumstances may be required to comply directly with
certain requirements under the foreign investment regulations. Under these regulations, the failure of a non-resident investor to comply with foreign exchange regulations may prevent the investor from obtaining remittance payments, including for the
payment of dividends, constitute an exchange control violation and/or result in a fine.

Our shareholders ability to receive cash dividends
may be limited.

Under Panamanian law, we may pay dividends only out of retained earnings and capital surplus. Our articles of
incorporation provide that all dividends declared by our shareholders meeting will be paid equally with respect to all of the preferred shares and common shares. Although our common shareholders have adopted a dividend policy that provides for
the payment of at least 15% of our annual consolidated net income to shareholders as a dividend, our common shareholders may at any time, in their sole discretion and for any reason, amend or discontinue the dividend policy. If they decide not to
declare a dividend, you will not have any right to participate in or override that decision. Future dividends with respect to shares of our preferred stock, if any, will depend on, among other things, our results of operations, cash requirements,
financial condition, contractual restrictions, business opportunities, provisions of applicable law and other factors that our common shareholders and board of directors may deem relevant. As a result, we cannot give you any assurance that we will
pay dividends in accordance with our current dividend policy or otherwise.



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Holders of our preferred shares are not entitled to preemptive rights, and as a result you may experience
substantial dilution upon future issuances of stock by us.

Under our organizational documents, and in accordance with Panamanian
law, holders of our preferred shares are not entitled to any preemptive rights with respect to future issuances of capital stock by us. Therefore, unlike companies organized under the laws of many other Latin American jurisdictions, we will be free
to issue new shares of stock to other parties without first offering them to our existing preferred shareholders. In the future we may sell common or other shares to persons other than our existing preferred shareholders at a lower price than the
shares are offered as ADSs on the New York Stock Exchange, and as a result you may experience substantial dilution of your interest in us.

ADS
holders may be subject to additional risks related to holding ADSs rather than shares.

Because ADS holders do not hold their
shares directly, they are subject to the following additional risks, among others:



| |  |  | as an ADS holder, we do not treat you as one of our direct shareholders and you may not be able to exercise shareholder rights;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | distributions on the preferred shares represented by your ADSs are paid to the depositary, and before the depositary makes a distribution to you on behalf of your ADSs, withholding taxes, if any, that must be paid will
be deducted and the depositary will be required to convert the Colombian pesos received into U.S. dollars. Additionally, if the exchange rate fluctuates significantly during a time when the depositary cannot convert the Colombian pesos received into
U.S. dollars, or while it holds the Colombian pesos, you may lose some or all of the U.S. dollar value of the distribution;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | we and the depositary may amend or terminate the deposit agreement without the ADS holders consent in a manner that could prejudice ADS holders or that could affect the ability of ADS holders to transfer ADSs; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the depositary may take other actions inconsistent with the best interests of ADS holders.
| | - |  | ------------------------------------------------------------------------------------------

The market
price for the ADSs could be highly volatile, and the market price of our ADSs may be negatively impacted.

Volatility in the market
price of our ADSs may prevent you from being able to sell your ADSs at, above or near the price you paid for them. The market price and liquidity of the market for our ADSs may be significantly affected by numerous factors, including, among others:



| |  |  | fluctuations in our periodic operating results;
| | - |  | -----------------------------------------------



| |  |  | changes in financial estimates, recommendations or projections by securities analysts;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | changes in conditions or trends in the airline industry;
| | - |  | --------------------------------------------------------



| |  |  | changes in the economic performance or market valuation of other airlines;
| | - |  | --------------------------------------------------------------------------



| |  |  | announcements by our competitors of significant acquisitions, divestitures, strategic partnerships, joint ventures or capital commitments;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increased competition in the airline industry;
| | - |  | ----------------------------------------------



| |  |  | general economic trends in Colombia, El Salvador, Costa Rica, Peru, Ecuador and the other jurisdictions in which we operate;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | events affecting equities markets in the countries in which we operate;
| | - |  | -----------------------------------------------------------------------



| |  |  | legal or regulatory measures affecting our financial condition;
| | - |  | ---------------------------------------------------------------



| |  |  | departures of managers and other key personnel; and
| | - |  | ---------------------------------------------------



| |  |  | potential litigation or the adverse resolution of pending litigation against us or our subsidiaries.
| | - |  | ----------------------------------------------------------------------------------------------------

Volatility in the price of the ADSs may be caused by factors outside of our control and may be unrelated to our operating results or
disproportionate to the effect upon us of such factors. In particular, announcements of potentially adverse developments, such as proposed regulatory changes, new government investigations or the commencement or threat of litigation against us, as
well as announced changes in our business plans or those of competitors, could adversely affect the trading price of the ADSs, regardless of the likely outcome of those developments or proceedings. Broad market and industry factors could also
adversely affect the market price of the ADSs, regardless of our actual operating performance. As a result, the market price of our ADSs may be negatively impacted.



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We recently completed our first assessment of the effectiveness of our internal control over financial
reporting as required by Section 404 of the Sarbanes-Oxley Act of 2002.

We are required to comply with the internal control,
evaluation and certification requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in this Annual Report on Form 20-F for the year ending December 31, 2014. In addition, our independent registered public accounting firm is required
to report on the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002. This process requires the investment of substantial time and resources, including by our chief
financial officer and other members of our senior management. As a result, this process may divert internal resources and take a significant amount of time and effort to complete.

We have identified material weaknesses in our internal controls over financial reporting related to our IT general controls (ITGCs) and
financial statement close process, and if we fail to remediate these material weaknesses and achieve an effective system of internal controls, we may not be able to report our financial results accurately, and current and potential shareholders
could lose confidence in our reporting, which would harm our business and the trading price of the ADSs.

In connection with the
evaluation of our disclosure controls and procedures, we identified material weaknesses in our internal control over financial reporting as of December 31, 2014. A material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim financial statement will not be prevented or detected on a timely basis. The material weaknesses identified related to
our ITGCs and financial statement close process was that our disclosure controls and procedures were not effective as a result of the implementation of our new enterprise resource planning (ERP) platform.

See Item 15 Controls and ProceduresManagements annual report on internal control over financial reporting and
Attestation report of the independent registered public accounting firm.

Any failure to implement and maintain the
needed improvements in the controls over our financial reporting, or difficulties encountered in the implementation of these improvements in our controls, could result in a material misstatement in our annual or interim financial statements that
would not be prevented or detected, or cause us to fail to meet our reporting obligations under applicable securities laws. Any failure to improve our internal controls to address the identified weaknesses could result in our incurring substantial
liability for not having met our legal obligation and could also make it more difficult for us to obtain additional financing on favorable terms or cause investors to lose confidence in our reported financial information, which could have a material
adverse impact on our business and the trading price of the ADSs.

As a foreign private issuer, we are permitted to, and do, rely on exemptions from
certain New York Stock Exchange, or NYSE, corporate governance standards applicable to U.S. issuers. This may afford less protection to holders of our ADSs.

Section 303A of the NYSE Listed Company Manual sets forth certain corporate governance requirements that a company must fulfill in order
to be listed on the NYSE. However, exemptions from many of the requirements are available to foreign private issuers such as us. As a foreign private issuer, we are permitted to, and do, follow home country practice in lieu of the NYSE corporate
governance standards from which we are exempt. Our home country standards are those of the Colombian Stock Exchange and Colombian securities laws. Although we are a Panamanian company, our preferred shares are listed on the Colombian Stock Exchange
and are subject to Colombian securities laws.

In particular, we are exempt from the requirements of §303A.03 and §303A.04 of
the NYSE Listed Company Manual. §303A.03 requires non-management directors to meet regularly in executive sessions without management and independent directors to meet alone in an executive session at least once a year. §303A.04 requires a
nominating/corporate governance committee composed of independent directors to be established. Under our bylaws and in accordance with the Colombian Stock Exchange regulations, our non-management directors are not required to meet regularly in
executive sessions without management and we are not required to have a nominating/corporate governance committee, although our board of directors has the power to establish such a committee in the future. In addition, we are exempt from the
requirements to give shareholders the opportunity to vote on equity-compensation plans and to have a compensation committee composed entirely of independent directors, as defined by the NYSE, and governed by written charters. We are also exempt from
certain director independence requirements of the NYSE, the requirement to hold executive sessions of directors without management present, certain additional requirements of audit committees, the requirement to adopt corporate governance guidelines
and a code of conduct and annual certification requirements. For more detail on differences in corporate governance between NYSE standards and our home country standards, see Item 16G. Corporate Governance. As long as we rely on these
foreign private issuer exemptions, the management oversight of our Company may be more limited than if we were not exempt from these requirements of Section 303A.



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As a foreign private issuer we are not be subject to U.S. proxy rules and are exempt from filing certain
Exchange Act reports.

As a foreign private issuer, we are exempt from the rules and regulations under the United States Securities
Exchange Act of 1934, as amended, or the Exchange Act, related to the furnishing and content of proxy statements, and our officers, directors, and principal shareholders are exempt from the reporting and short-swing profit recovery provisions
contained in Section 16 of the Exchange Act. We are also exempt from Regulation FD, which prohibits issuers from making selective disclosures of material non-public information. Moreover, we are not required under the Exchange Act to file
annual, quarterly and current reports and financial statements with the Securities and Exchange Commission, or SEC, as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act.

In addition, we would lose our foreign private issuer status if a majority of our directors or executive officers are U.S. citizens or
residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such
provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration
statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. We may also be required to modify certain of our policies to comply with governance practices
associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are
available to foreign private issuers.

We are a controlled company within the meaning of the New York Stock Exchange rules and qualify
for and rely on exemptions from certain corporate governance requirements.

Certain of our shareholders control a majority of the
combined voting power of all classes of our voting stock, and we are a controlled company within the meaning of the New York Stock Exchange corporate governance standards. Under these rules, a company of which more than 50% of the voting
power is held by an individual, a group, or another company is a controlled company and may elect not to comply with certain corporate governance requirements of the New York Stock Exchange, including:



| |  |  | the requirement that a majority of the Board consist of independent directors,
| | - |  | ------------------------------------------------------------------------------



| |  |  | the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors with a written charter addressing the committees purpose and responsibilities, and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committees purpose and responsibilities. We rely on these exemptions.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As a result, we may not have a majority of independent directors and our compensation committee does not consist entirely
of independent directors. In addition, we do not have a nominating/corporate governance committee. Accordingly, you do not have the same protections afforded to shareholders of companies that are subject to all of the corporate governance
requirements of the New York Stock Exchange.

We are subject to anti-corruption laws in the jurisdictions in which we operate.

We are subject to a number of anti-corruption laws, including the U.S. Foreign Corrupt Practices Act (FCPA) and various other
anti-corruption laws. The FCPA generally prohibits companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or keeping business and/or other benefits. Although our code of ethics and
standards of conduct require our employees to comply with the FCPA and similar laws and our Board of Directors has issued an anticorruption policy, we are still in the process of FCPA compliance training for our employees and consultants.
Nevertheless, we expect this policy and training program to be completed by the end of 2015. In addition, despite our ongoing efforts to ensure compliance with the FCPA and similar laws, there can be no assurance that our employees, agents, and the
companies to which we outsource certain of our business operations, will not take actions in violation of our policies, for which we may be ultimately held responsible. If we are not in compliance with anti-corruption laws and other laws governing
the conduct of business with government entities (including local laws), we may be subject to criminal and civil penalties and other remedial measures, which could harm our reputation and have a material adverse impact on our business, financial
condition, results of operations and prospects. Any investigation of any actual or alleged violations of such laws could also harm our reputation or have an adverse impact on our business, financial condition, results of operations and prospects.



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The protections afforded to minority shareholders in Panama are different from, and more limited than,
those in the United States and may be more difficult to enforce.

Under Panamanian law, the protections afforded to minority
shareholders are different from, and more limited than, those in the United States and some other Latin American countries. For example, the legal framework with respect to shareholder disputes, such as derivative lawsuits and class actions, is less
developed under Panamanian law than under U.S. law as a result of Panamas short history with these types of claims and the small number of successful cases in each country. In addition, there are different procedural requirements for bringing
these types of shareholder lawsuits. As a result, it may be more difficult for our minority shareholders to enforce their rights against us or our directors or controlling shareholder than it would be for shareholders of a U.S. company to do the
same.

Holders of ADSs may find it difficult to enforce civil liabilities against us or our directors, officers and controlling persons.

We are organized under the laws of Panama, and our principal place of business (domicilio social) is in Bogotá,
Colombia. All of our directors, officers and controlling persons reside outside of the United States. In addition, substantially all our assets are located outside of the United States. As a result, it may be difficult for holders of ADSs to effect
service of process within the United States on such persons or to enforce judgments against them, including in any action based on civil liabilities under the U.S. federal securities laws. Based on the opinion of our Panamanian and Colombian
counsel, there is doubt as to the enforceability against such persons in Panama and Colombia, whether in original actions or in actions to enforce judgments of U.S. courts, of liabilities based solely on the U.S. federal securities laws.

Relative illiquidity of the Colombian securities markets may impair the ability of an ADS holder to sell preferred shares.

Our preferred shares are listed on the Colombian Stock Exchange, which is relatively small and illiquid compared to stock exchanges in major
financial centers. In addition, a small number of issuers represent a disproportionately large percentage of market capitalization and trading volume on the Colombian Stock Exchange. A liquid trading market for our securities might not develop or
continue on the Colombian Stock Exchange. A limited trading market could impair the ability of an ADS holder to sell preferred shares (obtained upon withdrawal of such shares from the ADS facility) on the Colombian Stock Exchange in the amount and
at the price and time such holder desires, and could increase the volatility of the price of the ADSs.

Exchange rate fluctuations may adversely
affect the foreign currency value of the preferred shares represented by the ADSs and any dividend or other distributions.

The
preferred shares represented by the ADSs are quoted in Colombian pesos on the Colombian Stock Exchange. Dividends and other distributions, if any, with respect to the preferred shares may be declared in Colombian pesos. Fluctuations in the exchange
rate between Colombian pesos and U.S. dollars will affect, among other things, the foreign currency value of any such dividends or distributions.

It may be difficult to enforce your liquidation preference reimbursement right if we enter into a bankruptcy, liquidation or similar proceeding in
Panama.

The insolvency laws of Panama, particularly as they relate to the priority of creditors, may be less favorable to your
interests than the bankruptcy laws of the United States. Your ability to enforce your liquidation preference reimbursement rights as a holder of ADSs may be limited if we become subject to the insolvency proceedings set forth in Title I of the Third
Book of the Commercial Code, as amended from time to time, which establishes the events under which a petition for the declaration of insolvency of a company can be filed before a circuit court, considering that this preference reimbursement will be
feasible after payment to third-party creditors.

Our ability to pay dividends would be limited if any of our relevant operating subsidiaries enters
into a bankruptcy, liquidation or similar proceeding in their home jurisdictions.

Our ability to pay dividends may be limited if
any of our relevant operating subsidiaries becomes subject to the insolvency proceedings under the applicable laws of Colombia, the Bahamas, El Salvador, Costa Rica or Peru, as amended from time to time, which establish the events under which a
company, its creditors or the authorities may request its admission to insolvency proceedings in order to reach an agreement with its creditors as to the terms of its debt structure. In addition, if a debtor breaches an insolvency agreement, or if
continuation of a debtors business is not economically feasible, the restructured company may be liquidated, and payments of our dividends may also be contingent upon operating subsidiaries earnings and business considerations.



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Our shares are traded on more than one market and this may result in price variations; in addition,
investors may not be able to easily move shares for trading between such markets.

Our preferred shares have been traded on the
Colombian Stock Exchange since May 2011 and our ADSs representing preferred shares have been traded on the NYSE since November 2013. Trading in our ADSs or preferred shares on these markets takes place in different currencies (U.S. dollars on the
NYSE and COP on the Colombian Stock Exchange), and at different times (resulting from different time zones, different trading days and different public holidays in the United States and Colombia). The trading prices of our shares on these two
markets may differ due to these and other factors. Any decrease in the price of our preferred shares on the Colombian Stock Exchange could cause a decrease in the trading price of our ADSs on the NYSE. Investors could seek to sell or buy our shares
to take advantage of any price differences between the markets through a practice referred to as arbitrage. Any arbitrage activity could create unexpected volatility in both our share prices on one exchange, and the shares available for trading on
the other exchange. In addition, holders of ADSs cannot immediately surrender their ADSs and withdraw the underlying preferred shares for trading on the other market without effecting necessary procedures with the depositary. This could result in
time delays and additional cost for holders of ADSs.



|Item 4. | Information on the Company
|------- | --------------------------



|A. | History and Development of the Company
|-- | --------------------------------------

History

We are an airline holding company incorporated in Panama in connection with the combination of Avianca and Taca in February 2010. The
combination of Avianca and Taca was announced and agreed in October 2009 by their respective controlling shareholders who, after the approval of the combination by the antitrust and regulatory authorities, contributed their respective interests in
Avianca and Taca to us. Avianca Holdings S.A. (formerly AviancaTaca Holding S.A.) changed its domicile from the Commonwealth of the Bahamas to Panama and adopted its by-laws under Panamanian law on March 2, 2011.

In May 2011, we completed our initial public offering in Colombia on the Colombian Stock Exchange. In connection with that public offering we
sold 100,000,000 preferred shares for COP 500,000 million (approximately $279 million as of such date).

In May 2013, we issued $300
million in aggregate principal amount of 8.375% Senior Notes due 2020, our first offering in the international capital markets.

In
November 2013, we completed our initial public offering in the United States, listing our ADSs on the NYSE.

In April 2014, we issued $250
million in aggregate principal amount of additional 8.375% Senior Notes due 2020, which were first issued in May 2013.

In December 2014,
we issued our first aircraft financing through a private placement. The transaction financed three new aircraft deliveries (A319, A321 and B787) for Avianca and totaled $152.9 million.

Avianca

Avianca
was organized in 1919 as SCADTA (Sociedad Colombo-Alemana de Transportes Aéreos) by a group of Colombian and German investors that pioneered aircraft navigation in Colombia with Junkers F-13 hydroplanes. By the early 1920s, Avianca was
offering international service to Venezuela and the United States. During World War II, the German investors sold their stake to Pan American World Airways, a U.S. corporation. In 1940, Aerovias Nacionales de Colombia S.A., or Avianca, was
incorporated in connection with the merger of SCADTA and SACO (Servicio Aéreo Colombiano). In 1977, Avianca acquired SAM S.A., a Medellín based passenger airline. In 1981, Avianca built and began operating the Puente
Aéreo terminal in Bogotá to service domestic routes in Colombia. Avianca remodeled this terminal in 2006 and currently enjoys exclusive rights to use it for domestic routes in Colombia until the earlier of April 1, 2016 and the
date that the Operadora Aeroportuaria Internacional, or OPAIN, provides Avianca the necessary space to have its domestic and international operations integrated in one terminal. In 2004, our current controlling shareholder, Synergy, acquired
Avianca, helping it emerge from its Chapter 11 reorganization. In 2008, Avianca acquired Tampa Cargo, a leading Colombian cargo airline, and in November 2010 acquired Aerogal, an Ecuadorian airline, which currently is a direct subsidiary of Avianca
Holdings S.A.



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Taca

Taca was organized in 1931 in Honduras as Transportes Aéreos Centroamericanos (TACA). During the 1930s and 1940s, Taca expanded
throughout Central America, including Costa Rica, El Salvador, Guatemala, Nicaragua and Panama. By the 1950s, the operations were consolidated into one airline, Taca International, based in El Salvador. In 1963, the Kriete family acquired a majority
interest in Taca. In the 1990s, Taca began acquiring interests in the flag carriers of each of the other Central American countries. In 1998, Taca modernized its fleet and redesigned its schedule into a dual hub and spoke network, with hubs in San
Salvador and San José. In 1999, Taca launched Transamerican Airlines S.A., and added a hub in Lima, Peru.

Corporate Information

Our executive offices are located at Aquilino de la Guardia Calle No. 8, Panama City, Republic of Panama, and our telephone number is
(+507) 205-6000.

Our authorized agent in the U.S., Avianca, Inc., is located at 122 East 42nd Street, Suite 2525, New York, NY
10168.

Capital Expenditures

Our
capital expenditures consist primarily of expenditures related to our purchase of new aircraft and engines, and advance payments on aircraft purchase contracts. For the years ended December 31, 2014, 2013 and 2012, we invested $169.3 million,
$320.3 million and $161.3 million, respectively, in advance payments on aircraft purchase contracts and $130.3 million, $264.7 million and $370.4 million, respectively, in acquisition of property and equipment, which primarily consisted of aircraft
and engines.



|B. | Business Overview
|-- | -----------------

Overview

We are a leading airline in Latin America. In February 2010, we completed the combination of Avianca and Taca, two established airlines with
geographically complementary operations in the Andean region (Colombia, Ecuador and Peru) and Central America (Belize, Guatemala, Costa Rica, Honduras, El Salvador, Nicaragua and Panama). In 2014, we were the market leader in terms of
passengers carried in the domestic market of Colombia (the third largest domestic market in Latin America), according to the Colombian Civil Aviation Authority, and a leader in terms of passengers carried on international flights within the Andean
region and Central America (our home markets), according to internal data we derive from Travelport Marketing Information Data Tapes, or MIDT. Our strong presence within the Andean region and Central America enables us to consolidate regional
passenger traffic in our hubs and provide connectivity to international destinations, making us a leader in terms of international air passengers carried from our home markets to both North America and South America.

We operate an extensive route network from our strategically located hubs in Colombia, Peru and El Salvador (plus the focus markets of Costa
Rica and Ecuador). We offer passenger and cargo service through approximately 5,400 weekly scheduled flights to more than 100 destinations in over 25 countries around the world. Our code share alliances, together with our membership in Star
Alliance, which we joined in 2012, provide our customers with access to a worldwide network of over 1,200 destinations. During the year ended December 31, 2014, we transported approximately 26.2 million passengers and 389,779 metric tons
of cargo.

Since the combination of Avianca and Taca in February 2010, we have grown significantly. We believe we have already achieved
many revenue-enhancing synergies from the integration of Aviancas and Tacas networks, which was the initial focus of the combination. We are implementing a second stage of our integration plan focused primarily on achieving cost-oriented
synergies from greater operating and administrative efficiencies and economies of scale. Our consolidated operating revenue increased 24.0% from $3,794.4 million in 2011 to $4,703.6 million in 2014, and our consolidated operating profit increased
38.0% from $202.4 million for the year ended December 31, 2011 to $279.4 million in 2014. The revenue-enhancing synergies from our network integration allowed us to optimize our route capacity and efficiency, through which we added new routes
and increased our available seat kilometers (ASKs) and our total passengers carried 23.9% and 28.2%, respectively, from 2011 to 2014 and during the same period our load factor decreased modestly from 79.6% to 79.4%.

As of December 31, 2014, we operated a modern fleet of 181 aircraft (139 jet passenger aircraft, 30 turboprop passenger aircraft and 12
cargo aircraft), mainly from the Airbus family. Since 2010, we have focused on increasing homogeneity in our fleet, and therefore increasing efficiency, by decreasing the number of aircraft models we operate. We intend to enhance our modern jet
fleet further by continuing to add new aircraft and we currently have firm orders for delivery between 2015 and 2019 of 50 new Airbus aircraft and 11 Boeing 787 Dreamliners. We also replaced our regional fleet of Fokker 50s and ATR42s with 15 new
and more efficient ATR72s, the last of which was delivered in February 2015.

We provide other products and services that complement our
passenger and cargo businesses and diversify our sources of revenue. In March 2011, we launched our LifeMiles frequent flyer program, which has become a significant Latin American frequent flyer program, with approximately 5.9 million members
as of December 31, 2014. We also provide aircraft maintenance, crew training and other airport services to other carriers as well as travel-related services to our customers.



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We are a Panamanian company (sociedad anónima), and approximately 34% of our
outstanding capital stock is represented by our non-voting preferred shares that are listed on the Colombian Stock Exchange (Bolsa de Valores de Colombia), including preferred shares represented by American Depositary Shares listed on the New York
Stock Exchange as a result of our international initial public offering in November 2013. Approximately 78.1% of our voting common shares are owned by Synergy Aerospace Corp., a corporation indirectly controlled by the Efromovich family, and
approximately 21.9% of our voting common shares are owned by Kingsland Holdings Limited, a corporation controlled by the Kriete family.

Our Strengths

We believe that our most important business strengths include the following:



| |  |  | A market leader in a dynamic Latin American region. We have a leading presence in the Colombian domestic market and also in the market for international passenger service within the Andean region and Central
America, a region with approximately 150.1 million inhabitants (excluding Panama) as of December 31, 2014 and what we believe to be dynamic and growing economies. Our passengers carried increased 6.6% in 2013 and 6.5% in 2014. We believe
our strong presence in the regions in which we operate positions us to benefit from economies of scale and grow from a position of strength.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A strong brand associated with a superior customer experience. We believe our Avianca brand is associated with superior service in the minds of many customers in our core Latin American markets. Since the
combination of Avianca and Taca in 2010, we have unified our service standards to strive for Excelencia Latina (Latin Excellence), the ideal we set for our service goals. In 2013, we were recognized as the Best Airline in
South/Latin America 2013 (Business Traveler Magazine Best of the Best 2013 Awards) and the Best Airline Staff Service South America (Skytrax World Airline Awards 2013). In 2014, we were recognized as the Best
Airline Staff Service Central America and the Caribbean (Skytrax World Airline Awards 2014), the e-commerce Leader in the Colombian Tourism Industry (Colombia e-commerce Award 2014) and the Leader in Electronic Commerce in
the category of Tourism in Latin America (Latin American e-commerce Award). Beginning in May 2013, Avianca became our sole, unified brand for all of our operations.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A multi-hub network in Latin America. Our strategically located hubs in Bogotá, Lima and San Salvador provide coverage of the domestic markets in Colombia, Peru and Central America and support a broad
international network connecting the Andean Region, Central America, the Caribbean, North America and Europe. Our hub network is complemented by focus city operations in San José in Costa Rica, Quito and Guayaquil in Ecuador and our
membership in Star Alliance, the largest airline network in the world as of December 31, 2014 in terms of member airlines, daily flights, destinations and covered countries. We believe that the broad reach of our network, together with our code
share alliances and Star Alliance membership, provide our customers with a wide range of destination options and provide us with a geographically diversified source of revenues that affords us flexibility and adaptability with respect to demand
cycles in our industry.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | One of the most modern passenger fleets among Latin American airlines. Our continuous fleet modernization process has increased our jet passenger fleets capacity and has made our jet passenger operative
fleet one of the youngest among Latin American airlines, with an average aircraft age of 5.5 years as of December 31, 2014. Since 2010, as a result of our fleet modernization program, we have been able to increase fuel efficiency and improve
our technical dispatch reliability. Since 2010, we have reduced the number of jet passenger aircraft types or models we use, and our current passenger fleet now consists primarily of Airbus aircraft. The increased homogeneity of our fleet has
enabled us to reduce crew and staff training costs and also maintenance costs through the implementation of unified spare parts inventories and maintenance processes.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | World-class loyalty program. Launched in March 2011, LifeMiles, the consolidation of AviancaPlus and Distancia, has enhanced our brand recognition by providing superior customer service through member
engagement and an outstanding miles-to-rewards ratio. As of December 31, 2014, LifeMiles has more than 5.9 million members. In March 2013, LifeMiles won its first Freddie Award for Best Redemption Ability in the Americas,
just two years after the program was launched. In 2014, LifeMiles won two more Freddie Awards (Best Redemption Ability in the Americas, Best FFP Promotion in the Americas). The program has more than 200 commercial partners and continues
developing new partnerships with banks, hotel chains, car rental companies, retailers and other airlines.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Diversified business. Each year, we continue to expand our business units to complement our passenger transport business. Through targeted investments, the company offers specialized courier and cargo services,
personnel training, aircraft maintenance and tourism products which have increased revenue sources.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Experienced senior management team with strong track record. Our senior management team has significant industry knowledge and a demonstrated ability to acquire and integrate businesses successfully. In addition,
we believe our incentive programs align our management team with our strategic objectives and contribute to our success by rewarding the accomplishment of pre-defined financial and operating goals.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Our Strategy

Our goal is to leverage our leadership position to take advantage of opportunities for profitable growth in the Latin American aviation market
by expanding our network and continuing to reduce our operating costs. Key elements of our business strategy include the following:



| |  |  | Enhance customer loyalty through seeking to provide superior customer service and a culture of Excelencia Latina. Seeking to provide superior customer service is a cornerstone of our passenger and
cargo business, and we seek to create a culture that delivers Excelencia Latina (Latin Excellence). We believe our culture of Excelencia Latina can differentiate us from our competitors by combining high-quality operating
performance with a warm, Latin American service culture that we believe caters to the tastes of Latin American passengers. Our strategy is based on selecting, training and rewarding dedicated personnel, establishing a solid operational and
technological platform to provide high-quality operations, and delivering products and services such as improved VIP lounges, self-service check-in (over the internet, at kiosks or from mobile phones) and a superior experience aboard modern aircraft
with a varied selection of in-flight entertainment options. We also intend to leverage our LifeMiles frequent flyer program to increase customer loyalty and attract new customers by providing competitive benefits, including priority seat
availability, check-in and baggage handling and VIP lounge access.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Focus on achieving further synergies from the Avianca-Taca combination to increase revenues and reduce costs. After the combination of Avianca and Taca in February 2010, we focused initially on the commercial
integration of our combined network and grew significantly in terms of passengers carried and operating revenues. As we continue with the second phase of our post-combination integration, we believe there is still potential to achieve further
revenue growth from the consolidation of our operations under a single Avianca brand and improvement of our revenue management practices. We are currently seeking to achieve cost synergies by consolidating our maintenance procedures across
the regions we serve and optimizing our flight operations, increasing aircraft utilization through interchangeability of aircraft, better crew planning and more efficient use of our regional hubs. In addition, we are currently developing several
projects to unify our IT platforms in finance, maintenance, operations and customer service.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Pursue opportunities for profitable growth in our passenger segment. We seek to grow our passenger business by protecting and leveraging our strong presence and optimizing our network in the markets we serve. We
expect to add new destinations, routes and flight frequencies in Latin America to meet or stimulate demand for our services, in particular by adding new long-haul and other international destinations to be served from our Bogotá and Lima
hubs, by enhancing our connectivity for passengers traveling between South and North America via our San Salvador hub and by taking advantage of what we believe to be increasing demand for air travel within Latin America. We also expect to continue
to evaluate selectively additional growth opportunities through strategic alliances with other airlines as well as potential acquisitions and strategic opportunities that would complement our existing operations.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Grow our cargo operations. We believe our cargo operations offer an attractive opportunity for growth, complementing our passenger operations and diversifying our sources of revenue and profit. We believe we have
been successful in increasing our footprint in the cargo business in Latin American markets by optimizing our freighter schedules in spite of market imbalances, by maximizing the belly utilization in our passenger fleet, and through the continuous
analysis of opportunities for growth in strategic markets. During 2014, we acquired an ownership interest consisting of 25% of the voting rights and 92.7% of the economic rights of Aero Transporte de Carga Unión, S.A. de C.V., or Aerounion, a
Mexican cargo company, entered into commercial agreements with Aerounion and our affiliate OceanAir Linhas Aereas S.A. to expand our services in the Mexican and in the Brazilian markets. In addition, we also entered into a commercial agreement with
Etihad Cargo on a freighter service between Milan/Amsterdam and Bogota.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Expand our LifeMiles program to enhance our overall value. We believe our LifeMiles frequent flyer program enhances our brand recognition, strengthens our position in strategic markets and provides
ancillary revenue opportunities. Our wholly-owned loyalty business unit operates our LifeMiles frequent flyer program and offers miles and loyalty services to program members and about 200 commercial partners. Sales from our loyalty business
unit increased approximately 50% during the two-year period ended December 31, 2014. We intend to further enhance the programs revenue growth by (1) increasing the number of active members, (2) increasing the accrual and
redemption of miles per active member and (3) strengthening the network of commercial partners who allow their customers to earn LifeMiles, including by developing new co-branding products and partnerships and similar initiatives with
hotel chains, car rental companies, banks, credit card companies and other airlines. We continue to develop our LifeMiles loyalty program as a separate business unit. In furtherance of that purpose and to enhance the value of our
LifeMiles business unit, we are in the process of evaluating potential partnerships and investors for LifeMiles Corp. and have engaged professional advisors to assist in such initiative.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Airline Operations

Our operating revenues are comprised of passenger revenue, cargo and courier revenue and related activities revenue. Passenger revenue consists
primarily of ticket sales and redemption of rewards under our LifeMiles loyalty program. Cargo and courier revenue consists primarily of services designed for the air transportation of goods, on an airport to airport basis and other
complementary services. In addition, cargo and courier revenues include revenues derived from shipment of small parcels between countries, on a door-to-door basis and with defined transit time commitments from carriers. Related activities consist
primarily of sales of LifeMiles program rewards to banks for use in credit card reward programs (net of the value of the underlying rewards which, when redeemed, are recognized as passenger revenue), and also include air transport-related
services such as maintenance, crew training and other airport services provided to other carriers through our Avianca Services division, as well as service charges, ticket penalties, aircraft and property leases, marketing rebates, duty-free
sales, charter flights and other general activities.

Seasonality

We expect our quarterly operating results to continue to fluctuate from quarter to quarter due to seasonality. This fluctuation is the result
of high vacation and leisure demand occurring during the northern hemispheres summer season in the third quarter (principally in July and August) and again during the fourth quarter (principally in December). In addition, January is typically
a month in which heavy air passenger demand occurs.

Passenger operations

Our passenger revenues represented 83.2%, 83.8% and 82.1% of our total revenues for the years ended December 31, 2012, 2013 and 2014,
respectively.

Domestic

Domestic revenue accounted for approximately 28.4%, 26.7% and 27.7% of our total passenger revenue for the years ended December 31, 2012,
2013 and 2014, respectively.

Our Colombian domestic passenger revenue accounted for approximately 87.1%, 87.6% and 88.2% of our total
domestic passenger revenue for the years ended December 31, 2012, 2013 and 2014, respectively. The majority of our domestic traffic corresponds to business travelers, but during peak vacation and holiday seasons in July and August, in December
and January, and during the Easter holiday in March/April, the heaviest volumes of traffic come from leisure travelers. In Colombia, during 2014, approximately 65% of our domestic passengers regard Bogotá as their destination or origination
point, 24% of our domestic passengers pass through Bogotá in transit to other points on our domestic route network and the remaining 11% of our domestic passengers are point-to-point travelers who do not travel to or through Bogotá.
Bogotá is a significant business center with a population of approximately 8.0 million. Medellín, Cali and Barranquilla are also important destinations, with a population of approximately 2.4 million, 2.3 million and
1.2 million, respectively.

Our Peruvian domestic passenger revenue accounted for approximately 6.8%, 7.9% and 7.0% of our total
domestic passenger revenue for the years ended December 31, 2012, 2013 and 2014, respectively. We have flown a daily route between Lima and Cuzco for more than 10 years. During 2011 we increased our domestic operation in Peru. Currently we fly
twenty-two frequencies to seven domestic destinations. During the years ended December 31, 2013 and 2014, according to the data provided by the Peruvian Civil Aviation Authority, we were the second-largest domestic carrier in Peru with
approximately 14.1% and 13.0%, respectively, of the domestic passenger market.

Our Ecuadorian domestic passenger revenue accounted for
approximately 6.1%, 4.5% and 4.7% of our total domestic passenger revenue for the years ended December 31, 2012, 2013 and 2014, respectively.

International

International revenue accounted for approximately 71.6%, 73.3% and 72.3% of our total passenger revenue for the years ended December 31,
2012, 2013 and 2014.



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The majority of our passenger traffic to the United States and Europe is for leisure purposes,
principally from Colombian travelers. Leisure traffic tends to coincide with holidays, school schedules and cultural events and peaks in July and August and again in December and January. Within Latin America, business travel constitutes the
heaviest traffic volume, although a substantial amount of passenger traffic also comes from leisure travel.

Our international traffic is
served through our airlines: Avianca (Colombia), Taca International (El Salvador), LACSA (Costa Rica) and Transamerican Airlines S.A. (Peru). Two of our subsidiaries, Aviateca S.A. (Guatemala) and Taca de Honduras (Honduras), operate their
international routes through charter flights and wet leases with other of our subsidiaries. We are not currently operating any flights with the license for international routes of Nicaraguense de Aviación S.A.Nica (Nicaragua).

Regional operation in Central America

Our regional operation in Central America is served through our regional airlines: Aerotaxis La Costeña S.A.La Costeña
(Nicaragua), Isleña de Inversiones S.A.Isleña (Honduras), Servicios Aéreos Nacionales S.A.Sansa (Costa Rica) and Aviateca (Guatemala). Our passenger revenue from our regional operation in Central America accounted
for approximately 0.4%, 0.2% and 0.8% of our total passenger revenue for the years ended December 31, 2012, 2013 and 2014, respectively.

Cargo and other

Our cargo business operates in most of the route network of our passenger airline business, using the belly capacity of our passenger fleet,
and also by freighter-only operations. Our passenger airline business includes more than 100 destinations to which we can transport cargo in the bellies of our passenger aircraft. In addition, we operate in six more destinations exclusively for
cargo. We carry cargo for a variety of customers, including other international air carriers, freight-forwarding companies, export oriented companies and individual consumers. We may also strengthen our destination offerings through interline
agreements.

During 2014, our cargo capacity in terms of ATKs increased 16.4%. Our RTKs grew more than our capacity, with a 25.3% increase
from 2013 to 2014. This resulted in a 4.4 point increase in our cargo load factor, from 60.0% in 2013 to 64.4% in 2014. This growth was much stronger than general market growth in Latin America (0.1%) and North America (2.4%), reflecting our
strategy of belly maximization, freighter schedule optimization and strategic market growth.

The following table sets forth certain of
our cargo operating statistics for domestic and international routes for the periods indicated:



|                                              |  |                            |       |   |      |  |       |      |  |  |       |  
|--------------------------------------------- |  | -------------------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                              |  | Year Ended December 31(1), |      
|                                              |  | 2014                       |       |   | 2013 |  |       | 2012 | 
|Total ATKs (millions)                         |  |                            | 1,633 |   |      |  | 1,403 |      |  |  | 1,198 |  
|Total RTKs (millions)                         |  |                            | 1,052 |   |      |  | 838   |      |  |  | 748   |  
|Weight of cargo carried (thousands of tons)   |  |                            | 390   |   |      |  | 319   |      |  |  | 299   |  
|Total cargo yield (cargo revenues/RTKs, in $) |  |                            | 0.46  |   |      |  | 0.51  |      |  |  | 0.54  |  
|Total cargo load factor (%)                   |  |                            | 64.4  | % |      |  | 60.0  | %    |  |  | 62.5  | %



|(1) | ATKs, RTKs and cargo tons do not include domestic Colombia and Ecuador and Aerounion.
|--- | -------------------------------------------------------------------------------------

Our
international cargo operations are headquartered in Bogotá, though we also have a significant cargo operation in Medellin and Miami. The United States accounts for the majority of our cargo traffic to and from Latin America. In Latin America,
our main origins of our cargo are Colombia, Ecuador, Peru, Brazil and Mexico. We operate in/out of Europe through our passenger schedule services to Madrid, Barcelona and London. We also offer other destinations around the world through our code
share, interline and commercial agreements.

During 2014, Avianca Cargo considerably increased its footprint in Miami and Colombia. In
Miami, Avianca Cargo as a group ranked in the top three airlines to carry international freight in/out MIA, with a 28% increase in 2014 versus 2013. In Colombia, Avianca Cargo represented the strongest growth in gross tons, with a 14% growth in 2014
versus 2013, validating it as Colombias largest cargo carrier in gross tons.

In general terms, cargo flows are unidirectional. This
characteristic is a key determinant in the structure of cargo operations. This is especially relevant in markets featuring structural imbalances between inbound and outbound flows or during specific periods of such disequilibrium. Lack of demand in
one particular direction may force airlines to rely on different markets in



39



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order to maximize loads on return flights. In recent years, we have diversified origins and destinations, creating a larger network that can maximize asset utilization and decrease regional
dependence. Also, we have strengthened our cargo headquarters in Bogotá through the integration of the freighters and passenger plane networks.

Under our DEPRISA brand, we operate an express courier operation in Colombia. DEPRISA is a significant player in the courier
industry with more than 600 branches, 300 domestic and 200 international (UPS allied in Colombia) destinations, a broad domestic and international product portfolio with same day and next day deliveries, and we believe a strong brand recognition and
reputation in Colombia.

DEPRISA also manages our domestic cargo operation in Colombia and express courier operation located mainly
in the United States that operates currently under the brand AVIANCA EXPRESS, which has more than 50 branches in the United States.

Our courier revenues represented 1.8%, 1.7% and 1.6% of our total revenues for the years ending December 31, 2012, 2013 and 2014,
respectively.

We provide other services that complement our passenger and cargo businesses and diversify our sources of revenue. Other
revenues consist primarily of sales of LifeMiles program rewards to banks for use in credit card reward programs (net of the value of the underlying rewards which, when redeemed, are recognized as passenger revenue), and also include air
transport-related services such as maintenance, crew training and other airport services provided to other carriers through our Avianca Services division, as well as service charges, ticket penalties, aircraft and property leases, marketing
rebates, duty-free sales, charter flights and other general activities.

Other revenues accounted for approximately 5.5% of our total
revenue in 2012, 5.3% of our total revenue in 2013 and 5.9% of our total revenue in 2014.

Route Network and Schedules

Through our network, we operate more than 770 daily scheduled flights (including domestic flights) to more than 100 different destinations in
North America, Central America, South America and Europe. Our network combines three strategically located hubs in Bogotá, San Salvador and Lima, as well as strong point-to-point service from and to different major destinations in North
America, Central America, South America and Europe. We also provide our passengers with access to flights to more than 1,000 destinations worldwide through code-sharing arrangements with Aeroméxico, OceanAir, Air Canada, COPA, Iberia,
Lufthansa, Satena, Sky Airline, Turkish Airlines and United Airlines. Additionally, by joining Star Alliance in 2012, we increased the reach of our frequent flyer program, granting access to our clients to more than 1,200 destinations and more than
990 VIP lounges throughout the world, as well as mileage accruals and redemptions with the 27 Star Alliance carrier members.

We connect
city pairs with lower passenger traffic through our three hubs, which build density on flights and enable us to serve these destinations with a higher frequency. When passenger demand for a particular city pair is sufficient, we provide
point-to-point service, which reduces travel time and inconvenience for passengers. We believe that this mixed model allows us to efficiently allocate our resources among high and low-traffic destinations.

For our international connections at our three hubs, we utilize a morning bank, an evening bank and, for some of our hubs, a midday bank of
flights, with flights timed to arrive to the corresponding hub at approximately the same time and to depart a short time later. These banks give us the opportunity to provide more frequent service to many destinations, allow some passengers more
convenient connections and increase the flexibility of scheduling flights throughout our route network.

The following table shows the
distribution of our passenger revenue generated in each of the different regions for the periods indicated measured by destination:



|                                           |  |                         |       |   |      |  |       |      |  |  |       |  
|------------------------------------------ |  | ----------------------- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                                           |  | Year Ended December 31, |      
|Region                                     |  | 2014                    |       |   | 2013 |  |       | 2012 | 
|Domestic Colombia                          |  |                         | 27.9  | % |      |  | 26.1  | %    |  |  | 27.0  | %
|Domestic Ecuador                           |  |                         | 1.5   | % |      |  | 1.3   | %    |  |  | 1.9   | %
|Domestic Peru                              |  |                         | 2.2   | % |      |  | 2.4   | %    |  |  | 2.1   | %
|Central America & Caribbean (non-regional) |  |                         | 7.1   | % |      |  | 7.1   | %    |  |  | 7.2   | %
|Intra Home Markets(1)                      |  |                         | 10.1  | % |      |  | 9.7   | %    |  |  | 9.1   | %
|Europe                                     |  |                         | 9.8   | % |      |  | 8.7   | %    |  |  | 8.1   | %
|North America(2)                           |  |                         | 24.7  | % |      |  | 24.9  | %    |  |  | 25.9  | %
|South America                              |  |                         | 16.6  | % |      |  | 19.7  | %    |  |  | 18.1  | %
|Regional Central America                   |  |                         | 0.2   | % |      |  | 0.2   | %    |  |  | 0.4   | %
|                                           |  |                         |       |   |      |  |       |      |  |  |       |  
|Total                                      |  |                         | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | %



|(1) | International traffic between our home markets (Colombia, Ecuador, Peru, El Salvador, Costa Rica, Nicaragua, Honduras, Guatemala, Belize, excluding Central American & Caribbean (non-regional)).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | North America includes Mexico.
|--- | ------------------------------



40



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The following table sets forth the information regarding the number of revenue passengers we
carried for the periods indicated measured by destination:



|                                           |  |                         |            |  |      |  |       |      |  |  |            |  |  |  |       |   |  |  |            |  |  |  |       |  
|------------------------------------------ |  | ----------------------- | ---------- |  | ---- |  | ----- | ---- |  |  | ---------- |  |  |  | ----- | - |  |  | ---------- |  |  |  | ----- | -
|                                           |  | Year Ended December 31, |           
|Region                                     |  | 2014                    |            |  | 2013 |  |       | 2012 | 
|Domestic Colombia                          |  |                         | 13,198,917 |  |      |  | 52.0  | %    |  |  | 12,028,242 |  |  |  | 50.1  | % |  |  | 11,002,991 |  |  |  | 48.7  | %
|Domestic Ecuador                           |  |                         | 831,481    |  |      |  | 3.3   | %    |  |  | 707,545    |  |  |  | 2.9   | % |  |  | 949,313    |  |  |  | 4.2   | %
|Domestic Peru                              |  |                         | 1,173,258  |  |      |  | 4.6   | %    |  |  | 1,188,803  |  |  |  | 4.9   | % |  |  | 946,753    |  |  |  | 4.2   | %
|Central America & Caribbean (non-regional) |  |                         | 2,070,371  |  |      |  | 8.2   | %    |  |  | 1,988,961  |  |  |  | 8.3   | % |  |  | 1,957,045  |  |  |  | 8.7   | %
|Intra Home Markets(1)                      |  |                         | 2,008,145  |  |      |  | 7.9   | %    |  |  | 1,912,645  |  |  |  | 8.0   | % |  |  | 1,732,494  |  |  |  | 7.7   | %
|Europe                                     |  |                         | 543,222    |  |      |  | 2.1   | %    |  |  | 509,538    |  |  |  | 2.1   | % |  |  | 440,468    |  |  |  | 1.9   | %
|North America(2)                           |  |                         | 3,550,738  |  |      |  | 14.0  | %    |  |  | 3,414,358  |  |  |  | 14.2  | % |  |  | 3,363,730  |  |  |  | 14.9  | %
|South America                              |  |                         | 1,843,825  |  |      |  | 7.3   | %    |  |  | 2,115,779  |  |  |  | 8.8   | % |  |  | 2,032,398  |  |  |  | 9.0   | %
|Regional Central America                   |  |                         | 161,585    |  |      |  | 0.6   | %    |  |  | 156,382    |  |  |  | 0.7   | % |  |  | 182,859    |  |  |  | 0.8   | %
|                                           |  |                         |            |  |      |  |       |      |  |  |            |  |  |  |       |   |  |  |            |  |  |  |       |  
|Total                                      |  |                         | 25,381,542 |  |      |  | 100.0 | %    |  |  | 24,022,253 |  |  |  | 100.0 | % |  |  | 22,608,051 |  |  |  | 100.0 | %



|(1) | International traffic between our home markets (Colombia, Ecuador, Peru, El Salvador, Costa Rica, Nicaragua, Honduras, Guatemala, Belize, excluding Central American & Caribbean (non-regional)).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | North America includes Mexico.
|--- | ------------------------------

The following table shows our ASKs (in millions) in each of
the different regions for the periods indicated.



|                                           |  |                         |        |  |      |  |       |      |  |  |        |  |  |  |       |   |  |  |        |  |  |  |       |  
|------------------------------------------ |  | ----------------------- | ------ |  | ---- |  | ----- | ---- |  |  | ------ |  |  |  | ----- | - |  |  | ------ |  |  |  | ----- | -
|                                           |  | Year Ended December 31, |       
|Region                                     |  | 2014                    |        |  | 2013 |  |       | 2012 | 
|Domestic Colombia                          |  |                         | 7,309  |  |      |  | 17.8  | %    |  |  | 6,472  |  |  |  | 16.7  | % |  |  | 5,675  |  |  |  | 15.5  | %
|Domestic Ecuador                           |  |                         | 563    |  |      |  | 1.4   | %    |  |  | 576    |  |  |  | 1.5   | % |  |  | 630    |  |  |  | 1.7   | %
|Domestic Peru                              |  |                         | 947    |  |      |  | 2.3   | %    |  |  | 1,012  |  |  |  | 2.6   | % |  |  | 787    |  |  |  | 2.2   | %
|Central America & Caribbean (non-regional) |  |                         | 2,491  |  |      |  | 6.1   | %    |  |  | 2,262  |  |  |  | 5.8   | % |  |  | 2,263  |  |  |  | 6.2   | %
|Intra Home Markets(1)                      |  |                         | 4,432  |  |      |  | 10.8  | %    |  |  | 4,176  |  |  |  | 10.8  | % |  |  | 3,792  |  |  |  | 10.4  | %
|Europe                                     |  |                         | 5,169  |  |      |  | 12.6  | %    |  |  | 4,753  |  |  |  | 12.2  | % |  |  | 4,134  |  |  |  | 11.3  | %
|North America(2)                           |  |                         | 12,885 |  |      |  | 31.4  | %    |  |  | 11,973 |  |  |  | 30.8  | % |  |  | 11,851 |  |  |  | 32.4  | %
|South America                              |  |                         | 7,204  |  |      |  | 17.5  | %    |  |  | 7,539  |  |  |  | 19.4  | % |  |  | 7,411  |  |  |  | 20.2  | %
|Regional Central America                   |  |                         | 51     |  |      |  | 0.1   | %    |  |  | 51     |  |  |  | 0.1   | % |  |  | 59     |  |  |  | 0.2   | %
|                                           |  |                         |        |  |      |  |       |      |  |  |        |  |  |  |       |   |  |  |        |  |  |  |       |  
|Total                                      |  |                         | 41,052 |  |      |  | 100.0 | %    |  |  | 38,814 |  |  |  | 100.0 | % |  |  | 36,604 |  |  |  | 100.0 | %



|(1) | International traffic between our home markets (Colombia, Ecuador, Peru, El Salvador, Costa Rica, Nicaragua, Honduras, Guatemala, Belize, excluding Central American & Caribbean (non-regional)).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | North America includes Mexico.
|--- | ------------------------------

Network and schedule from Bogotá hub

As of December 31, 2014, through our Bogotá hub, we operated approximately 3,397 weekly scheduled flights to 23 different
destinations in Colombia, seven in North America, nine in South America, ten in Central America and the Caribbean and three in Europe. Unlike our international operations, we utilize a rolling hub system in our domestic operations
whereby our inbound and outbound connecting flights operate throughout the day, instead of during designated time banks. Our Puente Aéreodomestic terminal allows us to more efficiently manage our large volumes of domestic traffic.



41



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Through our Bogotá hub, we currently provide scheduled service to the following cities in
Colombia:



|                         |  |                                |     |  |                                 |  |           |                            |  |  |                            |  |  |  |           | 
|------------------------ |  | ------------------------------ | --- |  | ------------------------------- |  | --------- | -------------------------- |  |  | -------------------------- |  |  |  | --------- | 
|                         |  |                                |     |  | Number of Passengers Carried(3) | 
|Domestic Destinations(1) |  | Departuresscheduledper week(2) |     |  | Year EndedDecember 31,2014      |  |           | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|Armenia                  |  |                                | 96  |  |                                 |  | 313,655   |                            |  |  | 253,419                    |  |  |  | 221,864   | 
|Barrancabermeja          |  |                                | 54  |  |                                 |  | 157,674   |                            |  |  | 156,620                    |  |  |  | 147,559   | 
|Barranquilla             |  |                                | 248 |  |                                 |  | 1,145,315 |                            |  |  | 1,078,734                  |  |  |  | 939,611   | 
|Bucaramanga              |  |                                | 194 |  |                                 |  | 868,739   |                            |  |  | 773,768                    |  |  |  | 718,160   | 
|Cali                     |  |                                | 389 |  |                                 |  | 1,868,658 |                            |  |  | 1,674,123                  |  |  |  | 1,653,157 | 
|Cartagena                |  |                                | 228 |  |                                 |  | 1,343,484 |                            |  |  | 1,330,224                  |  |  |  | 1,212,525 | 
|Cucuta                   |  |                                | 149 |  |                                 |  | 620,997   |                            |  |  | 499,366                    |  |  |  | 451,374   | 
|El Yopal                 |  |                                | 28  |  |                                 |  | 72,387    |                            |  |  | 60,687                     |  |  |  | 24,265    | 
|Florencia                |  |                                | 14  |  |                                 |  | 37,019    |                            |  |  | 27,615                     |  |  |  | 27,512    | 
|Ibagué                   |  |                                | 54  |  |                                 |  | 108,700   |                            |  |  | 92,228                     |  |  |  | 106,789   | 
|Leticia                  |  |                                | 14  |  |                                 |  | 64,356    |                            |  |  | 6,861                      |  |  |  |          | 
|Manizales                |  |                                | 96  |  |                                 |  | 177,123   |                            |  |  | 165,366                    |  |  |  | 182,175   | 
|Medellín                 |  |                                | 433 |  |                                 |  | 2,051,847 |                            |  |  | 1,882,346                  |  |  |  | 1,785,707 | 
|Montería                 |  |                                | 56  |  |                                 |  | 276,759   |                            |  |  | 270,583                    |  |  |  | 227,578   | 
|Neiva                    |  |                                | 94  |  |                                 |  | 184,585   |                            |  |  | 209,548                    |  |  |  | 195,642   | 
|Pasto                    |  |                                | 56  |  |                                 |  | 184,712   |                            |  |  | 175,720                    |  |  |  | 176,060   | 
|Pereira                  |  |                                | 158 |  |                                 |  | 730,471   |                            |  |  | 652,687                    |  |  |  | 612,393   | 
|Popayán                  |  |                                | 38  |  |                                 |  | 91,468    |                            |  |  | 79,066                     |  |  |  | 82,520    | 
|Riohacha                 |  |                                | 28  |  |                                 |  | 130,675   |                            |  |  | 99,782                     |  |  |  | 83,299    | 
|San Andrés               |  |                                | 52  |  |                                 |  | 276,771   |                            |  |  | 255,299                    |  |  |  | 268,115   | 
|Santa Marta              |  |                                | 136 |  |                                 |  | 625,936   |                            |  |  | 563,797                    |  |  |  | 517,765   | 
|Valledupar               |  |                                | 40  |  |                                 |  | 238,448   |                            |  |  | 209,419                    |  |  |  | 194,628   | 
|Villavicencio            |  |                                | 28  |  |                                 |  | 26,471    |                            |  |  |                           |  |  |  |          | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014.
|--- | ------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried on flights to or from Bogotá.
|--- | --------------------------------------------------------------------------------------------



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We currently provide international scheduled service from our Bogotá hub to the following
cities:



|                              |  |                                |    |  |                                     |  |         |                            |  |  |                            |  |  |  |         | 
|----------------------------- |  | ------------------------------ | -- |  | ----------------------------------- |  | ------- | -------------------------- |  |  | -------------------------- |  |  |  | ------- | 
|                              |  |                                |    |  | Number of Passengers Carried(3) (4) | 
|International Destinations(1) |  | Departuresscheduledper week(2) |    |  | Year EndedDecember 31,2014          |  |         | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|Aruba (Oranjestad)            |  |                                | 14 |  |                                     |  | 80,814  |                            |  |  | 79,031                     |  |  |  | 70,519  | 
|Barcelona                     |  |                                | 12 |  |                                     |  | 91,963  |                            |  |  | 88,372                     |  |  |  | 87,585  | 
|Buenos Aires                  |  |                                | 8  |  |                                     |  | 91,015  |                            |  |  | 93,929                     |  |  |  | 94,095  | 
|Cancún                        |  |                                | 28 |  |                                     |  | 116,001 |                            |  |  | 24,491                     |  |  |  |        | 
|Caracas                       |  |                                | 28 |  |                                     |  | 148,136 |                            |  |  | 310,664                    |  |  |  | 297,044 | 
|Curacao (Willemstad)          |  |                                | 14 |  |                                     |  | 55,103  |                            |  |  | 54,257                     |  |  |  | 51,655  | 
|Fort Lauderdale               |  |                                | 14 |  |                                     |  | 88,573  |                            |  |  | 88,279                     |  |  |  | 89,528  | 
|Guatemala City                |  |                                | 14 |  |                                     |  | 30,809  |                            |  |  | 5,434                      |  |  |  |        | 
|Guayaquil                     |  |                                | 42 |  |                                     |  | 199,814 |                            |  |  | 185,214                    |  |  |  | 145,821 | 
|Havana                        |  |                                | 12 |  |                                     |  | 41,782  |                            |  |  | 38,366                     |  |  |  | 17,439  | 
|La Paz                        |  |                                | 14 |  |                                     |  | 59,239  |                            |  |  | 56,080                     |  |  |  | 48,636  | 
|Lima                          |  |                                | 70 |  |                                     |  | 432,760 |                            |  |  | 436,622                    |  |  |  | 375,290 | 
|London                        |  |                                | 8  |  |                                     |  | 39,516  |                            |  |  |                           |  |  |  |        | 
|Madrid                        |  |                                | 28 |  |                                     |  | 304,744 |                            |  |  | 276,872                    |  |  |  | 192,403 | 
|Mexico City                   |  |                                | 42 |  |                                     |  | 276,107 |                            |  |  | 259,168                    |  |  |  | 242,697 | 
|Miami                         |  |                                | 42 |  |                                     |  | 302,581 |                            |  |  | 310,160                    |  |  |  | 255,248 | 
|New York                      |  |                                | 28 |  |                                     |  | 219,587 |                            |  |  | 238,878                    |  |  |  | 222,417 | 
|Orlando                       |  |                                | 14 |  |                                     |  | 79,456  |                            |  |  | 71,762                     |  |  |  | 42,476  | 
|Panama City                   |  |                                | 42 |  |                                     |  | 204,684 |                            |  |  | 183,296                    |  |  |  | 195,737 | 
|Punta Cana                    |  |                                | 14 |  |                                     |  | 78,704  |                            |  |  | 60,523                     |  |  |  | 33,384  | 
|Quito                         |  |                                | 54 |  |                                     |  | 307,594 |                            |  |  | 304,560                    |  |  |  | 288,420 | 
|Rio de Janeiro                |  |                                | 14 |  |                                     |  | 80,282  |                            |  |  | 69,151                     |  |  |  | 42,852  | 
|San José                      |  |                                | 28 |  |                                     |  | 118,550 |                            |  |  | 109,464                    |  |  |  | 96,741  | 
|San Juan                      |  |                                | 10 |  |                                     |  | 30,252  |                            |  |  | 11,010                     |  |  |  |        | 
|San Salvador                  |  |                                | 36 |  |                                     |  | 173,716 |                            |  |  | 138,495                    |  |  |  | 115,793 | 
|Santiago                      |  |                                | 28 |  |                                     |  | 176,199 |                            |  |  | 153,778                    |  |  |  | 137,973 | 
|Santo Domingo                 |  |                                | 14 |  |                                     |  | 68,728  |                            |  |  | 67,848                     |  |  |  | 50,922  | 
|São Paulo                     |  |                                | 28 |  |                                     |  | 258,600 |                            |  |  | 236,396                    |  |  |  | 216,960 | 
|Washington                    |  |                                | 14 |  |                                     |  | 71,030  |                            |  |  | 74,006                     |  |  |  | 72,222  | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014.
|--- | ------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried on flights to or from Bogotá.
|--- | --------------------------------------------------------------------------------------------

|(4) | During 2014, we carried 11,653 passengers between Bogotá and Valencia, Venezuela. As of December 31, 2014, we no longer serviced this route.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------



43



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Network and schedule from San Salvador hub

Our San Salvador hub connects, principally, passengers from different destinations in North America, Central America and South America. As of
December 31, 2014, through our San Salvador hub, we operated approximately 627 weekly scheduled flights to 11 destinations in North America, five in South America, 11 in Central America and the Caribbean and currently provide scheduled service
to the following destinations:



|                |  |                                |    |  |                                     |  |         |                            |  |  |                            |  |  |  |         | 
|--------------- |  | ------------------------------ | -- |  | ----------------------------------- |  | ------- | -------------------------- |  |  | -------------------------- |  |  |  | ------- | 
|                |  |                                |    |  | Number of Passengers Carried(3) (4) | 
|Destinations(1) |  | Departuresscheduledper week(2) |    |  | Year EndedDecember 31,2014          |  |         | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|Belize City     |  |                                | 14 |  |                                     |  | 36,516  |                            |  |  | 36,617                     |  |  |  | 33,248  | 
|Cali            |  |                                | 14 |  |                                     |  | 41,870  |                            |  |  | 30,641                     |  |  |  | 8,158   | 
|Cancún          |  |                                | 14 |  |                                     |  | 73,331  |                            |  |  | 78,067                     |  |  |  | 65,342  | 
|Chicago         |  |                                | 14 |  |                                     |  | 59,924  |                            |  |  | 12,875                     |  |  |  | 7,776   | 
|Dallas          |  |                                | 10 |  |                                     |  | 43,808  |                            |  |  | 45,540                     |  |  |  | 39,515  | 
|Guatemala City  |  |                                | 48 |  |                                     |  | 233,990 |                            |  |  | 223,968                    |  |  |  | 205,010 | 
|Guayaquil       |  |                                | 14 |  |                                     |  | 54,429  |                            |  |  | 40,679                     |  |  |  | 22,273  | 
|Havana          |  |                                | 6  |  |                                     |  | 62,313  |                            |  |  | 41,793                     |  |  |  | 24,470  | 
|Houston         |  |                                | 18 |  |                                     |  | 53,512  |                            |  |  | 53,197                     |  |  |  | 51,469  | 
|Liberia         |  |                                | 6  |  |                                     |  | 6,903   |                            |  |  | 8,234                      |  |  |  | 7,254   | 
|Lima            |  |                                | 28 |  |                                     |  | 171,019 |                            |  |  | 162,119                    |  |  |  | 149,488 | 
|Los Angeles     |  |                                | 43 |  |                                     |  | 342,781 |                            |  |  | 306,507                    |  |  |  | 302,632 | 
|Managua         |  |                                | 42 |  |                                     |  | 160,196 |                            |  |  | 160,796                    |  |  |  | 162,463 | 
|Medellín        |  |                                | 14 |  |                                     |  | 45,634  |                            |  |  | 32,507                     |  |  |  |        | 
|Mexico City     |  |                                | 28 |  |                                     |  | 110,333 |                            |  |  | 75,552                     |  |  |  | 81,589  | 
|Miami           |  |                                | 14 |  |                                     |  | 109,721 |                            |  |  | 94,180                     |  |  |  | 86,169  | 
|New York        |  |                                | 28 |  |                                     |  | 172,659 |                            |  |  | 173,151                    |  |  |  | 157,854 | 
|Newark          |  |                                | 14 |  |                                     |  | 54,337  |                            |  |  | 9,018                      |  |  |  |        | 
|Panama City     |  |                                | 22 |  |                                     |  | 76,413  |                            |  |  | 69,005                     |  |  |  | 49,495  | 
|Quito           |  |                                | 14 |  |                                     |  | 67,780  |                            |  |  | 53,001                     |  |  |  | 11,672  | 
|Roatán          |  |                                | 14 |  |                                     |  | 21,413  |                            |  |  | 16,675                     |  |  |  | 18,935  | 
|San Francisco   |  |                                | 20 |  |                                     |  | 117,845 |                            |  |  | 125,129                    |  |  |  | 129,239 | 
|San José        |  |                                | 50 |  |                                     |  | 248,530 |                            |  |  | 248,555                    |  |  |  | 244,601 | 
|San Pedro Sula  |  |                                | 42 |  |                                     |  | 137,323 |                            |  |  | 138,925                    |  |  |  | 136,476 | 
|Tegucigalpa     |  |                                | 40 |  |                                     |  | 118,831 |                            |  |  | 106,743                    |  |  |  | 97,301  | 
|Toronto         |  |                                | 14 |  |                                     |  | 83,485  |                            |  |  | 85,141                     |  |  |  | 54,924  | 
|Washington      |  |                                | 42 |  |                                     |  | 241,374 |                            |  |  | 208,232                    |  |  |  | 197,646 | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014.
|--- | ------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried on flights to or from San Salvador.
|--- | --------------------------------------------------------------------------------------------------

|(4) | During 2014, we carried 19,451 passengers between San Salvador and Orlando, Florida in the United States. As of December 31, 2014, we no longer serviced this route.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Network and schedule from Lima hub

Our Lima hub connects passengers from different destinations in South America to destinations in North America, Central America and Europe,
through our other two hubs. As of December 31, 2014, through our Lima hub, we operated approximately 460 weekly scheduled flights to seven destinations in Peru, two in North America, 13 in South America and four in Central America and the
Caribbean and currently provide scheduled service to the following cities in Peru:



|                         |  |                                |    |  |                                     |  |         |                            |  |  |                            |  |  |  |         | 
|------------------------ |  | ------------------------------ | -- |  | ----------------------------------- |  | ------- | -------------------------- |  |  | -------------------------- |  |  |  | ------- | 
|                         |  |                                |    |  | Number of Passengers Carried(3) (4) | 
|Domestic Destinations(1) |  | Departuresscheduledper week(2) |    |  | Year EndedDecember 31,2014          |  |         | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|Arequipa                 |  |                                | 28 |  |                                     |  | 160,357 |                            |  |  | 164,444                    |  |  |  | 130,175 | 
|Chiclayo                 |  |                                | 14 |  |                                     |  | 77,921  |                            |  |  | 73,243                     |  |  |  | 88,733  | 
|Cuzco                    |  |                                | 66 |  |                                     |  | 382,184 |                            |  |  | 451,579                    |  |  |  | 265,172 | 
|Iquitos                  |  |                                | 14 |  |                                     |  | 46,098  |                            |  |  |                           |  |  |  |        | 
|Juliaca                  |  |                                | 14 |  |                                     |  | 88,940  |                            |  |  | 81,123                     |  |  |  | 82,246  | 
|Piura                    |  |                                | 26 |  |                                     |  | 155,066 |                            |  |  | 143,304                    |  |  |  | 140,670 | 
|Trujillo                 |  |                                | 28 |  |                                     |  | 121,062 |                            |  |  | 104,605                    |  |  |  | 103,500 | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014.
|--- | ------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried on flights to or from Lima.
|--- | ------------------------------------------------------------------------------------------

|(4) | During 2014, we carried 51,655 passengers between Lima and Tarapoto, Peru. As of December 31, 2014, we no longer serviced this route.
|--- | -------------------------------------------------------------------------------------------------------------------------------------

We currently provide scheduled service from our Lima hub to the following cities internationally:



|                              |  |                                |    |  |                                 |  |         |                            |  |  |                            |  |  |  |         | 
|----------------------------- |  | ------------------------------ | -- |  | ------------------------------- |  | ------- | -------------------------- |  |  | -------------------------- |  |  |  | ------- | 
|                              |  |                                |    |  | Number of Passengers Carried(3) | 
|International Destinations(1) |  | Departuresscheduledper week(2) |    |  | Year EndedDecember 31,2014      |  |         | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|Asunción                      |  |                                | 14 |  |                                 |  | 48,607  |                            |  |  | 46,990                     |  |  |  | 54,877  | 
|Buenos Aires                  |  |                                | 28 |  |                                 |  | 271,989 |                            |  |  | 268,078                    |  |  |  | 249,960 | 
|Cali                          |  |                                | 14 |  |                                 |  | 45,424  |                            |  |  | 25,150                     |  |  |  | 7,060   | 
|Caracas                       |  |                                | 14 |  |                                 |  | 78,269  |                            |  |  | 146,327                    |  |  |  | 139,975 | 
|Guayaquil                     |  |                                | 14 |  |                                 |  | 69,835  |                            |  |  | 52,925                     |  |  |  | 74,881  | 
|Havana                        |  |                                | 10 |  |                                 |  | 52,754  |                            |  |  | 48,856                     |  |  |  | 54,887  | 
|La Paz                        |  |                                | 14 |  |                                 |  | 69,861  |                            |  |  | 67,327                     |  |  |  | 85,391  | 
|Medellín                      |  |                                | 14 |  |                                 |  | 62,719  |                            |  |  | 28,842                     |  |  |  | 8,701   | 
|Mexico City                   |  |                                | 14 |  |                                 |  | 64,121  |                            |  |  | 44,997                     |  |  |  | 47,814  | 
|Miami                         |  |                                | 14 |  |                                 |  | 141,192 |                            |  |  | 111,989                    |  |  |  | 84,731  | 
|Montevideo                    |  |                                | 14 |  |                                 |  | 89,716  |                            |  |  | 90,226                     |  |  |  | 76,843  | 
|Porto Alegre                  |  |                                | 14 |  |                                 |  | 64,633  |                            |  |  | 30,325                     |  |  |  | 26,868  | 
|Quito                         |  |                                | 14 |  |                                 |  | 84,156  |                            |  |  | 111,640                    |  |  |  | 130,580 | 
|Rio de Janeiro                |  |                                | 14 |  |                                 |  | 89,435  |                            |  |  | 84,731                     |  |  |  | 81,388  | 
|Santa Cruz                    |  |                                | 14 |  |                                 |  | 63,716  |                            |  |  | 57,813                     |  |  |  | 56,904  | 
|Santiago                      |  |                                | 14 |  |                                 |  | 118,853 |                            |  |  | 119,694                    |  |  |  | 131,703 | 
|Santo Domingo                 |  |                                | 8  |  |                                 |  | 40,940  |                            |  |  | 36,323                     |  |  |  | 29,217  | 
|São Paulo                     |  |                                | 14 |  |                                 |  | 113,518 |                            |  |  | 117,547                    |  |  |  | 123,680 | 
|San José                      |  |                                | 14 |  |                                 |  | 68,581  |                            |  |  | 103,282                    |  |  |  | 138,337 | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014.
|--- | ------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried on flights to or from Lima.
|--- | ------------------------------------------------------------------------------------------



45



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##### Table of Contents

Network and schedule from San José

As of December 31, 2014, through our network in San José, we operated approximately 112 weekly scheduled flights to one destination
in North America, and four in Central America and the Caribbean. Our San José network connects, principally, passengers from different destinations in North America and Central America and currently provides scheduled service to the following
destinations:



|                |  |                                |    |  |                                    |  |         |                            |  |  |                            |  |  |  |         | 
|--------------- |  | ------------------------------ | -- |  | ---------------------------------- |  | ------- | -------------------------- |  |  | -------------------------- |  |  |  | ------- | 
|                |  |                                |    |  | Number of Passengers Carried(3)(4) | 
|Destinations(1) |  | Departuresscheduledper week(2) |    |  | Year EndedDecember 31,2014         |  |         | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|Guatemala City  |  |                                | 28 |  |                                    |  | 120,759 |                            |  |  | 117,731                    |  |  |  | 160,846 | 
|Managua         |  |                                | 14 |  |                                    |  | 15,503  |                            |  |  | 20,930                     |  |  |  | 29,627  | 
|Mexico City     |  |                                | 14 |  |                                    |  | 51,498  |                            |  |  | 74,166                     |  |  |  | 71,859  | 
|Panama City     |  |                                | 42 |  |                                    |  | 57,599  |                            |  |  | 50,776                     |  |  |  | 87,482  | 
|Tegucigalpa     |  |                                | 14 |  |                                    |  | 13,300  |                            |  |  | 15,836                     |  |  |  | 15,364  | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014.
|--- | ------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried to or from San José.
|--- | -----------------------------------------------------------------------------------

|(4) | During 2014, we carried 9,797 passengers between San José and Caracas, Venezuela, 2,247 passengers between San José and Miami, Florida in the United States, and 11,860 passengers between San José
and San Pedro Sula, Honduras, respectively. As of December 31, 2014, we no longer serviced these routes.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Domestic network and schedule in Ecuador

We operate approximately 170 weekly scheduled domestic flights to seven destinations in Ecuador, through our subsidiary Aerogal.

We currently provide scheduled domestic service between the following cities in Ecuador:



|                        |  |                                |    |  |                                 |  |         |                            |  |  |                            |  |  |  |         | 
|----------------------- |  | ------------------------------ | -- |  | ------------------------------- |  | ------- | -------------------------- |  |  | -------------------------- |  |  |  | ------- | 
|                        |  |                                |    |  | Number of Passengers Carried(3) | 
|Domestic(1)             |  | Departuresscheduledper week(2) |    |  | Year EndedDecember 31,2014      |  |         | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|QuitoBaltra            |  |                                | 4  |  |                                 |  | 13,866  |                            |  |  | 17,739                     |  |  |  | 10,647  | 
|QuitoCuenca            |  |                                | 10 |  |                                 |  | 73,443  |                            |  |  | 54,164                     |  |  |  | 89,136  | 
|QuitoGuayaquil         |  |                                | 84 |  |                                 |  | 399,835 |                            |  |  | 310,741                    |  |  |  | 462,933 | 
|QuitoManta             |  |                                | 24 |  |                                 |  | 110,518 |                            |  |  | 92,134                     |  |  |  | 150,858 | 
|QuitoEl Coca           |  |                                | 10 |  |                                 |  | 47,787  |                            |  |  | 49,141                     |  |  |  | 41,536  | 
|GuayaquilBaltra        |  |                                | 20 |  |                                 |  | 114,234 |                            |  |  | 113,008                    |  |  |  | 118,012 | 
|GuayaquilSan Cristobal |  |                                | 18 |  |                                 |  | 71,766  |                            |  |  | 68,933                     |  |  |  | 72,763  | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014. These numbers do not include flights served by Isleña.
|--- | -------------------------------------------------------------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried between such destinations.
|--- | -----------------------------------------------------------------------------------------

Regional operation and schedule in Central America

We operate approximately 366 weekly scheduled domestic flights to 11 destinations in Central America, through a group of airlines composed by
Sansa (Costa Rica) and Isleña (Honduras).



46



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##### Table of Contents

Through our regional operation in Central America, we currently provide scheduled domestic
service between the following cities in Central America:



|                           |  |                                |    |  |                                    |  |        |                            |  |  |                            |  |  |  |        | 
|-------------------------- |  | ------------------------------ | -- |  | ---------------------------------- |  | ------ | -------------------------- |  |  | -------------------------- |  |  |  | ------ | 
|                           |  |                                |    |  | Number of Passengers Carried(3)(4) | 
|Domestic(1)                |  | Departuresscheduledper week(2) |    |  | Year EndedDecember 31,2014         |  |        | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|San JoséDrake Bay         |  |                                | 22 |  |                                    |  | 5,334  |                            |  |  | 4,447                      |  |  |  | 3,731  | 
|San JoséGolfito           |  |                                | 30 |  |                                    |  | 9,922  |                            |  |  | 9,006                      |  |  |  | 10,337 | 
|San JoséLiberia           |  |                                | 26 |  |                                    |  | 10,399 |                            |  |  | 6,912                      |  |  |  | 6,791  | 
|San JoséPalmar Sur        |  |                                | 13 |  |                                    |  | 2,614  |                            |  |  | 2,407                      |  |  |  | 2,291  | 
|San JoséPuerto Jimenez    |  |                                | 62 |  |                                    |  | 14,344 |                            |  |  | 11,706                     |  |  |  | 11,986 | 
|San JoséQuepos            |  |                                | 67 |  |                                    |  | 18,752 |                            |  |  | 17,132                     |  |  |  | 17,818 | 
|San JoséTamarindo         |  |                                | 24 |  |                                    |  | 3,238  |                            |  |  | 4,764                      |  |  |  | 5,851  | 
|San JoséTambor            |  |                                | 72 |  |                                    |  | 19,948 |                            |  |  | 17,174                     |  |  |  | 16,466 | 
|San Pedro SulaRoatán      |  |                                | 12 |  |                                    |  | 14,191 |                            |  |  | 16,921                     |  |  |  | 11,641 | 
|San Pedro SulaTegucigalpa |  |                                | 26 |  |                                    |  | 32,839 |                            |  |  | 37,540                     |  |  |  | 39,160 | 
|TegucigalpaLa Ceiba       |  |                                | 12 |  |                                    |  | 7,039  |                            |  |  | 9,574                      |  |  |  | 7,287  | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014. These numbers do not include flights served by Isleña.
|--- | -------------------------------------------------------------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried between such destinations.
|--- | -----------------------------------------------------------------------------------------

|(4) | During 2014, we carried 8,964 passengers between Tegucigalpa and Roatán, Honduras. As of December 31, 2014, we no longer serviced this route.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

Network and schedule from other cities

In addition to the different destinations served through our three hubs, we provide point-to-point service between different destinations and
domestic flight service in Central America and Ecuador.

Point-to-Point Service

We currently provide domestic point-to-point scheduled service between the following cities:



|                       |  |                                |     |  |                                 |  |         |                            |  |  |                            |  |  |  |         | 
|---------------------- |  | ------------------------------ | --- |  | ------------------------------- |  | ------- | -------------------------- |  |  | -------------------------- |  |  |  | ------- | 
|                       |  |                                |     |  | Number of Passengers Carried(3) | 
|Domestic(1)            |  | Departuresscheduledper week(2) |     |  | Year EndedDecember 31,2014      |  |         | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|CaliBarranquilla      |  |                                | 20  |  |                                 |  | 102,266 |                            |  |  | 96,266                     |  |  |  | 51,341  | 
|CaliCartagena         |  |                                | 20  |  |                                 |  | 110,803 |                            |  |  | 106,317                    |  |  |  | 59,139  | 
|CaliPasto             |  |                                | 14  |  |                                 |  | 37,110  |                            |  |  | 30,019                     |  |  |  | 31,204  | 
|CaliTumaco            |  |                                | 28  |  |                                 |  | 71,021  |                            |  |  | 61,473                     |  |  |  | 59,730  | 
|CuzcoArequipa         |  |                                | 6   |  |                                 |  | 14,063  |                            |  |  | 29,956                     |  |  |  | 18,878  | 
|CuzcoPuerto Maldonado |  |                                | 8   |  |                                 |  | 26,326  |                            |  |  | 64,838                     |  |  |  | 56,186  | 
|MedellínBarranquilla  |  |                                | 14  |  |                                 |  | 63,444  |                            |  |  | 193,566                    |  |  |  | 163,284 | 
|MedellínBucaramanga   |  |                                | 40  |  |                                 |  | 213,781 |                            |  |  | 33,968                     |  |  |  |        | 
|MedellínCali          |  |                                | 12  |  |                                 |  | 56,634  |                            |  |  | 380,002                    |  |  |  | 313,783 | 
|MedellínCartagena     |  |                                | 101 |  |                                 |  | 400,187 |                            |  |  | 444,259                    |  |  |  | 369,214 | 
|MedellínCucuta        |  |                                | 70  |  |                                 |  | 430,412 |                            |  |  | 54,933                     |  |  |  | 49,095  | 
|MedellínSanta Marta   |  |                                | 10  |  |                                 |  | 45,836  |                            |  |  | 108,867                    |  |  |  | 77,503  | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014.
|--- | ------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried between such destinations.
|--- | -----------------------------------------------------------------------------------------



47



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##### Table of Contents

We currently provide international point-to-point scheduled service between the following cities:



|                              |  |                                |    |  |                                 |  |        |                            |  |  |                            |  |  |  |         | 
|----------------------------- |  | ------------------------------ | -- |  | ------------------------------- |  | ------ | -------------------------- |  |  | -------------------------- |  |  |  | ------- | 
|                              |  |                                |    |  | Number of Passengers Carried(3) | 
|International(1)              |  | Departuresscheduledper week(2) |    |  | Year EndedDecember 31,2014      |  |        | Year EndedDecember 31,2013 |  |  | Year EndedDecember 31,2012 | 
|BarranquillaMiami            |  |                                | 14 |  |                                 |  | 74,946 |                            |  |  | 78,458                     |  |  |  | 80,222  | 
|CaliGuayaquil                |  |                                | 6  |  |                                 |  | 29,772 |                            |  |  | 33,443                     |  |  |  | 27,015  | 
|CaliMadrid                   |  |                                | 6  |  |                                 |  | 64,349 |                            |  |  | 99,859                     |  |  |  | 116,239 | 
|CaliMiami                    |  |                                | 14 |  |                                 |  | 80,354 |                            |  |  | 80,739                     |  |  |  | 80,833  | 
|CartagenaMiami               |  |                                | 6  |  |                                 |  | 13,976 |                            |  |  | 64,963                     |  |  |  | 65,294  | 
|CartagenaNew York            |  |                                | 14 |  |                                 |  | 63,597 |                            |  |  |                           |  |  |  |        | 
|Guatemala CityFlores         |  |                                | 28 |  |                                 |  | 48,772 |                            |  |  | 43,947                     |  |  |  | 43,875  | 
|Guatemala CityLos Angeles    |  |                                | 14 |  |                                 |  | 96,299 |                            |  |  | 102,064                    |  |  |  | 104,281 | 
|Guatemala CityMiami          |  |                                | 6  |  |                                 |  | 22,318 |                            |  |  | 37,816                     |  |  |  | 49,511  | 
|Guatemala CitySan Pedro Sula |  |                                | 12 |  |                                 |  | 13,643 |                            |  |  | 14,000                     |  |  |  | 11,748  | 
|Guatemala CityTegucigalpa    |  |                                | 15 |  |                                 |  | 21,635 |                            |  |  | 22,547                     |  |  |  | 21,936  | 
|ManaguaMiami                 |  |                                | 21 |  |                                 |  | 86,898 |                            |  |  | 95,689                     |  |  |  | 114,063 | 
|MedellínMadrid               |  |                                | 4  |  |                                 |  | 42,486 |                            |  |  | 44,430                     |  |  |  | 44,241  | 
|MedellínMiami                |  |                                | 14 |  |                                 |  | 78,881 |                            |  |  | 85,306                     |  |  |  | 87,418  | 
|MedellínNew York             |  |                                | 14 |  |                                 |  | 55,487 |                            |  |  | 53,056                     |  |  |  | 40,206  | 
|San Pedro SulaMiami          |  |                                | 14 |  |                                 |  | 57,787 |                            |  |  | 55,229                     |  |  |  | 60,500  | 
|San Pedro SulaNew York       |  |                                | 4  |  |                                 |  | 20,777 |                            |  |  | 25,970                     |  |  |  | 31,061  | 



|(1) | Reflects destinations served as of December 31, 2014.
|--- | -----------------------------------------------------

|(2) | Departures for the week ended December 31, 2014.
|--- | ------------------------------------------------

|(3) | These numbers reflect the number of revenue passengers carried between such destinations.
|--- | -----------------------------------------------------------------------------------------

Alliances

We have a number of bilateral alliances with other airlines, which enhance travel options for customers by providing better coverage
to common destinations, additional mileage accrual and redemption opportunities, and access to markets that we do not serve directly. These commercial alliances typically include one or more of the following features: loyalty program reciprocity;
code sharing of flight operations (whereby seats on one carriers selected flights can be marketed under the brand name of another carrier); coordination of passenger services including, but not limited to, ticketing, passenger check-in,
baggage handling and passenger connection, and other resource-sharing activities.

We are a member of Star Alliance, a global integrated
airline network founded in 1997 and the largest and the most comprehensive airline alliance in the world. As of January 1, 2015, Star Alliance carriers served 1,316 airports in 192 countries with over 18,500 daily flights. Current Star
Alliance members are, in addition to us, Adria Airways, Aegean Airlines, Air Canada, Air China, Air New Zealand, All Nippon Airways, Asiana Airlines, Austrian Airlines, Brussels Airlines, Copa Airlines, Croatia Airlines, EGYPTAIR, Ethiopian
Airlines, EVA Air, LOT Polish Airlines, Lufthansa, SAS Scandinavian Airlines, Shenzhen Airlines, Singapore Airlines, South African Airways, SWISS, TAP Portugal, THAI Airways International, Turkish Airlines and United Airlines. On
February 14, 2013, US Airways announced an agreement to merge with AMR Corporation and its intent to exit Star Alliance as a result of such merger.

Besides our Star Alliance partnerships, we currently have strategic code share agreements with Aeroméxico, OceanAir, Air Canada, Copa
Airlines, Iberia, Lufthansa, Satena, Sky Airline, Turkish Airlines and United Airlines. In addition, we have a frequent flyer program agreement in place with Aeroméxico and Iberia.

These alliances enhance our network, providing more options, facilities and benefits to our customers and additional revenues to us.



48



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##### Table of Contents

Loyalty Business Unit

We believe that a strong loyalty program provides the basis for improved profitability and for the development of a lucrative loyalty business.
In recent years we have made investments to improve our frequent flyer program, LifeMiles. We monitor LifeMiles performance carefully and believe it continues to have significant growth and value creation potential.

In March 2011, we launched LifeMiles, the consolidated and improved frequent flyer program of Avianca and Taca. Aerogal
adopted LifeMiles as its frequent flyer program in November 2012. As of December 31, 2014, LifeMiles has approximately 5.9 million members. We believe that LifeMiles is the most attractive frequent flyer
program offered by a Latin American airline. For example, LifeMiles has been the only Latin American loyalty program to win a Freddie Award, the most prestigious member-generated award in the travel loyalty industry, in the last two
years. Indeed, since 2013, LifeMiles has won three Freddie Awards and two Global Traveler Awards. LifeMiles members earn mileage by flying on Avianca, Taca, Aerogal, and on partner airlines. Mileage can also be earned by using
certain services offered by about 200 program partners, including banks, hotels and car rental agencies and retail stores. LifeMiles members can use their miles to fly to over 1,200 destinations around the world. In addition, miles can be
redeemed for upgrades, entrance to our VIP lounges, excess baggage waivers, hotel nights and many other awards from program partners. Our Elite program includes three Elite status levels. Among the benefits that all of our Elite members enjoy
are: complementary automated upgrades based on space availability and complementary access to our network of VIP lounges. Our Diamond Elites and Gold Elites also enjoy the benefits of Star Alliance Gold status, including complementary access to
some 1,000 Star Alliance VIP lounges around the world.

Since the combination of Avianca and Taca, loyalty programs have been the source
of significant direct and indirect value creation for us. Indirectly, LifeMiles contributes to the strength of our primary business in key commercial markets, and supports yields through miles-based voluntary up-sell incentives. More
directly, loyalty generates financial value for us principally through the commercialization of miles. A significant majority of miles commercialized through partners are sold to banks. For example, we have approximately 20 co-branded credit and
debit card partner banks, and active mileage sales agreements with more than 80 financial institutions.

We continue to develop our
LifeMiles loyalty program as a separate business unit. In furtherance of that purpose and to enhance the value of our LifeMiles business unit, we are in the process of evaluating potential partnerships and investors for LifeMiles Corp.
and have engaged professional advisors to assist in such initiative.

Pricing and Revenue Management

We maintain revenue management policies and procedures that are intended to maximize total revenue, while keeping fares generally competitive
with those of our major competitors. We charge higher prices for tickets on higher-demand flights, tickets purchased on short notice and tickets for itineraries suggesting a passenger would be willing to pay a premium. The number of seats we offer
at each fare level in each market is determined by a continual process of analysis and forecasting, taking into account factors such as past booking history, seasonality, the effects of competition and current booking trends. We use a combination of
approaches, taking into account yields, flight load factors and effects on load factors of continuing traffic, depending on the characteristics of the markets served, to arrive at a strategy for achieving the highest possible revenue per ASK,
balancing the average fare charged against the corresponding effect on our load factors.

Our revenue management software includes PROS
O&D III for demand forecasting and inventory control optimization, PROS GRMS for group requests acceptance and negotiation process optimization, Profit Line Price (PLP) for competitors fares monitoring and analysis, Infare for competitors
websites availability and fares monitoring and analysis, and Network Revenue Planning System (NRPS) for determining network optimization opportunities.

Sales and Distribution

We use a
multichannel strategy to reach travelers, striving for a proper balance between direct and indirect distribution channels. In the past few years, we have focused on streamlining our distribution strategy in order to reduce costs and enhance the
effectiveness of our commercial efforts. During the year ended December 31, 2014 approximately 65% of our sales were through travel agencies and tour operators while approximately 35% were sales in the more profitable channels, direct channels,
website, call centers and direct point of sales. Travel agents receive base commissions of 3.3% in Colombia and 3.2% in other countries. The weighted average rate for these commissions during this period was 3.3%. There commissions consist of
up front over commission, and back end over commission. These commissions are established by us, based on market conditions, strategic needs by country and other needs or goals.



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Travel agencies obtain airline travel information and issue airline tickets through global
distribution systems, or GDSs, that enable them to make reservations on flights from a large number of airlines. GDSs are also used by travel agents to make hotel and car rental reservations. We participate in all major international GDSs, including
SABRE, Amadeus, Galileo and Worldspan. In return for access to these systems, we pay transaction fees that are generally based on the number of reservations booked through each system. We believe that obtaining a single commercial code is likely to
give our flights greater visibility at travel agencies.

Our website is an integral part of our commercial, marketing and service efforts.
Together with other direct sales initiatives, our website provides us with an important tool to reduce our distribution costs. Sales on our website have increased significantly in recent years, by approximately 12% in 2014 compared to 2013. We are
continually improving our website, a key element of our new short-haul model, so that the technological platform can support future growth.

The following are data for our ticket sales in 2014 through our ticket offices, direct agents, call center and website portals:



| |  |  | Ticket sales through our approximately 180 ticket offices in Colombia and abroad accounted for approximately 9% of our sales.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | Ticket sales through our direct agents accounted for approximately 4% of our sales. Our direct agents are third-party agents who work for us on an exclusive basis. Currently in Colombia, our ticket officers and direct
agents also sell package deals through Avianca Tours, which is our internal travel agency dedicated to packaging flights, hotels and rental cars to provide our customers with promotions during off-peak seasons. We plan to extend this service to
other markets we serve.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Ticket sales through our call center accounted for approximately 5% of our sales. Our call centers are located in Medellín, Colombia and in San Salvador, El Salvador and handle reservations and sales calls from
throughout the world for our domestic and international flights. A centralized call center allows us to provide efficient customer service 24 hours a day, 7 days a week.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Ticket sales through the website portals accounted for approximately 17% of our sales.
| | - |  | --------------------------------------------------------------------------------------

We
have worked to increase the importance of key account management, strategic and collaborative efforts with customers, and adhere to simplified, integrated commercial processes, which has resulted in a better negotiating position and a reduction of
commercial trade investment. As a result, commission payments to agencies as a percent of sales decreased from 3.6% in 2013 to 3.3% in 2014.

We continue to consolidate our global agreements with major corporations and aim to become the preferred corporate carrier in Latin America,
generating high yield traffic, and continue to work closely with tourism boards in core markets to develop growth for both leisure and corporate travelers.

Marketing, Customer Experience and Advertising and Promotional Activities

The Avianca brand embraces a forward-looking vision to be the preferred Latin American airline, and we seek to continue to improve the
quality of our marketing based on knowledge of travelers preferences, adherence to our processes, and through nurturing our relationships with our communication partners.

We have also moved forward with fewer and stronger brands, strengthening the value of our corporate brand. Beginning in May 2013, Avianca
became our sole, unified brand for all of our operations. We continue to focus on improving the quality of our communications, building on our Latin Excellence standard of service across our operations, which we believe differentiates us from other
airlines. We seek to enhance customer experience by delivering high quality professional service, connecting people emotionally, with warmth and Latin style. Moreover, we have worked on improving our communication effectiveness and integration with
sales activities, enabling us to drive demand and strengthen brand loyalty, while maintaining a strong emotional bond built upon Colombian heritage in our core market.

Our advertising and promotional activities include the use of television, print, radio and billboards, as well as targeted public relations
events in the cities to which we fly. We believe that the corporate traveler is an important part of our business, and we promote our services to these customers by conveying the reliability, convenience and consistency of our services and offering
value-added services such as convention and conference travel arrangements. We also target large Colombian and multinational corporations that do business in Colombia by offering these companies rewards, which may be used towards the purchase of
Avianca tickets, upgrades, excess baggage fees, and other services. As travelers habits and technologies evolve, we continue ensuring to efficiently reach current and prospect customers by new technological platforms, while maximizing
services, sales and return on our digital investments.



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Promotional activities include, (i) Air only fares (Low fare communication) for
domestic travel, pursuant to which special rates are available during certain time frames, (ii) LifeMiles + Cash promotions for domestic and international travel, establishing a combination of miles from our Frequent Flyer
Program and cash on different routes throughout our network and (iii) Added Value Promotions such as awarding bonus miles or double segments in their accrual of miles or segments when flying with us in specific destinations. For
example, we have sponsored a promotional charity run for 10,000 runners in Bogotá in March 2014 and 2015.

Aircraft

As of December 31, 2014 , we operated a fleet consisting of 181 aircraft (169 passenger aircraft and 12 cargo aircraft), including 11
Airbus A330s, five Airbus A330Fs, four Boeing B787-800, one Boeing 767, four Airbus A300F, six Airbus A321 Sharklets, three Airbus A321s, six Airbus A320 Sharklets, 52 Airbus A320s, seven Airbus A319 Sharklets, 27 Airbus A319s, 10 Airbus A318s, one
Boeing 767-300, two Boeing 767-200s, 12 Embraer E190s, seven ATR42s, 14 ATR72s and nine CESSNA 208s. As of December 31, 2014, the average age of our operative jet passenger fleet was 5.5 years. The goal of our fleet modernization plan is to
have more modern aircraft because it reduces fuel consumption, generates less pollution and reduces noise levels.

In connection with our
fleet modernization plan, a new A320 family MOU was signed in December 2014 relating to the future acquisition of 100 neo aircraft. For our freight operations development, as of December 31, 2014, we operated two 767 200SF, five Airbus A330F
and four A300F. The lease for the 767-300F expires in the third quarter of 2015, which we do not expect to renew.

As of December 31,
2012, we had replaced all of our former Boeing 767 (passengers), Boeing 737, MD83 and F100 fleets with A318s, A319s, A320s and A330s finishing a successful transition to a new, more homogenous operative fleet of aircraft with more efficiency and
reliability. We believe that a modern, homogeneous and younger operative fleet further strengthens our ability to provide better customer service, which is reflected in higher passenger satisfaction. The technology used in these aircraft offer
substantial cost savings as they are more fuel efficient and require lower maintenance costs.

On February 3, 2014, we took
preventative action to ground our fleet of ten Fokker 50 turboprop aircraft (including four that were inactive) following an engine malfunction in one of the Fokker 50 aircraft in Cali, Colombia. We replaced our entire fleet of Fokker 50s with
ATR72s. Under IFRS, were required to reflect the grounding of these aircraft as a write-off expense of $4.2 million in the first quarter of 2014.

The following table sets forth the composition of our operative fleet as of December 31, 2014:



|               |  |                       |    |  |                        |  |    |                 |  |  |                    |  |  |                 |       |  |  |  |         | 
|-------------- |  | --------------------- | -- |  | ---------------------- |  | -- | --------------- |  |  | ------------------ |  |  | --------------- | ----- |  |  |  | ------- | 
|               |  | Number of Aircraft(1) |    |  |                        |  |    |                 | 
|               |  | Total                 |    |  | Owned andFinanceLeases |  |    | OperatingLeases |  |  | Average Age(Years) |  |  | SeatingCapacity |      
|Jets           |  |                       |    |  |                        |  |    |                 |  |  |                    |  |  |                 |       |  |  |  |         | 
|Embraer E190   |  |                       | 12 |  |                        |  | 10 |                 |  |  | 2                  |  |  |                 | 5.28  |  |  |  | 96      | 
|Airbus A318    |  |                       | 10 |  |                        |  |   |                 |  |  | 10                 |  |  |                 | 9.79  |  |  |  | 100     | 
|Airbus A319    |  |                       | 27 |  |                        |  | 11 |                 |  |  | 16                 |  |  |                 | 8.85  |  |  |  | 120     | 
|Airbus A319S   |  |                       | 7  |  |                        |  | 7  |                 |  |  |                   |  |  |                 | 0.65  |  |  |  | 120     | 
|Airbus A320    |  |                       | 52 |  |                        |  | 31 |                 |  |  | 21                 |  |  |                 | 5.22  |  |  |  | 150     | 
|Airbus A320S   |  |                       | 6  |  |                        |  |   |                 |  |  | 6                  |  |  |                 | 1.17  |  |  |  | 150     | 
|Airbus A321    |  |                       | 3  |  |                        |  | 1  |                 |  |  | 2                  |  |  |                 | 7.66  |  |  |  | 194     | 
|Airbus A321S   |  |                       | 6  |  |                        |  | 2  |                 |  |  | 4                  |  |  |                 | 0.52  |  |  |  | 194     | 
|Airbus A330    |  |                       | 11 |  |                        |  | 1  |                 |  |  | 10                 |  |  |                 | 3.44  |  |  |  | 252     | 
|Boeing B767(2) |  |                       | 1  |  |                        |  |   |                 |  |  | 1                  |  |  |                 | 22.00 |  |  |  | 246     | 
|Boeing B787    |  |                       | 4  |  |                        |  | 3  |                 |  |  | 1                  |  |  |                 | 0.02  |  |  |  | 250     | 
|Turboprop      |  |                       |    |  |                        |  |    |                 |  |  |                    |  |  |                 |       |  |  |  |         | 
|CESSNA 208     |  |                       | 9  |  |                        |  | 9  |                 |  |  |                   |  |  |                 | 3.84  |  |  |  | 12      | 
|ATR42          |  |                       | 7  |  |                        |  | 4  |                 |  |  | 3                  |  |  |                 | 20.57 |  |  |  | 48      | 
|ATR72          |  |                       | 14 |  |                        |  | 14 |                 |  |  |                   |  |  |                 | 0.65  |  |  |  | 68      | 
|Cargo          |  |                       |    |  |                        |  |    |                 |  |  |                    |  |  |                 |       |  |  |  |         | 
|Airbus A330F   |  |                       | 5  |  |                        |  | 5  |                 |  |  |                   |  |  |                 | 1.30  |  |  |  | 64 tons | 
|Airbus A300F   |  |                       | 4  |  |                        |  | 4  |                 |  |  |                   |  |  |                 | 31.92 |  |  |  | 40 tons | 
|Boeing 767-300 |  |                       | 1  |  |                        |  |   |                 |  |  | 1                  |  |  |                 | 11.42 |  |  |  | 53 tons | 



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|               |  |                       |     |  |                        |  |     |                 |  |  |                    |  |  |                 |       |  |  |  |         | 
|-------------- |  | --------------------- | --- |  | ---------------------- |  | --- | --------------- |  |  | ------------------ |  |  | --------------- | ----- |  |  |  | ------- | 
|               |  | Number of Aircraft(1) |     |  |                        |  |     |                 | 
|               |  | Total                 |     |  | Owned andFinanceLeases |  |     | OperatingLeases |  |  | Average Age(Years) |  |  | SeatingCapacity |      
|Boeing 767-200 |  |                       | 2   |  |                        |  | 2   |                 |  |  |                   |  |  |                 | 27.59 |  |  |  | 41 tons | 
|               |  |                       |     |  |                        |  |     |                 |  |  |                    |  |  |                 |       |  |  |  |         | 
|Total          |  |                       | 181 |  |                        |  | 104 |                 |  |  | 77                 |  |  |                 | 6.40  |  |  |  |         | 



|(1) | Does not include five F100 and two A319 aircraft leased, one A319 aircraft subleased and one A330F subleased to OceanAir. Does not include two ATR42s and one A330 that are inactive. Some of the aircraft owned are
financed through financial leasing contracts with financial institutions and export credit agencies.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The B767 passenger aircraft is no longer operating in the fleet.
|--- | ----------------------------------------------------------------

The following table sets
forth the scheduled expiration of our operational aircraft operating leases existing as of December 31, 2014.



|              |  |      |    |  |      |  |    |      |  |  |      |  |  |      |   |  |      |  |   |      |  |  |      |  |  |       |    |  |  |  |   |  |  |  |    | 
|------------- |  | ---- | -- |  | ---- |  | -- | ---- |  |  | ---- |  |  | ---- | - |  | ---- |  | - | ---- |  |  | ---- |  |  | ----- | -- |  |  |  | - |  |  |  | -- | 
|Aircraft Type |  | 2015 |    |  | 2016 |  |    | 2017 |  |  | 2018 |  |  | 2019 |   |  | 2020 |  |   | 2021 |  |  | 2022 |  |  | Total |   
|ATR42         |  |      | 3  |  |      |  |   |      |  |  |     |  |  |      |  |  |      |  |  |      |  |  |     |  |  |       |   |  |  |  |  |  |  |  | 3  | 
|Embraer E190  |  |      |   |  |      |  |   |      |  |  | 2    |  |  |      |  |  |      |  |  |      |  |  |     |  |  |       |   |  |  |  |  |  |  |  | 2  | 
|Airbus A318   |  |      |   |  |      |  |   |      |  |  |     |  |  |      |  |  |      |  |  |      |  |  |     |  |  |       | 10 |  |  |  |  |  |  |  | 10 | 
|Airbus A319   |  |      | 6  |  |      |  | 6  |      |  |  | 2    |  |  |      |  |  |      |  |  |      |  |  | 2    |  |  |       |   |  |  |  |  |  |  |  | 16 | 
|Airbus A320   |  |      | 2  |  |      |  | 4  |      |  |  | 10   |  |  |      | 2 |  |      |  |  |      |  |  | 3    |  |  |       |   |  |  |  |  |  |  |  | 21 | 
|Airbus A320S  |  |      |   |  |      |  |   |      |  |  |     |  |  |      |  |  |      |  |  |      |  |  |     |  |  |       | 4  |  |  |  | 2 |  |  |  | 6  | 
|Airbus A321   |  |      |   |  |      |  | 1  |      |  |  | 1    |  |  |      |  |  |      |  |  |      |  |  |     |  |  |       |   |  |  |  |  |  |  |  | 2  | 
|Airbus A321S  |  |      |   |  |      |  |   |      |  |  |     |  |  |      |  |  |      |  |  |      |  |  |     |  |  |       |   |  |  |  | 4 |  |  |  | 4  | 
|Airbus A330   |  |      | 2  |  |      |  | 1  |      |  |  | 1    |  |  |      | 1 |  |      |  | 2 |      |  |  | 2    |  |  |       | 1  |  |  |  |  |  |  |  | 10 | 
|Boeing B767   |  |      | 1  |  |      |  |   |      |  |  |     |  |  |      |  |  |      |  |  |      |  |  |     |  |  |       |   |  |  |  |  |  |  |  | 1  | 
|Boeing B787   |  |      |   |  |      |  |   |      |  |  |     |  |  |      |  |  |      |  |  |      |  |  |     |  |  |       |   |  |  |  | 1 |  |  |  | 1  | 
|Boeing 767F   |  |      | 1  |  |      |  |   |      |  |  |     |  |  |      |  |  |      |  |  |      |  |  |     |  |  |       |   |  |  |  |  |  |  |  | 1  | 
|              |  |      | 15 |  |      |  | 12 |      |  |  | 16   |  |  |      | 3 |  |      |  | 2 |      |  |  | 7    |  |  |       | 15 |  |  |  | 7 |  |  |  | 77 | 

We have entered into agreements to acquire up to 11 Boeing 787 Dreamliners for delivery between 2015 and 2019,
17 Airbus A320S (consisting of A319, A320 and A321 models) for delivery between 2015 and 2016, 33 Airbus A320s with a new engine option (neo) for delivery between 2017 and 2019, one ATR72 for delivery in 2015. The following table sets forth our firm
contractual deliveries through 2019.



|                |  |      |    |     |      |  |    |      |  |  |      |  |  |      |    |  |       |  |    |  |  |  |    | 
|--------------- |  | ---- | -- | --- | ---- |  | -- | ---- |  |  | ---- |  |  | ---- | -- |  | ----- |  | -- |  |  |  | -- | 
|Aircraft Type   |  | 2015 |    |     | 2016 |  |    | 2017 |  |  | 2018 |  |  | 2019 |    |  | Total | 
|Boeing 787      |  |      | 3  |     |      |  | 3  |      |  |  | 2    |  |  |      |   |  |       |  | 3  |  |  |  | 11 | 
|Airbus A319S    |  |      | 1  |     |      |  |   |      |  |  |     |  |  |      |   |  |       |  |   |  |  |  | 1  | 
|Airbus A320S    |  |      | 5  |     |      |  | 8  |      |  |  |     |  |  |      |   |  |       |  |   |  |  |  | 13 | 
|Airbus A321S    |  |      | 3  |     |      |  |   |      |  |  |     |  |  |      |   |  |       |  |   |  |  |  | 3  | 
|Airbus A319 neo |  |      |   |     |      |  |   |      |  |  | 7    |  |  |      | 9  |  |       |  | 3  |  |  |  | 19 | 
|Airbus A320 neo |  |      |   |     |      |  |   |      |  |  | 3    |  |  |      | 2  |  |       |  | 5  |  |  |  | 10 | 
|Airbus A321 neo |  |      |   |     |      |  |   |      |  |  | 1    |  |  |      | 1  |  |       |  | 2  |  |  |  | 4  | 
|ATR72           |  |      | 1  | (2) |      |  |   |      |  |  |     |  |  |      |   |  |       |  |   |  |  |  | 1  | 
|                |  |      |    |     |      |  |    |      |  |  |      |  |  |      |    |  |       |  |    |  |  |  |    | 
|Total(1)        |  |      | 13 |     |      |  | 11 |      |  |  | 13   |  |  |      | 12 |  |       |  | 13 |  |  |  | 62 | 



|(1) | We also have purchase rights options to purchase up to ten Boeing 787 Dreamliners, 21 Airbus A320s, 15 ATR72s and eight Embraers and entered into a new A320 family Memorandum of Understanding in December 2014 relating
to the future acquisition of 100 neo aircraft, for which we expect to enter into a definitive purchase purchase agreement in the second quarter of 2015.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The ATR72 was delivered in January of this year.
|--- | ------------------------------------------------

Our long-term fleet plan includes the
incorporation of the following aircraft types: Airbus A319, A320, A321, A330, Boeing 787 and ATR72. We expect our new aircraft to offer substantial cost savings, as they are more fuel-efficient and require lower maintenance costs. The Boeing 787
belongs to a new generation of aircraft made of lighter composite materials, offering new technology and powered with more efficient Rolls Royce Trent 1000D engines, which will allow us to reach long-haul destinations with enhanced capacity and
efficiency. Our new 787 aircraft are expected to be configured with premium business class sections that will provide our customers with modern in-flight amenities.



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As of December 31, 2014, our operative fleet was comprised of 181 aircraft, 104 of which
were owned and 77 were subject to long-term operating leases. Additionally, we lease five F100s, sublease three A319s and one A330F, to OceanAir, none of which have been included in the composition of our operative fleet as of December 31,
2014. The five F100s, two A319s and one A330F are owned and one A319 is under operating lease. In addition, two ATR42s and one A330 that are inactive and are not included in the composition of our operative fleet.

The 77 of our operative aircraft that are subject to long-term operating leases require monthly rental payments and have purchase options at
the end of the lease. We are generally responsible for the maintenance, servicing, insurance, repair and overhaul of our leased aircraft during the terms of the leases. Under some of our operating lease agreements, we are required to make
supplemental rent payments to aircraft leasing companies as deposits to guarantee the performance of overhaul work on aircraft under lease and are disbursed to cover overhaul costs. Such funds are refunded to us to pay for scheduled overhauls. As
such, we record the payments as Deposits and other assets under Current and Non-Current Assets in our consolidated financial statements. We are required to return the leased aircraft in an agreed upon condition at the end of the leases.
There are some contracts in which we have agreed to make an end of lease adjustment. The rates to calculate this adjustment are set forth in the relevant lease contract.

Of the 104 aircraft of our operative aircraft that we own or have under financial lease, approximately 93% are financed through commercial
bank financing and some of these aircraft are supported by export credit agency financing. The average rate of these financings is 2.97% as of December 31, 2014.

All of our jet aircraft have a two-class configuration. Our Boeing B787s have 250 seats, with a business class capacity of 28 seats; nine
Airbus A330s have 252 seats, with a business class capacity of 30 seats; two Airbus A330s have 238 seats, with a business class capacity of 32 seats, our Airbus A321s have 194 seats, with a business class capacity of 12 seats; our Airbus A320s have
a capacity of 150 seats, with a business class capacity of 12 seats; our Airbus A319s have a capacity of 120 seats, with a business class capacity of 12 seats; our Airbus A318s have 100 seats, with a business class capacity of 12 seats; our Embraer
E190s have 96 seats, with a business class capacity of eight seats; our ATR42s have an average of 47 seats, in an all-economy configuration; our ATR72s have a capacity of 68 seats; and our CESSNA 208s have 12 economy seats.

Maintenance

Our maintenance facilities
are located in Bogotá, San Salvador, Rionegro, Quito, San José, Lima and Guatemala City and have capability to perform line maintenance, heavy maintenance, components maintenance, Non Destructive Test (NDT) and specialized services,
which consist of scheduled maintenance checks on our aircraft, including pre-flight, daily and overnight checks, A-checks and any diagnostics and routine repairs and heavy airframe checks, including C-checks.

Currently, we have five maintenance hangars dedicated to heavy maintenance. We have three hangars in Bogotá, one of which can
accommodate wide body planes, and the other two can accommodate narrow body planes. Currently, these hangars are certified for maintenance on the Airbus A320 family, Boeing 757s, Boeing 767s, McDonnell Douglas MD-83s, Fokker 100s and FK50s and the
repair station holds FAA Part-145 certification. We have one hangar at the Rionegro Airport serving Medellín. The hangar is certified for the Airbus A320 family, A330s and Boeing 767s. We have one hangar in Guatemala City certified for our
ATR fleet.

In addition, on April 25, 2014, we entered into a lease agreement for property near Medellín, Colombia where we
intend to construct a new Maintenance, Repair and Overhaul (MRO) facility for our exclusive use. The new facility is currently scheduled to be in operation by 2016. We believe that the new MRO facility will afford us flexibility for future expansion
and will enable us to achieve economies of scale in our maintenance operation across the regions we serve.

Maintenance and engineering
activities are supervised by local authorities in each country, including the UAEAC (Unidad Especial de la Aeronáutica Civil) in Colombia, the AAC (Autoridad de la Aviación Civil) of El Salvador and the DGAC
(Dirección General de Aviación Civil) in Peru, Ecuador, Costa Rica and Guatemala. Our maintenance activities are also subject to recurring external audits from international entities such as the FAA, the EASA, the International
Air Transport Association Operational Safety Audit, or the IOSA (from the IATA), and the Bureau Veritas Quality International (ISO 9001:2008) in order to comply with applicable regulations. The audits are conducted in connection with each
countrys certification procedures and enable us to continue to perform maintenance for aircraft registered in the certifying jurisdictions.



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Our repair station located in Bogotá holds FAA, EASA Part-145 certification and UAEAC
(Unidad Aeronautica Especial de Aviacion Civil of Colombia) and is also certified by other authorities such as the CCAA (Curaçao Civil Aviation Authority), the ANAC (Agencia Nacional de Aviacion Civil of Brasil), the INAC (Instituto
Nacional de la Aeronáutica Civil)of Venezuela, the DGAC (Dirección General de Aviación Civil)of Ecuador and the AAC (Autoridad de la Aviación Civil)of El Salvador allowing us to perform maintenance on
aircraft from several countries.

Each year we are subject to audits by the aviation authorities in each of the countries in which we
operate and generally receive more than 250 audits each year (including self-audits), assuring our maintenance process complies with the best practices and standards of the aviation industry.

We provide line maintenance services in most of our local stations, heavy and components maintenance service at our Bogotá station for
other carriers through our Avianca Services business unit. Heavy maintenance consists of more complex inspections and C-checks, as well as servicing of the aircraft that cannot be accomplished during an overnight visit.
Maintenance checks are performed as prescribed by an aircrafts manufacturer. These checks are based on the number of hours flown or the number of take-offs or calendar days.

All major engine repairs and overhauls are conducted by certified outside maintenance providers including GE, Pratt & Whitney, IAI
and Rolls Royce.

As of December 31, 2014, we employed approximately 3,181 maintenance professionals, including engineers,
supervisors, technicians and inspectors, who perform maintenance in accordance with maintenance programs that are established by the manufacturers of our aircraft and approved and certified by international aviation authorities. Every certified
mechanic is trained in factory procedures and goes through our own rigorous in-house training program. Every mechanic is licensed by the local authorities of the relevant country and many of our mechanics are also licensed by the FAA.

Operational Training Center

In November
2014, we began construction of a new operational training center located near Bogotás El Dorado International Airport. This new facility will serve as an educational training center for our pilots, flight attendants and technicians, as
well as for the rest of our employees from different administrative areas. It is estimated to be approximately 26,600 square meters and is currently scheduled to be in operation by 2016.

Aviation Center

In January 2015, we
signed a turnkey contract for the design, construction and implementation of an aviation center in adjacent areas to the José María Córdova International Airport. The aviation center will have a total area of 44,300 square
meters and will have 8,800 square meters in hangars and aircraft component repair facilities, as well as premises for aircraft taxi, parts and replacements warehouses, and training classrooms. It is currently scheduled to be in operation by late
December 2015.

Fuel

Aircraft fuel
costs represented 32.7%, 31.4% and 30.4% of our operating expenses for the years ended December 31, 2012, December 31, 2013 and December 31, 2014, respectively. Fuel costs are volatile, as they are subject to many global economic and
geopolitical factors that we cannot control or predict. In addition, oil prices remain an important determinant of global economic performance which affects demand for air transportation services. See Item 3. Key InformationPart D. Risk
FactorsRisks Relating to the Airline IndustryVolatility in our fuel costs or disruptions in our fuel supply would materially and adversely affect our operating results.

The following tables set forth certain information about our fuel consumption for the periods set forth below:



|                                                                                 |  |                         |         |  |      |  |         |      |  |  |         | 
|-------------------------------------------------------------------------------- |  | ----------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                                                 |  | Year ended December 31, |        
|                                                                                 |  | 2014                    |         |  | 2013 |  |         | 2012 | 
|Average price per gallon of jet fuel into plane (net of hedge) (in U.S. dollars) |  |                         | 3.15    |  |      |  | 3.27    |      |  |  | 3.33    | 
|Gallons consumed (in thousands)                                                  |  |                         | 427,785 |  |      |  | 406,143 |      |  |  | 388,066 | 



|* | Data in table does not include regional operations in Central America.
|- | ----------------------------------------------------------------------



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|                                                                                 |  |                         |         |  |      |  |         |      |  |  |         | 
|-------------------------------------------------------------------------------- |  | ----------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                                                 |  | Year ended December 31, |        
|                                                                                 |  | 2014                    |         |  | 2013 |  |         | 2012 | 
|Average price per gallon of jet fuel into plane (net of hedge) (in U.S. dollars) |  |                         | 3.15    |  |      |  | 3.27    |      |  |  | 3.33    | 
|Gallons consumed (in thousands)                                                  |  |                         | 396,973 |  |      |  | 377,696 |      |  |  | 360,374 | 
|Available seat kilometers (in millions)                                          |  |                         | 41,052  |  |      |  | 38,762  |      |  |  | 36,545  | 
|Gallons per ASK (in thousandths)                                                 |  |                         | 9.7     |  |      |  | 9.7     |      |  |  | 9.9     | 



|* | Data in table does not include regional operations in Central America and cargo operations.
|- | -------------------------------------------------------------------------------------------

We currently have an exclusive agreement with a single fuel distributor in Bogotá, Terpel, pursuant to which Terpel supplied us with
approximately 97.7% of our fuel needs in Colombia in 2014. We have a fuel supply agreement with PUMA for our fuel needs in San Salvador. We also have a fuel supply agreement with Repsol Marketing S.A.C., pursuant to which Repsol Marketing S.A.C.
supplied us 98.0% of our fuel needs in Peru in 2014. During the year ended December 31, 2014, Terpel supplied approximately 41.0% and Repsol Marketing S.A.C. supplied approximately 10.4% of our total fuel consumption.

As of December 31, 2014, we had hedges in place for approximately 35% of our projected next 15-month fuel consumption through financial
instruments and futures, forwards and options contracts. We also seek to tanker extra fuel at lower cost airports to reduce our fuel costs. See Item 11. Quantitative and Qualitative Disclosures About Market RiskFuel.

Competition

We face intense competition
throughout our domestic and international route networks. Overall airline industry profit margins are low and industry earnings are volatile. Airlines compete in the areas of pricing, scheduling (frequency and flight times), on-time performance,
on-board experience, frequent flyer programs and other services. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to the Airline IndustryThe airline industry is highly competitive.

Within the market, we face competition from different types of business models, such as full-service and low-cost carriers, differentiated by
the operation and cost structure, sales channels and service, among others. Full-service carriers concentrate their domestic and international operation in major hubs, with complex fleets and often provide a wider range of services, such as VIP
lounges, on-board meals and multiple cabin classes.

Airlines in the United States and Europe have in recent years faced substantial and
increasing competitive pressure from low-cost carriers offering discounted fares. The low-cost carriers operations are typically characterized by point-to-point route networks focusing on the highest-demand city pairs, high aircraft
utilization, single-class service and fewer in-flight amenities. Several new low-cost carriers have started service in Mexico, Colombia and other markets, such as Interjet, Viva Aerobus, Volaris, Azul, Veca and VivaColombia. The low-cost carrier
business model is gaining acceptance in the Latin American aviation industry. During 2014 we competed with local low-cost carriers in Colombia domestic market and with American low cost carriers in markets between the United States and our home
markets. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to the Airline IndustryWe expect to face increasing competition from low-cost carriers offering discounted fares.

Domestic Competition Colombia

In the domestic Colombian market, we compete with Copa Airlines, EasyFly, LATAM Airlines Group, Satena and VivaColombia. We currently are the
largest domestic carrier with approximately 58.3% of the domestic passenger market for the year ended December 31, 2014 according to data about regular flights provided by the Colombian Civil Aviation Authority.

Our largest competitor, LATAM Airlines Groups share of Colombias domestic market was approximately 18.3% according to the
Colombian Civil Aviation Authority information about regular flights. VivaColombia, which started operations in May 2012, has approximately 11.0% of market share of domestic operation for the twelve month period ended December 31, 2014,
according to the data about regular flights provided by the Colombian Civil Aviation Authority. Copa Airlines has been gradually reducing its domestic operations in Colombia, focusing in point-to-point service between major Colombian cities and
Panama. For the year ended December 31, 2014 Copas share of Colombias domestic market was approximately 2.5% according to the Colombian Civil Aviation Authority information about regular flights.

Easyflys share of Colombias domestic market was 4.0% during the same period according to the Colombian Civil Aviation Authority
information about regular flights. We expect that these airlines will target leisure travelers.

Satena is a government-owned regional
carrier and its share of Colombias domestic market was approximately 4.4% for the year ended December 31, 2014 according to the Colombian Civil Aviation Authority.



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Domestic Competition Peru

In the domestic Peruvian market, we compete with LATAM Airlines Group, Peruvian and Star Peru. We have flown a daily route between Lima and
Cuzco for more than 10 years. During 2011 we increased our domestic operation. Currently we fly nine routes to nine domestic destinations. During the year ended December 31, 2014, according to the data provided by the Peruvian Civil Aviation
Authority, we were the second-largest domestic carrier in Peru with approximately 13.0% of the domestic passenger market.

Our largest
competitor, LATAM Airlines Group, started operations in Perus domestic market in 1999. During 2014, according to the data provided by the Peruvian Civil Aviation Authority, LATAM Airlines Groups share of Perus domestic market was
approximately 63.2%. Currently LATAM Airlines Group operates 20 routes served in Airbus planes targeting the corporate segment market.

Peruvian is a local company which started operations in October 2009. During 2014 according to the data provided by the Peruvian Civil
Aviation Authority, Peruvians share of Perus domestic market was approximately 12.2%. Currently, Peruvian offers regular passenger service in eight routes.

Star Peru is our third-largest competitor in the Peruvian domestic market. During 2014, according to the data provided by the Peruvian Civil
Aviation Authority, Star Perus share of Perus domestic market was approximately 7.0% according to the data provided by the Peruvian Civil Aviation Authority. Currently Star Peru offers regular passenger service in 10 routes.

International

Internationally, we compete with a number of other airlines that currently serve the routes in which we operate, including Aeroméxico,
Aerolineas Argentinas, American Airlines, Copa Airlines, Delta Air Lines, Iberia, Interjet, Jet Blue Airways, KLM, LATAM Airlines Group, Sky Airlines, Spirit Airlines, TAP, United Airlines, VivaColombia and recently, VECA. In addition, we expect to
encounter competition in the future from low-cost carriers. Low-cost carriers often offer discounted fares and their operations are typically characterized by high aircraft utilization, single-class service and fewer in-flight amenities.

Over the last 20 years the global airline industry has been shifting to increasing acceptance of liberalized and open skies air
transport agreements among nations. As a result of this continuing trend toward liberalized air transport agreements, a number of countries to which we fly, including the United States, the United Kingdom and Spain, have been negotiating with the
Colombian, Salvadoran and Costa Rican governments to liberalize its bilateral agreements with such countries and to permit more flights to and from Colombia, El Salvador and Costa Rica. It is likely that the Colombian government will eventually
liberalize the current restrictions on international travel to and from our Bogotá hub by, among other things, granting new route rights and flights to competing airlines and generally promoting increased numbers of market participants on
routes we serve. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to the Airline IndustryWe face increasing competition from other international airlines due to the continuing liberalization of restrictions
traditionally affecting the global airline industry.

LAN Chile, LAN Peru, LAN Ecuador, LAN Argentina, LAN Colombia, TAM, LAN Cargo
and LAN Express together comprise LATAM Airlines Group. LATAM Airlines flies to more than 145 destinations, primarily in Latin America. We compete with LATAM Airlines on routes from Colombia to Santiago, Quito, Miami, Sao Paulo, Cancun and Lima; and
from Peru to Caracas, Buenos Aires, Sao Paulo, Guayaquil, Havana, La Paz, Madrid, Mexico, Miami, New York, Quito, Santa Cruz and Santiago. LATAM Airlines Group is currently our major competitor and its expansion plans will lead to more shared
routes. LATAM Airlines is also a strong cargo carrier in Latin America.

Copa Airlines has been consolidating its traffic through its
Panama hub, from which it serves approximately 70 destinations in 30 countries. Through its Panama hub, Copa Airlines competes directly with us for international traffic from Barranquilla, Bucaramanga, Cucuta, Bogotá, Cali, Cartagena,
Medellín, Pereira and San Andres to important international destinations such as Buenos Aires, Caracas, Lima, New York, São Paulo and Miami. Copa Airlines is also our largest competitor in the Central American market where we have our
San Salvador hub. Copa Airlines also competes with our hub at El Dorado International Airport. In June 2012 Copa Airlines also joined Star Alliance.

American Airlines also offers significant competition. It attracts strong brand recognition throughout the Americas and is able to attract
brand loyalty through its AAdvantage frequent flyer program, and competes through its hub in Miami. American Airlines was a founding member of the OneWorld Alliance. As of December 31, 2014, American Airlines provided three daily
flights from Miami to Bogotá, one daily flight from Miami to Cali, ten weekly flights from Miami to Medellin, one daily flight from Dallas to Bogotá, two daily flights from Miami to Lima, one daily flight from Dallas to Lima, three
daily flights from Miami to Managua, one daily flight from Miami to Tegucigalpa, four daily flights from Miami to Guatemala, eight weekly flights from Dallas to Guatemala, one daily flight from Miami to San Salvador, five weekly flights from Dallas
to San Salvador, four daily flights from Miami to San Jose, three weekly flights from New York to San Jose (seasonally in December) and one daily flight from Dallas to San Jose.



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United Airlines has one daily flight from New York to Bogotá, two daily flights from
Houston to Bogotá, one daily flight from Houston to Lima, five weekly flights from New York to Lima, 14 weekly flights from Houston to Managua, one daily flight from Houston to Tegucigalpa, five weekly flights from New York to Guatemala, 18
weekly flights from Houston to Guatemala, two weekly flights from New York to San Salvador, two daily flights from Houston to San Salvador, 18 weekly flights from New York to San Jose, three weekly flight from Washington to San Jose, 25 weekly
flights from Houston to San Jose and three weekly flight from Chicago to San Jose.

Iberia has one daily flight from Madrid to
Bogotá, one daily flight from Madrid to Lima, four weekly flights from Madrid to Guatemala/San Salvador and one daily flight from Madrid to San Jose. We have a code-sharing agreement with Iberia.

Delta Air Lines has one daily flight from New York to Bogotá, one daily flight from Atlanta to Bogotá, one daily flight from
Atlanta to Lima, one daily flight from Atlanta to Managua, one daily flight from Atlanta to Tegucigalpa, 11 weekly flights from Atlanta to Guatemala, nine weekly flights from Los Angeles to Guatemala, one daily flight from Atlanta to San Salvador,
two daily flights from Atlanta to San Jose, and seven daily flight from Los Angeles to San Jose. We have a code-sharing agreement with Delta.

Lufthansa started operations on the Frankfurt-Bogotá route in 2012, one daily flight from Frankfurt to Bogotá and has a
code-sharing agreement with us in order to serve the Colombian and German markets.

We also compete with Spirit Airlines and JetBlue
Airways in the market from the U.S. to Central and South America. Spirits Airlines serves routes from U.S. to Colombia, Guatemala, Peru, Nicaragua, El Salvador and Costa Rica. JetBlue operates routes from U.S. to Colombia, Peru and Costa Rica.

Cargo

Our main
cargo network hubs are located at El Dorado Airport in Bogotá and Miamis international airport. With respect to our international cargo operations, our largest competitor is LATAM Airlines Group. We also compete for the international
market with Centurion Air Cargo, Líneas Aéreas Sudamericanas, Martinair Cargo, UPS and Iberia. Other competitors in Miami are Atlas Airlines, Amerijet and American Airlines.

Competition and excess capacity in some markets during the last few years has put pressure on yields, which have been decreasing yearly. In
this context, our recently modernized A330F fleet will be fundamental to keep our operating costs low and to allow us to remain competitive.

With respect to our domestic cargo operations, we face competition most notably from Líneas Aéreas Sudamericanas S.A. and Aero
Sucre S.A., both of which have large cargo operations at the El Dorado International Airport. These airlines sell through third parties focusing on traffic between Bogotá, Medellín, Cali and Barranquilla. The service offered by these
companies competes with the capacity of the bellies of our passenger fleet.

The Colombian courier market is very competitive. Our major
competitors are Servientrega, Coordinadora, TCC, Envia, Inter Rapidisimo and 4/72. Most of these companies are family-owned businesses except 4/72, which is a government-owned company. These companies operate through alliances with larger companies
like FedEx, UPS and DHL.

Safety

Colombian government regulations require that our pilots attend extensive training at least twice a year as well as prior to their transition
to flying new aircraft types. In 2012, we implemented a flight data analysis program, in which data from every Avianca flight is analyzed for safety and technical issues. We are currently in the planning stages for construction of a training
facility in Bogotá.

We have successfully implemented a single corporate Safety Management System (SMS), a safety risk
management system that IATA has established and that the aeronautical authorities of the different countries where we operate are starting to require. This assures that each of our airlines has its own SMS implemented under the same corporate
guidelines and in accordance with the same requirements as each of the nine regulatory authorities that regulate SMS in Central and South America. Thanks to the implementation of SMS, we have been able to develop a systematic process for managing
safety risks through a data-driven decision-making process for resource allocation.

Our airlines that are part of IATA have been
implementing the IOSA and ISAGO standards since 2003, continuously achieving recertification from IATA that validates the implementation integrity of standards and recommended practices for managing and developing safe operations of the organization
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Neither Avianca nor Taca has had a serious accident since 1993, except for an accident on
May 30, 2008 involving one of Tacas Airbus A320 aircraft which overshot the runway while landing at Tocontin Airport in Tegucigalpa, Honduras, causing the death of five people (three people on board and two on the ground).

The FAA periodically audits the aviation regulatory authorities of other countries, and each country is given an International Aviation Safety
Assessment, or IASA, rating and also an International Operational Safety Audit, or IOSA audit implemented for the industry by the International Aviation Transport Association. The IASA rating for Colombia, El Salvador, Costa Rica and Peru is
Category 1, which is the highest rating and which indicates a strong level of confidence in the safety regulation of each countrys respective civil aviation authority.

Security

We are subject to the security
regulations of every country in which we conduct operations.

We have a security division, the director of which reports directly to our
CEO and works within the framework of the Security Management System designed by IATA. The Direction of Aviation and Corporate Security works closely with all areas of Avianca to ensure regulatory compliance in security matters, as well as with
authorities to identify and neutralize internal drug trafficking and money laundering conspiracies.

In March 2005, pursuant to an order
from the U.S. Attorney for the Southern District of New York, because of several seizures from our aircraft of baggage and cargo containing narcotics, we hired the International Aviation Services Group, or IASG, to provide us with security
consulting services until 2007. We also (i) adopted a code of conduct that is signed by all employees of the airline; (ii) adopted a hiring process that includes background checks, home visits, psychological evaluations, and polygraph
testing; (iii) implemented periodic dissemination of corporate security policies and communications of security matters to personnel; (iv) restructured procedures related to baggage, passenger identification, screening of transit
passengers and inspection of baggage on United States-bound flights; (v) increased the level of supervision and training for security coordinators, increased the training for interviewers, and increased the presence of security personnel in
areas such as catering and baggage; (vi) increased the use of inspection technicians under the supervision of security agents and, as often as possible, the Colombian anti-narcotics police, to conduct detailed inspections of aircraft before
departing to the United States; (vii) improved the training of x-ray operators; and (viii) implemented a response procedure for security incidents on flights to the United States, including investigations, depositions, sanctions, and
polygraph tests for specific cases, including the creation of an internal investigations office with personnel and support from the Colombian police and judicial authorities.

On June 27, 2007, the U.S. Attorney for the Southern District of New York determined that we had effectively complied with our commitment
to substantially improve our security procedures and security related work culture and, as a result, the U.S. District Court for the Southern District of New York terminated our court-mandated consulting arrangement with IASG. We work with Central
American, South American, European and U.S. authorities in the implementation of interdiction measures, which, in 2014, resulted in the seizure of 696 kilograms of cocaine. The adequate implementation of aviation security standard operating
procedures is periodically verified by internal and external audit programs. In the event, however, that we violate any U.S. or foreign narcotic restrictions in the future, we may be subject to new sanctions, severe fines, seizure of our planes, or
cancellation of our flights. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to Our CompanyWe may incur substantial compliance costs and face sanctions if we fail to comply with U.S. and other international drug
trafficking laws. To minimize the possibilities of such seizures, Avianca continues to rigorously apply the procedures adopted under the monitorship and work closely with authorities in the investigation of internal conspiracies. Although we
cannot guarantee that the airlines drug interdiction procedures are fail-safe, in the last four years, no subsequent drug seizures have occurred.

Airport Facilities

Our operations are
based on a multi-hub system at El Dorado International Airport and Puente Aéreoin Bogotá; El Salvador International Airport Monseñor Oscar Arnulfo Romero y Galdámez in San Salvador; and Jorge Chávez
International Airport in Lima, . We operate from approximately 100 airports in the Americas and Europe, including 25 airports in Colombia and nine in Peru. We lease more than 160,000 square meters (approximately 1.72 million square feet) of
check-in space, gates, crew lounges, maintenance, warehouses, sales and VIP lounge space throughout our network.

Colombia: El
Dorado International Airport and Puente Aéreo

Since June 8, 2014, we have conducted our Colombian domestic operations
in Bogotá from our El Dorado International Airport and Puente Aéreo, our exclusive domestic terminal. Currently, flights to and from Cali, Medellín, Cartagena, Barranquilla and Pereira are operated in the new domestic
terminal, grouping nearly 55% of our operations and 61% of our total domestic passengers in



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Bogotá. This new operation brings an enhanced customer experience as a consequence of 30 check-in
counters, 20 self check-in kiosks, 13 boarding gates, 900 square meters for VIP lounge, 20 security filters, among other benefits that optimize the connectivity process for our travelers. Prior to June 2014, we conducted our domestic Colombian-based
operations in Bogotá solely from our domestic terminal Puente Aéreo.

We lease the Puente Aéreofacilities from OPAIN and have exclusive rights to use the terminal, including our ability to lease advertising and retail space to third parties, through April 1, 2016. This terminal is used by us for 45% of our Colombian domestic
operations and has a broad selection of retail stores and restaurants, large check-in areas, electronic check-in kiosks, easily accessible boarding gates to facilitate domestic connections, high-speed wireless internet access throughout the terminal
and a VIP lounge.

The El Dorado International Airport has two runways which have a declared capacity of 40 departures and 30 arrivals per
hour (weather permitting). The airport is located at a high altitude due to Bogotás elevation of approximately 2,600 meters above sea level. This results in appreciably higher fuel consumption for aircraft taking off and landing
than similar aircraft at lower altitudes. Also, the high elevation and temperature conditions bring some payload restrictions to some of our flights due to a lower takeoff weight as a result of the lower aircraft performance. The El Dorado
International Airport terminal 1 is operated by OPAIN and the runways are operated by CODAD S.A. (Compañía de Desarrollo Aeropuerto El Dorado S.A.). We provide all of our own ground services and handling for our domestic and
international passengers, and we also provide such services to approximately ten foreign carriers operating in Bogotá through our Avianca Services business unit. Air traffic control is managed by the Colombian Civil Aviation Authority.
Avianca works closely with OPAIN in order to improve the passenger experience and ensure the compliance of all international procedures related to air transportation.

El Dorados current expansion project started in 2007, with the expansion of the Central Arrivals Hall and installation of common use
terminal systems at the old terminal. Recently, the Colombian government has presented the current plan, which adds 27 gates by July 2018, resulting in a total 54 at the airport. Many other improvements are expected such as the construction of high
speed taxi ways which will contribute to the increase in the declared capacity. For our passengers, so far this remodeling has led to an improvement in terms of common use spaces and circulation areas, more check-in spaces and boarding areas.
Additionally the baggage handling system allows Avianca to have a better baggage control from check-in to baggage selection process.

We
execute our international Colombian-based operations in Bogotá from the international terminal at El Dorado International Airport (Terminal 1). At this terminal, we have almost 13,000 square meters (approximately 140,000 square feet) for
check-in counters, ticket sales facilities and a 2,000 square meter VIP lounge, which we lease from OPAIN. We operate from this terminal with 24 check-in positions, 40 check-in kiosks and 24 boarding positions. We lease similar facilities at other
Colombian domestic airports and at some Colombian international airports we operate in.

We also have facilities at many other Colombian
domestic airports including Medellín, Cali and Cartagena, each containing newly remodeled VIP lounges. During 2014, we nearly tripled the size of the domestic VIP lounge in Medellín by 929 square meters; in Cali, we doubled the size of
our domestic VIP lounge to 600 square meters and started the operation of an international VIP lounge with 540 square meters. In this context, between 2013 and 2015 we have made significant efforts and investments in more than nine VIP lounges
throughout our network, creating spaces that are exclusive and modern.

El Salvador: El Salvador International Airport
Monseñor Oscar Arnulfo Romero y Galdámez

Our hub at El Salvador International Airport is located approximately 31
kilometers from the countrys capital San Salvador. This is El Salvadors main airport, handling more than 2 million passengers per year. Avianca moved nearly 1.6 million passengers during 2014, 65% of which connected through
this hub to one of our 28 destinations offered from this airport.

The current infrastructure has one passenger terminal, one cargo
terminal and separate maintenance facilities. The government is evaluating a plan that would significantly increase the number of gates and also add a second runway. Due to the fact that the airport is located away from populated areas, the
expansion can be significant.

We lease over 28,358 square meters for our 30 check-in counters, offices, warehouses, maintenance areas,
and a flight simulator. We also operate nearly 50 daily flights in 14 gates and 11 remote positions (three at the passenger terminal, three at the cargo terminal and four next to the maintenance facilities). During 2014 we performed several
modifications in our VIP lounge, which were first available in November for our Business Class passengers and our LifeMiles and Priority Pass partners. The final opening of the 720 square meters lounge took place in the first quarter of 2015.
The International Airport in El Salvador is government-owned and operated by an autonomous port authority entity, Comisión Ejecutiva Portuaria Autónoma, or CEPA, with which we have a good working relationship. We have entered
into an operations contract with CEPA which governs access fees, landing rights and allocation of terminal gates. We are in good standing with respect to this agreement and intend to continue to comply with such agreement to ensure that we have
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efforts to modernize the current terminal and are proactively contributing expertise in the development of the
master plans for the construction of a new terminal. We are also involved in the governmental project to transform the areas next to the airport into an aeronautical cluster.

Aligned with the infrastructure plans but in a more rapid pace, the airspace of this airport has been redesigned in 2014, allowing different
operators to use modern flight procedures that contribute to the operational efficiency and safety.

Peru: Jorge Chávez
International Airport

Jorge Chávez is Perus main international and domestic airport. In 2014, the airport served
almost 14.9 million passengers. The airport serves as one of our hubs for South America, with more than 41 scheduled flights per day, including 19 international destinations. During 2014 we connected nearly 2000 passenger on a daily basis
through this airport, which corresponds to 40% of our total passenger movement in Lima.

After its privatization in 2001, Jorge
Chávez underwent a substantial renovation project, the first phase of which was completed in 2005 and the second one in 2009. As a consequence of the accelerated growth plan that the airport had after its privatization, the last 7 years it
has been ranked by Skytrax as the best airport in South America. Currently this airport has 45 aircraft parking spaces, 19 gates and 26 remote boarding positions. In addition to this, different work has been done to increase the parking positions
due to need of incremental capacity driven by the high operation rates at peak hours and the requirements for additional positions adequate for heavy aircraft such as A330s or B787s.

The airport is currently managed and operated by Lima Airport Partners, LAP. We have entered into an operations contract with Lima Airport Partners which
governs access fees, landing rights and allocation of terminal gates. Our relationship with LAP is very good due to the quality of the service that is rendered. However, the fees that we pay to LAP for use of the airport are higher than for most
other airports in the region.

Insurance

We maintain insurance policies covering damage to our property, third-party liabilities, commercial crime and war. Our insurance policies are
provided by reputable insurance companies. We have obtained all insurance coverage required by the terms of our leasing and financing agreements. We believe our insurance coverage is consistent with airline industry standards and appropriate to
protect us from material loss in light of the activities we conduct. No assurance can be given, however, that the amount of insurance we carry will be sufficient to protect us from material losses. In 2014, we paid a total of approximately $25
million in insurance premiums and had a total insured value of approximately $16.2 billion.

We have also contracted liability insurance
with respect to our directors and officers.

Regulation

Colombia

Overview

Aerovías del Continente Americano S.A. Avianca is a sociedad anónima duly organized and validly existing under the laws of
Colombia. It is duly qualified to hold property and transact business as a sociedad anónima, and holds all licenses, certificates and permits from governmental authorities necessary for the conduct of its business as now conducted. All
consents, licenses, approvals, registration and authorizations as may be required in connection with providing airlines services under applicable Colombian laws have been obtained or affected and are in full force and effect.

The policy of the Consejo Asesor of the Aeronáutica Civil of Colombia is to make the markets flexible and open them under reciprocity
with the other countries and as a consequence of such policy there are no governmental policies that materially restrict our airline services in Colombia.

The government of Colombia is not a declared open skies country except in some of the countries of the Latin American region.
Colombia is subject to multilateral and/or bilateral air transport agreements that provide for the exchange of air traffic rights between Colombia and various other countries.



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Notwithstanding the agreements, we are subject to permits, laws, regulations and operational
restrictions provided by each of the different aviation authorities of countries where we are willing to operate, and the ongoing operational costs the local or regional authorities apply.

Authorizations and licenses

The Colombian aviation market is heavily regulated by the Colombian Civil Aviation Authority. For domestic aviation, particularly for the
authorization of trunk routes (rutas troncales), airlines must present feasibility studies to secure specific route rights, and no airline may serve the part of the city with the most traffic unless that airline owns or leases at least five
certified aircraft and has a paid-in minimum capital equal to approximately $2.5 million.

In the past, the Colombian Civil Aviation
Authority even established maximum fares for each route. However, by means of Resolution 904 of February 28, 2012, the Colombian Civil Aviation Authority established (i) fuel surcharge freedom for national and foreign passengers or cargo
airlines operating in Colombia, which surcharges are included in airfares and (ii) tariff freedom for air transportation services. Notwithstanding the above, airlines are obliged to inform their tariffs as well as its conditions to the Civil
Aviation Authority one day after its publication. Currently there is a project to modify Chapter 3 of the Colombian Civil Aviation Regulations, or RAC, to, among other things, obligate airlines to submit their tariffs and its conditions for approval
by the Aviation Authority prior to its application. This project has not been completed, therefore the final version may vary substantially from the proposed version.

Since November 2006, all customers are charged an administrative fee in connection with purchases of airline tickets (although this fee is at
the discretion of the seller for Internet sales).

Aviancas status as a private carrier means that it is not required under
Colombian law to serve any particular route and is free to withdraw service from any of the routes it currently serves as it sees fit, subject to bilateral agreements in the case of international service. Avianca is also free to determine the
frequency of the services it offers across its route network without any minimum frequencies imposed by the Colombian authorities. Nevertheless, the Colombian Civil Aviation Authority may establish a maximum frequency under certain conditions.

Colombian law requires airlines providing commercial passenger service in Colombia to maintain an Operation and Air Transportation Certificate
(Certificado de Operación y Transporte Aéreo) issued by the Colombian Civil Aviation Authority. The Operation and Air Transportation Certificate lists the airlines routes, equipment used, capacity and frequency of flights.
This certificate must be updated each time a carrier acquires new aircraft, or when routes or the frequency of service to a particular destination are modified. A public hearing before the director of the Colombian Civil Aviation Authority and the
members of the Commercial Aviation Projects Evaluating Group (Grupo Evaluador de Proyectos Aerocomerciales) of the Colombian Civil Aviation Authority is required to determine the necessity of modifying an airlines Operation and Air
Transportation Certificate, except in the Andean region.

Colombian law also requires airlines providing commercial passenger service in
Colombia to maintain for each aircraft an Air Worthiness Certificate (Certificado de Aeronavegabilidad) issued by the Colombian Civil Aviation Authority. This certificate must be obtained each time a carrier acquires a new aircraft.

Colombian law also requires that aircraft operated by Avianca be registered with the Colombian National Aviation Registry (Registro
Aeronautico Nacional) kept by the Colombian Civil Aviation Authority, and that the Colombian Civil Aviation Authority certify the air-worthiness of each aircraft in Aviancas fleet. Currently, there is a project to also modify Chapter 4 of
the RAC to modify the requirements that must be fulfilled to obtain the certificates of air- worthiness. This project has not been completed, therefore the final version may vary substantially from the proposed version.

Furthermore, Colombian airlines are subject to the authority of the Colombian Transportation and Ports Superintendency (Superintendencia de
Puertos y Transportes), which is part of the Ministry of Transportation (Ministerio de Transporte). The Colombian Transportation and Ports Superintendency is in charge of (i) verification of compliance with regulations such as
regulations relating to transportation facilities, service quality, passenger security, international treaties and other resolutions and decrees issued by the Ministry of Transportation and the Transportation and Ports Superintendency, and
(ii) the levying of fines for the non-compliance with such treaties and regulations, and (iii) the evaluation of the financial, technical and managerial aspects of each airline, among other things.

Under Colombian commercial law, air transportation is considered a commercial activity, and therefore, certain elements of the standard terms
and conditions of air transportation agreements entered into by airlines and passengers are expressly covered under such law. For instance, if an airline decides to include a new condition to an air transportation agreement, it must request the



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approval of the Colombian Civil Aviation Authority. Article 1180 of the Colombian Commercial Code establishes
that with respect to domestic service, an airline is responsible for any damages caused to any passenger, when boarding, on board, or when disembarking an aircraft, except for (i) damages caused by any third party, (ii) damages caused by
the passenger and (iii) damages caused to the passenger by pre-travel illness that has not been aggravated by any act attributable to the carrier. Additionally, the carrier must prove that all practicable measures to avoid the damage were
taken.

Passengers in Colombia are also entitled by law to compensation in cases of excessive delays, over-bookings and cancellations.
Furthermore, local law establishes sanctions for more than one-hour delays, and for flight cancellations, regardless of the compensatory measures that the airlines may adopt, which trigger the obligation to compensate passengers and increases the
compensatory amounts.

Currently there is a project to harmonize actual aviation regulations of Colombia (Reglamentos
Aeronáuticos de Colombia) with Latin American Regulations lAR. This project has not been completed, therefore the final version may vary substantially from the proposed version.

Some of Colombias airports are operated by the government. Currently, the main airports in Bogotá, Cali, Cartagena, Barranquilla,
Medellín, and San Andres Island are privately operated through concessions. The government, however, has stated its intention to continue privatizing the operations of other airports in order to finance expansion projects and increase the
efficiency of operations. Increased privatization may lead to increases in landing fees and facility rentals at such airports.

The
Convention for the Unification of Certain Rules for International Carriage by Air, signed in Montreal, Canada on May 28, 1999, as approved and adopted by Colombia by means of Law 701 of 2001 imposes duties upon Colombian airlines with respect
to their international services. Under these rules, airlines are responsible for compliance with certain obligations regarding quality and passenger security, as well as for damages sustained in case of any death of, or bodily injury to, a
passenger, which occurs on board, as well as for baggage loss or damage. This convention applies to international transportation between Colombia and the territory of another party to the treaty, regardless of whether there is an interruption in the
transportation or a trans-shipment, or whether, prior to arriving in, or departing from, Colombia, there is an agreed stop-over within the territory of another state. Under Article 17 of the convention, an airline is liable for damage sustained in
case of death or bodily injury of a passenger upon condition that the accident which caused the death or injury took place on board the aircraft or in the course of any of the operations of embarking or disembarking. Air carriers are responsible,
even if not at fault, for proven damages up to 100,000 Special Drawing Rights (SDRs), which represent a mix of currencies established by the International Monetary Fund. For damages above 100,000 SDRs (approximately $151,557), the airline may avoid
liability by showing that the accident that caused injury or death was not due to its negligence or was the fault of a third party. In the case of cargo business, the liability of the carrier is absolutely limited to 17 SDRs/Kg (approximately $25.46
per kilogram). These provisions also cover baggage and delay.

Currently, there are two projects in the Colombian Congress that are
relevant for the aviation industry, because they intend to increase the passenger protection scheme, as well as enhanced penalties for flight delays or cancelations without legal cause. As of the date of this annual report, these projects are still
under discussion and therefore the final versions may vary substantially from the proposed versions.

Security

Chapter Seventeen of the Colombian Civil Aviation Regulations encompasses all aspects of civil aviation security, including,
(i) implementation of certain security measures by airlines and airports, such as the requirement that all passenger luggage be screened for explosives, (ii) designation of restricted areas, (iii) systems of airport controls for
identification of passengers (iv) inspection of vehicles, and (v) the transportation of explosives and dangerous goods. Additionally, on April 11, 2005 the Colombian Civil Aviation Authority issued Resolution 01556, which regulates
all aspects of the transportation of firearms.

Environmental regulation

We are subject to the general environmental regulations of Colombia such as Law 99 of 1993, as amended, and several other laws, decrees and
local resolutions which regulate the management of natural resources and their contamination. Pursuant to these regulations, we prepared an Environmental Management Plan (Plan de Manejo Ambiental), detailing the procedures to be followed in
connection with any activity that has any environmental impact, including solid and liquid waste management, hazardous waste management and the management of effluents and noise, among others. Additionally, we must maintain certain permits and
authorizations for the use and management of natural resources, such as waste water discharge and emissions permits, and maintain our environmental impact within required levels. If we fail to maintain the relevant permits and authorizations or to
abide by the environmental regulations, we may be subject to penalties or fines.



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In addition, the RAC contains a general environmental policy establishing that the Colombian
Civil Aviation Authority must comply with Colombian environmental regulations and must require the compliance of parties involved in the Colombian civil aviation industry. The RAC includes provisions and guidelines relating to noise and effluents
that must be followed in the provision of aviation services. The RAC requires that noise levels be kept below levels established under Colombian law. Compliance is evidenced by means of a certificate (certificado de homologación de
ruido) that must be obtained for each aircraft from the Colombian Civil Aviation Authority or the competent authority of each country member of ICAO. If noise levels exceed the limits, the Colombian Civil Aviation Authority has the power and
authority to sanction and penalize us with fines.

If the Colombian Civil Aviation Authority determines that our operations or facilities
do not meet the RAC standards or otherwise fail to comply with Colombian environmental regulations, we could be subject to a fine. We have voluntarily hired a consulting firm to conduct an environmental audit of our hangar and support facilities at
the El Dorado International Airport to obtain a certification under ISO 14001:2004, which is an international standard for environmental management systems. Certification should indicate that we are in compliance with all applicable environmental
regulations, including the RAC environmental regulations. We have also prepared an environmental management plan designed to ensure our compliance with environmental regulations, including the requirements of the RAC. While we do not believe that
compliance with these or other environmental regulations that may be applicable to us in the future will expose us to material expenditures, compliance could increase our costs and adversely affect our operations and financial results. In addition,
failure to comply with these regulations could adversely affect us in a variety of other ways, including by negatively impacting our reputation.

Currently, there is an operational restriction against operating in the south runway of the El Dorado International Airport between 10 p.m.
and 6 a.m., with some exceptions in order to protect flight operations.

Bilateral agreements

With respect to our international services, our plans to introduce new destinations and increase the frequency of existing services depend,
among other things, upon the allocation of route rights, a process over which we do not have direct control. Route rights are allocated through negotiations between the government of Colombia and the governments of foreign countries and are set
forth in bilateral agreements. If we are unable to obtain route rights, we will re-allocate capacity within our route network as appropriate.

Bilateral agreements between countries also regulate other aspects of our commercial cargo and passenger air transport relations, including
the designation of carriers and aircraft capacity restrictions and requirements. They may also establish minimum safety, security, customs and environmental requirements for each designated carrier. These agreements can be modified upon the
agreement of the relevant countries at any time prior to their expiration dates. Our principal bilateral agreements include those with the United States, Spain, the Andean Pact countries (Ecuador, Peru and Bolivia), Venezuela, Mexico, Brazil and
Argentina. The bilateral agreement with the United States was modified and since the beginning of 2013 is an open skies agreement that allows the parties to engage in foreign scheduled and charter air transportation of persons, property,
and mail from points behind Colombia via Colombia and intermediate points to points in the United States and beyond with fifth freedom. The bilateral agreement with Spain, which was modified in January 2012, grants for passengers and cargo a total
of 37 frequencies with third, fourth and fifth freedom rights for each of the parties, and parties can freely choose their routes. In this connection Colombia was granted nine additional frequencies resulting in a total of 37 frequencies.

The Colombian Civil Aviation Authority allocates rights obtained pursuant to bilateral agreements to specific airlines. On July 2012, the
Colombian Civil Aviation Authority authorized us to operate 27 new international weekly flights, including seven weekly frequencies from Bogotá to Los Angeles, eight more frequencies from Bogotá to Spain (MAD and/or BCN), seven flights
to Frankfurt, one additional frequency to Guatemala City, three additional frequencies to London, and one flight from San Andres to Panama City. If we do not use these rights within nine months (or 18 months if a nine-month extension is granted)
from their effective date, they will expire.

Colombia has open skies agreements with the Andean Pact countries, Venezuela and
the U.S. pursuant to which there are no regulations on the numbers of flights. The bilateral agreement with Argentina provides for four weekly flights by each countrys designated carrier. The bilateral agreement with Brazil provides for 28
weekly flights by each countrys designated carrier.

Over the last 20 years the global airline industry has been shifting to
increasing acceptance of liberalized and open skies air transport agreements among nations. For example, open skies agreements currently exist among the countries of the European Union, and between the European Union and the
United States. In Latin America, open skies agreements exist among Colombia, Ecuador, Peru and Bolivia and among the United States, France, Chile, Panama, Venezuela and the countries of Central America. As a general matter, these
liberalized or open skies air transport agreements serve to (i) reduce (or, in the case of open skies, eliminate) restrictions on route rights, designated carriers, aircraft capacity or flight frequencies and
(ii) promote competitive pricing.



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We believe that it is likely that the Colombian government will eventually liberalize the current
restrictions on international travel to and from our Bogotá hub by, among other things, granting new route rights and flights to competing airlines and generally promoting increased numbers of market participants on routes we serve. As a
result of such liberalization, we could face substantial new competition, which may erode our pricing and market share and have a material adverse effect on our financial position and results of operations. See Item 3. Key
InformationPart D. Risk FactorsRisks Relating to Our CompanyWe face increasing competition from other international airlines due to the continuing liberalization of restrictions traditionally affecting the global airline
industry.

Colombia is currently a party to a multilateral agreement known as Andean Community CAN, between Bolivia, Ecuador, Peru
and Colombia, which among other things, allows airlines from such countries to operate between them without limitation on international flights. No cabotage is allowed. Colombia is also party to an Air Transport Agreement and/or Memorandum of
Understanding with the following countries: United States, El Salvador, Costa Rica, Ecuador, Canada, Mexico, Panama, Aruba, Curacao, Argentina, Austria, Bolivia, Brazil, Chile, Ecuador, Paraguay, Peru, Uruguay, Saudi Arabia, Venezuela, Germany,
Belgium, Spain, France, Holland, Italy, Luxemburg, Portugal, United Kingdom, Switzerland, Iceland, Turkey, Korea, United Arab Emirates, Singapore, Dominican Republic, Cuba, French Antilles, Barbados, Israel, Qatar, Surinam and China.

Ownership and control

The Colombian State Council (Consejo de EstadoSala de Consulta y Servicio Civil), in an opinion dated April 6, 2000, declared
that article 1426 of the Commerce Code, which established a 40% limitation on foreign investment in Colombian airlines, was no longer applicable as it is considered to have been tacitly overturned by Decree 2080 of 2000 (Foreign Investment Statute),
and stated that, from a Colombian law perspective, there are no restrictions on foreign investment in Colombian airlines. However, some of Colombias bilateral agreements do restrict foreign involvement in Colombian airlines. For example,
bilateral agreements entered into by Colombia with the United States, Canada, the United Kingdom, France, China, Germany, Uruguay, Italy, contain requirements that each designated airline remain substantially owned and effectively controlled by a
Colombian governmental entity or Colombian nationals. Nevertheless United States, Canada and China granted a waiver to the Colombian airlines under certain conditions.

Currently, in those bilateral agreements it is established that each of the countries may deny, revoke or impose any conditions deemed
necessary upon an airlines operating permit in the event it determines that there is not sufficient evidence that a substantial proportion of ownership and effective control of the airline is held or exercised by Colombia or its nationals.
These ownership and control restrictions have not been expressly defined in the bilateral agreements, in terms of percentage thresholds or otherwise, and therefore should be interpreted according to the Vienna Convention on the Law of Treaties.

Taking the above into account, certain aviation authorities have interpreted these ownership and control restrictions as follows:



| |  |  | The DOT policy on substantial ownership and effective control is to examine the relationships of the airline in depth and determine who actually controls the airlines key decisions (examining
composition of the board, management and control and special voting majorities, among other factors), rather than simply looking at the airlines ownership.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Spanish aviation authoritys basic policy on substantial ownership and effective control issues is to examine the nationality of the shareholders who have direct control of the airline.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other countries also consider the nationality of the aircraft crews, including Mexico, Brazil and the Netherlands Antilles.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------

Agreements entered into by Colombia with Spain, The Netherlands, Portugal, Bolivia, Ecuador, Peru, Panama, Chile, the Dominican Republic,
Cuba, Venezuela and Costa Rica, among others, require that we be incorporated, have our principal domicile, management, operation and offices within the Colombian territory and to have the oversight and control done by the national aeronautical
authority.

Although we believe Avianca is currently in compliance with such substantial ownership and effective control requirements, we
cannot assure you that Colombians, directly or indirectly, will continue to own and control a majority of our capital stock indefinitely. If for any reason the owners, all Colombian citizens cease to have at least 51% of Avianca, or the effective
regulatory control of the national aeronautical authority ceases to be exercised, or if Avianca fails to continue to have its corporate domicile, administrative headquarters, and base of operations within Colombian territory, Avianca may no longer
comply with the requirements of Colombias bilateral agreements and, as a result, its route and landing rights in a number of important countries may be adversely affected, which could have a material adverse effect on our business, financial
condition and results of operations.



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As an additional protection to ensure compliance with our principal bilateral agreements, when
our board of directors are notified by any shareholder of its intent to have any direct or indirect transfer of our capital stock (including a change in the ultimate beneficial ownership by Colombian shareholders) affecting the substantial ownership
of the shares by Colombian nationals, the board of directors (excluding any directors having a personal economic interest in such transfer) shall determine, after consultation with more than one independent and internationally recognized aviation
counsel, that such transfer would likely result in a violation of bilateral agreements causing our legal ability to engage in the aviation business or to exercise our international route rights to be revoked, suspended or materially inhibited, in
each case in a manner which would materially and adversely affect us.

This shareholders agreement shall remain in effect until such
time as our board of directors (excluding any directors having a personal economic interest in any such transfer then proposed) determines that this undertaking is no longer necessary to ensuring our compliance with bilateral treaties material to
us.

Under this shareholders agreement, all determinations of our board of directors shall take into account the interests of our
various shareholders and shall be made subject to each directors duty to exercise his or her duties in accordance with Colombian law.

Even though it is possible that we may be able to obtain waivers of any future non-compliance with these requirements under our bilateral
agreements, their mere existence may deter a non-Colombian entity from acquiring control of us as well as limit our future flexibility to sell additional shares or conduct a recapitalization.

El Salvador

Overview

Taca International is a sociedad anónima duly organized and validly existing under the laws of El Salvador. It is duly qualified
to hold property and transact business as a sociedad anónima, and holds all licenses, certificates and permits from governmental authorities necessary for the conduct of its business as now conducted. All consents, licenses, approvals,
registration and authorizations as may be required in connection with providing airlines services under applicable Salvadoran laws have been obtained or affected and are in full force and effect.

By means of Legislative decree No. 126 dated September 1972, Taca International was named as a national air carrier, for the effect of
being considered as such in the countries where it provides or is willing to provide Air transport services. Effective legal control and principal place of business is still established in El Salvador.

The failure to maintain the required foreign and domestic governmental authorizations, will adversely affect our operations. We are subject to
national and international regulations which may vary frequently and are out of our control. These may result in an increase of costs and/or operational requirements and restrictions. Also, there is instability concerning governmental policies, due
to highly polarized political environment, ranging from a left-to right-wings perspective which does not provide the expected continuity and stability in economic and fiscal issues.

The government of El Salvador has declared an open skies policy when negotiating air transport agreements and the traffic rights.
Currently, the Civil Aviation law was reformed to provide for an open skies regime and, as a result, is now open skies based on reciprocity. This new regime includes up to seventh air freedom specifically for cargo operations.

Authorizations and licenses

The Civil Aviation Law of El Salvador requires that airlines authorized for the operation of national or international air transport possess an
Operation Certificate and an Operating Permit issued by the Autoridad de Aviación Civil, or AAC. An Operating Permit sets forth the routes, rights and the frequency of the flights that are permitted to be flown. An Operating Permit is valid
for five years and must be modified each time a carrier intends to add or cancel new routes or flight frequencies. In addition, a carrier is also required to present revised itineraries to the AAC each time it intends to change its schedules, the
aircraft servicing its routes and flight and route frequencies. We possess the required operating certificates and permits and are in compliance with all regulations requiring the presentation of revised itineraries.

The Civil Aviation Law of El Salvador requires that carriers register their aircraft with the Salvadoran Civil Aviation Registry, or RAS,
which is maintained by the AAC, and such aircraft are subject to periodic inspection by the AAC. The AAC is responsible for certifying that each aircraft in a carriers fleet meets the safety standards required by the AACs aeronautical
regulations. Each of our aircraft that flies to El Salvador is properly registered and certified with the AAC. Only Tariffs must be filed.

On January 2015, the AAC issued new tariffs for the services provided by such authority. The tariffs which are being contested represent
extremely high costs for national and international airlines operating to El Salvador.



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Apart from local governments we are regulated by the Federal Administration Authorization and
Transport Security Agency, from the United States. Most of Taca Internationals aircraft are registered at the United States. Therefore, we are subject to directives, and regulations imposed by the United States, which represent high
expenditures for us.

In addition, there are currently law projects to modify Consumer Protection Law and Migration Law, which may affect
our operations.

Air transport agreements

El Salvador is subject to multilateral and/or bilateral air transport agreements that provide for the exchange of air traffic rights between El
Salvador and various other countries. Until recently El Salvador has been actively negotiating such agreements, seven of which in the past three years are under ratification of the countries party to the agreements. Nevertheless, it holds Memoranda
of Understanding, or MOUs, that provide for immediate force and effect of the provisions contained therein. Operations to countries where there is no Air Transport Agreement, have been negotiated under reciprocity, such is the case with Costa Rica,
Peru and Panama.

Notwithstanding the agreements, we are subject to permits, laws, regulations and operational restrictions provided by
each of the countries where we are willing to operate, and these laws, regulations and restrictions may vary frequently and are out of our control. Those may result in an increase in our costs and/or operating registrations.

Passenger flow separations

El Salvador has adopted alternative measures to comply with OACI standards in passenger flow separations and is working to validate the
security measures in the airports that provide passengers to its hub, maintaining separation for passengers coming from a country where higher or equal security measures to the ones adopted in El Salvador have been established. It is doing so
by auditing such measures and signing MOUs with such countries to promote cooperation on this matter. As of the date of this annual report, there is an MOU signed with Panama, which is the other country in the Central American region which is also
adopting these alternative measures. El Salvador currently has no budget to build flow separations in its international airport. If found in non-compliance with OACI standards, the country could be placed on the blacklist of countries without proper
security measures. An OACI audit is scheduled for May 2015. It is likely that the TSA, with the support of OACIs will strengthen security measures for flights to the US.

Bilateral and open skies agreements

El Salvador is currently a party to a multilateral agreement known as CA-4, between Guatemala, Honduras, Nicaragua and El Salvador, which among
other things allows airlines from such countries to operate between them as if they were domestic flights. No cabotage is allowed. El Salvador is also a party to Air Transport Agreements and/or MOUs with the following countries: Spain, Mexico,
United Kingdom, Ireland, Cuba, China (Taiwan), Ecuador, the United Arab Emirates (agreement is under ratification), Qatar (agreement is under ratification), Chile, Colombia, Canada (agreement is under ratification).

Safety rating

El
Salvador currently possesses FAA Category 1 status, which allows Salvadoran airlines to operate flights to and from the United States. Category 1 status signifies that a nations aeronautical regime fulfills all necessary standards of
operational safety established by International Civil Aviation Organization, or ICAO. Receipt of Category 1 status is based upon the FAAs review of various safety standards with respect to the regulations, licensing of personnel, condition of
the aircraft, airline monitoring, pilot training, maintenance, repair and overhaul facilities and aeronautical organizations.

Foreign ownership

El Salvador does not impose any limitations or restrictions with respect to the ownership or control by foreigners of airlines organized in El
Salvador.

Antitrust regulation, enforcement

El Salvador has enacted antitrust laws and regulations which govern the aerial transport market. These laws and regulations prohibit
anticompetitive practices between airlines. The antitrust laws and regulations provide for various enforcement actions including both civil and criminal penalties against those parties found to be in violation. There are currently no pending
antitrust enforcement actions against us in El Salvador.



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Noise regulations

El Salvador has adopted noise regulations applicable to the airline industry in accordance with the ICAO standards. These regulations provide
that no person can operate an aircraft to or from an airport in El Salvador which does not comply with the noise regulations as set forth in Annex 16 of the ICAO standards. Each of our aircraft that flies in El Salvador complies with applicable
noise regulations imposed by El Salvador.

Costa Rica

Overview

LACSA is
a sociedad anónima duly organized and validly existing under the laws of Costa Rica. It is duly qualified to hold property and transact business as a sociedad anónima, and holds all licenses, certificates and permits from
governmental authorities necessary for the conduct of its business as now conducted. All consents, licenses, approvals, registration and authorizations as may be required in connection with LACSA being an entity providing airlines services under
applicable laws of Costa Rica have been obtained or affected and are in full force and effect. Effective legal control and principal place of business is still established in Costa Rica.

The failure to maintain the required foreign and domestic governmental authorization, will adversely affect our operations. We are subject to
national and international regulations which may vary frequently and are out of our control. These may result in an increase of costs and/or operational requirements and restrictions.

Costa Rica has adopted an open skies regime for its AirTransport negotiations, based on real and effective reciprocity. Costa Rica is subject
to multilateral and/or bilateral air transport agreements that provide for the exchange of air traffic rights between Costa Rica and various other countries. Notwithstanding these agreements, we are subject to permits, laws, regulations and
operational restrictions provided by each of the countries where we are willing to operate.

Apart from local governments we are regulated
by the FAA and TSA, of the United States. Most of LACSAs aircraft are registered in the United States. Therefore, we are subject to directives, and regulations imposed by the United States, which represent high expenditures for us.

Authorizations and licenses

Costa Rican law requires airlines providing commercial air transport services to and from Costa Rica to hold an Aeronautical Operation
Certificate, or COA, and an Air Transportation License/Certificate issued by the Dirección General de Aviación Civil, or DGAC. An Air Transportation Certificate specifies a carriers designated routes, the equipment it may
use, its permitted capacity and its flight frequencies. A carriers Air Transportation Certificate is required to be updated each time it acquires a new aircraft, or when such airline modifies any of its routes or frequencies to a particular
destination. We possess the required COA and Air Transportation Certificate as required by the DGAC.

Costa Rican carriers are required to
register their aircraft with the Costa Rican National Aviation Registry kept by the DGAC. The DGAC is responsible for certifying the airworthiness of each registered aircraft. All registered aircraft must be re-certified each year through
inspections carried out by the DGAC. Each of our aircraft that flies to Costa Rica is properly registered with the DGAC.

In addition,
there are currently law projects to modify the Civil Aviation Law, Consumers Protection Rights Law, Migration Law and the law that regulates departures from Costa Rica, all of which may affect our operations.

Bilateral and open skies agreements

Costa Rica has entered into various bilateral agreements which allow Costa Rican airlines to fly to the United States and to and within the
Americas and the Caribbean. All international fares are filed and subject to the approval of the Costa Rican government. Costa Rica is currently a party to Air Transport Agreements and/or MOUs with the following countries: United States, Spain,
Panama, Mexico, Venezuela, Holland, China, Germany, Canada, United Kingdom, Ireland, Peru, Brazil, Argentina, the Dominican Republic, Colombia, Costa Rica (agreement is under ratification), Cuba, Chile, Ecuador, Argentina, the United Arab Emirates
(agreement is under ratification) and Qatar (agreement is under ratification).

Costa Rica is the first country in the Central American
region to have a full open skies agreement with Canada, which is in full force and effect.



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Safety rating

Costa Rica currently possesses FAA Category 1 status, which allows Costa Rican airlines to operate flights to and from the United States.

Foreign ownership

Following a recent ruling by the Costa Rican Constitutional Court, there are no restrictions on foreign ownership and control of airlines
organized in Costa Rica.

Antitrust regulation, enforcement

Costa Rica has adopted certain antitrust laws which govern the airline industry. Costa Ricas antitrust laws were enacted to protect the
rights and interests of the consumer and the guardianship and promotion of the competitive process. There are currently no pending antitrust enforcement actions against us in Costa Rica.

Noise regulations

Costa Rica has adopted noise regulations applicable to the airline industry. These regulations provide that no person can operate an aircraft
to or from an airport in Costa Rica that does not comply with the noise regulations set forth in Annex 16 of the ICAO standards.

Costa
Rica has also adopted noise abatement provisions which require aircraft registered in Costa Rica to comply with at least Stage 2 noise requirements. All aircraft registered for the first time with the Costa Rican Civil Aviation Authority after
January 1, 2003 are required to comply with Stage 3 noise restrictions. Our aircraft which fly in Costa Rica comply with applicable noise regulations imposed by Costa Rica.

Peru

Overview

Peruvian law requires that all airlines organized in Peru that provide commercial services to and from Peru hold an Operations Permit valid for
a period of four years and an Air Services Operator Certificate, or ASEC, issued by the Civil Aviation Authority, or DGAC without expiration. Both must be modified each time a carrier modifies the characteristics of its service. An Operations Permit
specifies a carriers designated routes, the equipment it may use, its permitted capacity and its flight frequencies.

Peruvian law
requires that carriers register their aircraft in the Public Aircraft Registry of the Registry Office of the National Superintendency of Public Registrar, or SUNARP. The DGAC is responsible for issuing a Conformity Certification of airworthiness for
each aircraft in a carriers fleet. This certification is valid for two years and must be renewed thereafter. Additionally, the DGAC approves all technical aspects of a carriers operation and such operations are reviewed by the DGAC as
modifications or changes arise. We possess the required Operations Permit and ASEC as required by the DGAC and our aircraft which fly in Peru are properly registered with the SUNARP.

Bilateral and open skies agreements

Peru has entered into 37 bilateral agreements and other memoranda of understanding, several of which are open sky agreements, which allow
Peruvian airlines to fly to the United States and various countries in South America, Central America, Europe, Africa and Asia.

Safety

Peru
currently possesses FAA Category 1 status which allows Peruvian airlines to operate flights to and from the United States.

Foreign
ownership

Peruvian law requires that National Airline Services can only be provided by Peruvian natural persons and
legal entities. A Peruvian legal entity is an entity that complies with the following requirements:



| |  |  | the entity has its principal domicile in Peru;
| | - |  | ----------------------------------------------



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| |  |  | more than a majority of the directors, managers and people who control the entitys management must be Peruvian nationals or must be permanently domiciled in Peru;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the legal entitys property must substantially be Peruvian; and
| | - |  | ---------------------------------------------------------------



| |  |  | at least 51% of the entitys stock must be under the control of stockholders that are Peruvian nationals who are permanently domiciled in Peru.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | in addition, Peruvian law further requires that a Peruvian legal entity:
| | - |  | ------------------------------------------------------------------------



| |  |  | must be organized in accordance with Peruvian law; and
| | - |  | ------------------------------------------------------



| |  |  | must indicate that its legal purpose is providing airline service.
| | - |  | ------------------------------------------------------------------

Notwithstanding the
foregoing, Peruvian regulations provide that 51% of an entitys voting stock only needs to be the property of a Peruvian national who is permanently domiciled in Peru for a period of six months commencing on the effective date of the
airlines occupational license. Upon the expiration of such term, up to 70% of an entitys voting stock may be owned by foreigners. As of the date of this annual report, we own 49% of the voting stock and 99% of the non-voting stock in our
Peruvian airline, Transamerican Airlines S.A.

Antitrust regulation, enforcement

The National Institution of Competition Defense and Intellectual Property, or INDECOPI, governs competition in the aerial transport market.
Peruvian law does not foresee any previous control mechanisms or authorization procedures for mergers or other forms of associations. It does not restrict or penalize the mere existence of dominant market positions or monopolies, but regulates
behaviors that might constitute an abuse of such positions in detriment of competitors. It therefore regulates anticompetitive practices between airlines, the registry of tariffs and the modification, cancellation or suspension of operations. There
are currently no pending antitrust enforcement actions against us in Peru.

INDECOPI also has authority to control passenger rights
violations. INDECOPI in the past years increased control over passenger rights protection and fines have been imposed to our airlines.

Noise regulations

Peru has adopted noise regulations applicable to the airline industry. These regulations provide that no person can operate an aircraft to or
from an airport in Peru that does not comply with the noise regulations set forth in Annex 16 of the ICAO standards. Our aircraft which fly in Peru comply with applicable noise regulations imposed by Peru.

Ecuador

Overview

Aerogal is a private carrier duly organized and validly existing under the laws of Ecuador. It is duly qualified to hold property and transact
business as a sociedad anónima, and holds all licenses, certificates and permits from governmental authorities necessary for the conduct of its business as now conducted. All consents, licenses, approvals, registration and
authorizations as may be required in connection with it being an entity providing airlines services under applicable laws of Ecuador have been obtained or affected and are in full force and effect.

Authorizations and licenses

The aviation market in Ecuador is heavily regulated by the Ecuadorian Civil Aviation Authority. For domestic aviation, airlines must present
feasibility studies to secure specific route rights, and no airline may serve the city pairs with the most traffic unless that airline has aircraft with air-worthiness certificates in force. Airlines in Ecuador are obligated to add a surcharge for
fuel to their ticket prices and charge an administrative fee in connection with purchases of airline tickets, although this fee is at the discretion of the seller for Internet sales.

Aerogals status as a private carrier means that it is not required under Ecuadorian law to serve any particular route and is free to
withdraw service from any of the routes it currently serves as it sees fit, subject to bilateral agreements in the case of international service. Aerogal is also free to determine the frequency of the services it offers across its route network
without any minimum frequencies imposed by the Ecuadorian authorities.

Ecuadorian law requires airlines providing commercial passenger
service in Ecuador to maintain an Operation and Air Transportation Certificate (Certificado de Aeronavegabilidad) issued by the Ecuadorian Civil Aviation Authority. The Operation and Air Transportation Certificate lists the airlines
routes, equipment used, capacity and frequency of flights. This certificate must be updated each time a carrier acquires new aircraft, or when routes or the frequency of service to a particular destination are modified.



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Ecuadorian law also requires that aircraft operated by us be registered with the Ecuadorian
National Aviation Registry (Registro Aeronautico Nacional) kept by the Ecuadorian Civil Aviation Authority, and that the Ecuadorian Civil Aviation Authority certify the air-worthiness of each aircraft in our fleet.

Furthermore, Ecuadorian airlines are subject to the authority of the Ecuadorian Civil Aviation Counsel. The Ecuadorian Civil Aviation Counsel
is in charge of granting operations permits, which contain the routes and frequencies, and evaluating the financial, technical and managerial aspects of each airline, among other things.

Under Ecuadorian commercial law, air transportation is considered a commercial activity, and therefore, certain elements of the standard terms
and conditions of air transportation agreements entered into by airlines and passengers are expressly covered under such law. Passengers in Ecuador are also entitled by law to compensation in cases of delays in excess of four hours, over-bookings
and cancellations.

Most of Ecuadorians airports are operated by the government. Currently, only the Quito, Guayaquil and Baltra
airports are privately operated through concessions.

The Convention for the Unification of Certain Rules for International Carriage by
Air, signed in Montreal, Canada on May 28, 1999, as approved and adopted by Ecuador by means of Law 701 of 2001, imposes duties upon Ecuadorian airlines with respect to their international services. Under these rules, airlines are responsible
for compliance with certain obligations regarding quality and passenger security, as well as for damages sustained in case of any death of, or bodily injury to, a passenger, which occurs on board, as well as for baggage loss or damage. This
convention applies to international transportation between Ecuador and the territory of another party to the treaty, regardless of whether there is an interruption in the transportation or a trans-shipment, or whether, prior to arriving in, or
departing from, Ecuador, there is an agreed stop-over within the territory of another state. Under Article 17 of the convention, an airline is liable for damage sustained in case of death or bodily injury of a passenger upon condition that the
accident which caused the death or injury took place on board the aircraft or in the course of any of the operations of embarking or disembarking. Air carriers are responsible, even if not at fault, for proven damages up to 100,000 Special Drawing
Rights (SDRs), which represent a mix of currencies established by the International Monetary Fund. For damages above 100,000 SDRs (approximately $151,557), the airline may avoid liability by showing that the accident that caused injury or death was
not due to its negligence or was the fault of a third party.

Security

Parts 107 and 108 of the Ecuadorianregulaciones técnicas de la DAC, or RDAC, regulate all aspects of civil aviation security,
including, (i) implementation of certain security measures by airlines and airports, such as the requirement that all passenger luggage be screened for explosives, (ii) designation of restricted areas, (iii) systems of airport
controls for identification of passengers (iv) inspection of vehicles, and (v) the transportation of explosives and dangerous goods.

Environmental regulation

We are subject to the general environmental regulations of Ecuador, and several other laws, decrees and local resolutions which regulate the
management of natural resources and their contamination. Pursuant to these regulations, we prepared an Environmental Management Plan (Plan de Manejo Ambiental), detailing the procedures to be followed in connection with any activity that has
any environmental impact, including solid and liquid waste management, hazardous waste management and the management of effluents and noise. Additionally, we must maintain certain permits and authorizations for the use and management of natural
resources, such as discharge and emissions permits, and maintain our environmental impact within required levels. If we fail to maintain the relevant permits and authorizations or to abide by the environmental regulations, we may be subject to
penalties or fines.

In addition, the RDAC contains a general environmental policy establishing that the Ecuadorian Civil Aviation
Authority must comply with Ecuadorian environmental regulations and must require the compliance of parties involved in the Ecuadorian civil aviation industry. The RDAC includes provisions and guidelines relating to noise and effluents that must be
followed in the provision of aviation services. The RDAC requires that noise levels be kept below levels established under Ecuadorian law. Compliance is evidenced by means of a certificate (Certificado de Homologación de Ruido) that
must be obtained for each aircraft from the Ecuadorian Civil Aviation Authority or the competent authority of each country member of ICAO. If noise levels exceed the limits, the Ecuadorian Civil Aviation Authority has the power and authority to
sanction and penalize us with fines.



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If the Ecuadorian Civil Aviation Authority determines that our operations or facilities do not
meet the RDAC standards or otherwise fail to comply with Ecuadorian environmental regulations, we could be subject to a fine. In addition, failure to comply with these regulations could adversely affect us in a variety of other ways, including by
negatively impacting our reputation.

Bilateral agreements

With respect to our international services, our plans to introduce new destinations and increase the frequency of existing services depend,
among other things, upon the allocation of route rights, a process over which we do not have direct control. Route rights are allocated through negotiations between the government of Ecuador and the governments of foreign countries and are set forth
in bilateral agreements. If we are unable to obtain route rights, we will re-allocate capacity within our route network as appropriate.

Bilateral agreements between countries also regulate other aspects of our commercial cargo and passenger air transport relations, including
the designation of carriers and aircraft capacity restrictions and requirements. They may also establish minimum safety, security, customs and environmental requirements for each designated carrier. These agreements can be modified upon the
agreement of the relevant countries at any time prior to their expiration dates. Our principal bilateral agreements include those with the United States, Spain, the Andean Pact countries (Colombia, Peru and Bolivia), Venezuela, Brazil, the
Netherlands, Argentina, Panama and Chile. The bilateral agreement with the United States, which granted 120 weekly flights to Ecuadorian carriers and 120 weekly flights to U.S. carriers, was modified on June 4, 2010. In addition, the following
routes were added for Ecuador: (i) from Ecuador via 15 intermediate points to Miami, Orlando, Washington, New York, Chicago, Los Angeles, and four additional points in the United States and beyond Madrid, Montreal and Toronto; and five
additional points in Europe via code share; (ii) as of July 1, 2011, five additional points in the United States that were selected by Ecuador and five additional points in the United States that were selected by Ecuador for code share
only; and (iii) as of July 1, 2012, five additional points in the United States that were selected by Ecuador for code share only. There is an open sky policy for all cargo services. The bilateral agreement with Spain, which
was modified in July 2003, grants 14 weekly flights. The following routes are to be determined: from Ecuador via points in Colombia, Venezuela and points in the Caribbean to Madrid and/or Barcelona, and points in France, Italy and Germany in both
directions. Fifth freedom rights should be negotiated for each case.

The Ecuadorian Civil Aviation Authority allocates rights obtained
pursuant to bilateral agreements to specific airlines. In 2014, the Ecuadorian Civil Aviation Authority authorized us to operate new international weekly flights, including flights within the Andean Pact Operation Permit. We operate routes from
Quito and/or Guayaquil to Bogotá, with 49 frequencies per week from Quito to Lima with the following points from Santa Cruz (14 frequencies per week), La Paz (seven frequencies per week) and Bogotá (three frequencies per week) and
seven flights from Panama to Quito. In 2014, we obtained 21 frequencies per week to Panama, seven frequencies to Aruba and seven to Curacao. Ecuador has open skies agreements with the Andean Pact countries pursuant to which there are no
regulations on the numbers of flights to such destinations.

Over the last 25 years the global airline industry has been shifting to
increasing acceptance of liberalized and open skies air transport agreements among nations. For example, open skies agreements currently exist among the countries of the European Union, and during the first quarter of 2007
were agreed to between the European Union and the United States. In Latin America, open skies agreements exist among Colombia, Ecuador and Peru and among the United States, Chile, Panama, Venezuela and the countries of Central America.
As a general matter, these liberalized or open skies air transport agreements serve to (i) reduce (or, in the case of open skies, eliminate) restrictions on route rights, designated carriers, aircraft capacity or flight
frequencies and (ii) promote competitive pricing.

As a result of this continuing trend toward liberalized air transport agreements,
a number of countries to which we fly, including the United States, have been negotiating with the Ecuadorian government to liberalize its bilateral agreements with such countries and to permit more flights to and from Ecuador. We believe that it is
likely that the Ecuadorian government will eventually liberalize the current restrictions on international travel to and from Ecuador by, among other things, granting new route rights and flights to competing airlines and generally promoting
increased numbers of market participants on routes we serve. As a result of such liberalization, we could face substantial new competition, which may erode our pricing and market share and have a material adverse effect on our financial position and
results of operations. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to Our CompanyWe face increasing competition from other international airlines due to the continuing liberalization of restrictions
traditionally affecting the global airline industry.

Ownership and control

The Ecuadorian Civil Aviation Law was changed in 2001 eliminating a 40% limitation on foreign investment in Ecuadorian airlines, and stated
that, from an Ecuadorian law perspective, there were no restrictions on foreign investment in Ecuadorian airlines. However, some of Ecuadorians bilateral agreements do restrict foreign involvement in Ecuadorian airlines. For example, bilateral
agreements entered into by Ecuador with the United States, Spain, the United Kingdom, France, Germany, Switzerland, all contain requirements that each designated airline remain substantially owned and effectively controlled by an Ecuadorian
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Currently, the bilateral agreements establish that each of the countries may deny, revoke or
impose any conditions deemed necessary upon an airlines operating permit in the event it determines that there is not sufficient evidence that a substantial proportion of ownership and effective control of the airline is held or exercised by
Ecuador or its nationals. These ownership and control restrictions have not been expressly defined in the bilateral agreements, in terms of percentage thresholds or otherwise, and therefore should be interpreted according to the Vienna Convention on
the Law of Treaties.

Agreements entered into by Ecuador with Bolivia, Colombia, Peru and United Kingdom, among others, require that our
relevant operating subsidiaries be incorporated, have our principal domicile, management, operation, technical maintenance operations and offices within the Ecuadorian territory.

U.S. Airline Regulation

Service to the
United States by non-U.S. airlines is subject to Title 49 of the U.S. Code, under which the DOT, the FAA and the TSA exercise regulatory authority. The U.S. Department of Justice also has jurisdiction over airline competition matters under the
federal antitrust laws.

Authorizations and licenses

The DOT has jurisdiction over international aviation, including routes, within the United States, subject to review by the President of the
United States. The DOT also has jurisdiction with respect to unfair practices and methods of competition by airlines and related consumer protection matters. We are authorized by the DOT to engage in scheduled and charter air transportation
services, including the transportation of persons, property (cargo) and mail, or combinations thereof, between points in Colombia and certain points in the United States and beyond, and including the carriage of passengers to their final destination
in the United States via an intermediate location in another country and picking up passengers at an intermediate location to carry them to the United States. We hold the necessary authorizations from the DOT, including a foreign air carrier permit,
to conduct our current U.S. operations. We also have an exemption authority related to the code share agreement and our flights to Fort Lauderdale. The exemption authority is authorized pursuant to a different statutory section and
regulatory procedure from that used to obtain a foreign air carrier permit. The most relevant difference between exemption authority and a foreign air carrier permit is that exemption authority is usually granted for shorter periods (usually up to
one or two years), while foreign air carrier permits, like Aviancas foreign air carrier permit, have no expiration date or at least have a five year term. Exemption authority may also be revoked by DOT at any time without having to first give
the airline notice and a hearing and can be processed and granted more easily and quickly, because exemption authority is for a more limited period of time and is reviewed periodically upon submission of requests for renewal. Unlike air carrier
permits, exemptions do not have to go through a White House review for possible national defense or security considerations. Our DOT exemption authority, which was granted by the DOT in February 1998, was due to expire on April 3,
2007, however, it remains in effect pending final DOT action on the renewal application that we filed on March 14, 2007. So far there has been no final decision on this application.

Our operations to the United States are also subject to regulation by the FAA with respect to safety matters, including aircraft maintenance
and operations, equipment, aircraft noise, ground facilities, dispatch, communications, personnel, training, weather observation, air traffic control and other matters affecting air safety. The FAA requires each foreign air carrier serving the
United States to maintain operations specifications pursuant to Part 129 of its regulations and to meet operational criteria associated with specified equipment on approved international routes. We believe that we are in compliance in all material
respects with all requirements to maintain our FAA operations specifications in good standing. The FAA can amend, suspend, revoke or terminate those specifications, or can suspend or revoke our authorization if we fail to comply with FAA
regulations, in addition to having the ability to assess civil penalties for such failure. A modification, suspension or revocation of any of our DOT authorizations or FAA operations specifications could have a material adverse effect on our
business. The FAA also conducts safety audits and has the power to impose fines and other sanctions for violations of airline safety regulations. We have not incurred any material fines related to operations. The FAA periodically rates foreign
countries safety standards and Colombia is ranked Category 1, which is the top category and which means that it complies with the ICAO safety requirements. As a result, we may continue our service to the United States in a normal manner and
take part in reciprocal code-sharing arrangements with U.S. carriers.

Security

On November 19, 2001, the Aviation and Transportation Security Act, or the Aviation Security Act, became U.S. law. This law put
substantially all aspects of civil aviation security under direct federal control and created the TSA, an agency of the Department of Homeland Security, which assumed the security responsibilities previously held by the FAA. The Aviation Security



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Act requires, among other things, the implementation of certain security measures by airlines and airports, such as the requirement that all passenger bags be screened for explosives. Funding for
airline and airport security required by the Aviation Security Act is provided in part by a $2.50 per-segment passenger security fee for flights departing from the U.S., subject to a $10.00 per-roundtrip cap; however, airlines are responsible for
costs incurred in excess of the amount raised by the fee. There is no assurance this fee will not be raised in the future as the TSAs costs exceed the revenue it receives from this fee. The current administration has proposed to raise this fee
to $5.50, subject to approval by the U.S. Congress. Implementation of the requirements of the Aviation Security Act has resulted in increased costs and security burdens for airlines and their passengers. Since the events of September 11, 2001,
the U.S. Congress has also mandated, and the TSA has implemented, numerous other security procedures and requirements that have imposed and will continue to impose burdens on airlines, passengers and shippers.

The Aviation Security Act also requires us to pay an Aviation Security Infrastructure Fee directly to the U.S. Government. Currently, the
amount of the fee is set at the amount we actually paid for screening passengers and property in calendar year 2000. However, the TSA is authorized to adjust the methodology for determining the infrastructure fee and this process may result in
future fee increases.

Noise restrictions

Under the Airport Noise and Capacity Act of 1990, or ANCA, and related FAA regulations, aircraft that fly to the United States must comply with
certain Stage 3 noise restrictions, which are currently the most stringent FAA operating noise requirements. All of our aircraft meet the Stage 3 requirements.

Other regulations

FAA regulations also require implementation of the Traffic Alert and Collision Avoidance System, which mandates that each aircraft be equipped
with an approved airborne wind-shear warning system and certain other requirements related to the age of the aircraft. Our fleet meets these requirements.

The FAA also requires that aircraft comply with regulations pertaining to emissions. Our fleet meets these requirements.

European Regulation

Within Europe, we
currently operate to Spain and therefore are subject to Spanish DGAC (Dirección General de Aviación Civil) regulation and authorizations. Our license to operate to certain destinations in Spain and the number of frequencies we
operate is reviewed on a bi-annual basis. We must also comply with special noise abatement procedures required by the Madrid airport.

Additionally, since July 2014, we have operated four weekly flights to London and expect to operate one daily flight as of July 2015. In this
regard we are we are subject to England CAA (Civil Aviation Authority) regulation and authorizations.

As of November 2014, the European
Aviation Safety Agency (EASA) is responsible for granting operating permits for non-EU carriers operating flights to Europe pursuant to Reg (EU) 452/2014. At the time of writing this annual report, we are in process of obtaining this operation such
permit.

Other Jurisdictions

We are
also subject to regulation by aviation regulatory bodies which set standards and enforce national aviation legislation in each of the other jurisdictions to which we fly. These regulators may exercise powers associated with their duties potentially
including the ability to set fares, enforce environmental and safety standards, levy fines or restrict operations within their respective jurisdictions. We cannot predict how these various regulatory bodies will act in the future, and the evolving
standards enforced by any of them could have a material adverse effect on our operations.



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|C. | Organizational Structure
|-- | ------------------------

The following is a simplified organizational chart showing our
principal subsidiaries as of December 31, 2014:



LOGO



|(1) | Service Companies includes various special purpose vehicles formed to contract personnel and provide operating and other services.
|--- | ------------------------------------------------------------------------------------------------------------------------------------

|(2) | Aircraft Ownership Entities includes special purpose vehicles organized for the financing of aircraft.
|--- | --------------------------------------------------------------------------------------------------------

|(3) | Participation through different vehicles.
|--- | -----------------------------------------

|(4) | Participation through different vehicles, including voting and non-voting shares.
|--- | ---------------------------------------------------------------------------------

Avianca,
Tampa Cargo S.A., Líneas Aéreas Costarricenses, S.A., or LACSA, Trans American Airlines S.A., and Taca International Airlines S.A., or Taca International, are our operating airline subsidiaries in Colombia, Costa Rica, Peru and El
Salvador, respectively. Grupo Taca Holdings Limited is a holding company.



|D. | Property, Plants and Equipment
|-- | ------------------------------

Premises

Our principal administrative offices are located at Avenida Calle 26, No. 59  15, Centro Administrativo, Bogotá, Colombia,
approximately nine kilometers away from El Dorado International Airport, and in an office building in San Salvador, which covers approximately 18,000 square feet, which serves as our headquarters for our hub in San Salvador. Both of these properties
are owned by us.



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Other Property

We own an office building in San José, Costa Rica which covers approximately 16,400 square meters. This location serves as our
headquarters for our operations in Costa Rica.

We occupy approximately 5,265 square feet of office space in Lima, Peru with aggregate
payments of $47,211 per month in rent.

At Jorge Chavez International Airport, we lease maintenance hangars, operations offices, counter
space, parking spaces and other operational properties from Lima Airport Partners. We pay approximately $75,589 per month for this leased property.

At Mariscal Sucre International Airport, we lease maintenance hangars, operations offices, counter space, parking spaces and other operational
properties from QUIPORT. We pay approximately $26,865 per month for this leased property.

At Jose Joaquin Olmedo International Airport,
we lease maintenance hangars, operations offices, counter space, parking spaces and other operational properties from TAGSA. We pay approximately $10,500 per month for this leased property

At Puente Aéreo, we lease maintenance hangars, operations offices, parking spaces and commercial spaces from OPAIN for
approximately $480,000 per month, which covers approximately 95,468 square meters. We have exclusive rights to use and commercially benefit from the Puente Aéreo, including the ability to sublease retail and commercial space, until
March 2016.

At El Dorado International Airport, we lease maintenance hangars, operations offices, counter space, parking spaces and other
operational properties from OPAIN. We pay approximately $500,000 per month for this leased property.

At Comalapa International Airport,
we lease maintenance hangars, operations offices, counter space, parking spaces and other operational properties from CEPA. We pay approximately $35,000 per month for this leased property.

At Juan Santamaria International Airport, we lease maintenance hangars, operations offices, counter space, parking spaces and other
operational properties from Alterra. We pay approximately $49,000 per month for this leased property.

We also have approximately 109
leases at the different airports we operate at for check-in, reservations, gates, ticket-office sales, maintenance offices and cargo areas. In addition, we lease approximately 114 office spaces in the main countries where we operate for direct
ticket sales. We pay approximately $1,713,256 per month for these leased properties.

We also lease property near Medellín,
Colombia, where we intend to construct a new MRO facility for our exclusive use. The new facility is currently scheduled to be in operation by 2016. We pay approximately $105,000 per month for this leased property.

The duration of these lease agreements varies. In most cases they are long-term leases with monthly rent obligations. The lease agreements
differ from each other in aspects such as payment terms and exit windows that enable us to terminate the agreement prior to its scheduled expiration. In some of the agreements, the lessor is entitled to terminate the agreement at any time without
cause, subject to prior notice.

Construction, expansion and improvement

For a description of our plans to construct, expand and improve our facilities, see Item 4. Information on the CompanyPart B.
Business OverviewAirport Facilities and Item 4. Information on the CompanyPart B. Business OverviewMaintenance and Item 4. Information on the CompanyPart B. Business OverviewOperational Training
Center.



|Item 4A. | Unresolved Staff Comments
|-------- | -------------------------

None.



|Item 5. | Operating and Financial Review and Prospects
|------- | --------------------------------------------

The following discussion of our financial
condition and results of operations should be read in conjunction with our audited consolidated financial statements as of December 31, 2014 and 2013 and for the years ended December 31, 2012, 2013 and 2014 and the notes thereto included
elsewhere in this annual report, as well as with the information presented under the sections entitled Presentation of Financial and Other Information, Item 3. Key InformationPart A. Selected Financial Data and
Item 10.



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Additional InformationExchange ControlsExchange Rates. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may
differ materially from those discussed in the forward-looking statements as a result of various factors, including those set forth in Forward-Looking Statements and Item 3. Key InformationPart D. Risk Factors.

On December 11, 2012, our board of directors approved our adoption of IFRS as issued by the IASB. We used a transition date of
January 1, 2011, and therefore our consolidated financial statements as of and for the year ended December 31, 2012 were our first annual consolidated financial statements required to be prepared in accordance with IFRS. We have not
prepared any financial information in accordance with IFRS as of or for any prior periods, including the eleven-month period ended December 31, 2010. For periods prior to 2012, we prepared our audited consolidated financial statements solely in
accordance with Colombian GAAP.



|A. | Operating Results
|-- | -----------------

Overview

We are a leading airline in Latin America. In February 2010, we completed the combination of Avianca and Taca, two established airlines with
geographically complementary operations in the Andean region (Colombia, Ecuador and Peru) and Central America (Belize, Guatemala, Costa Rica, Honduras, El Salvador, Nicaragua and Panama). In 2014, we were the market leader in terms of
passengers carried in the domestic market of Colombia (the third largest domestic market in Latin America), according to the Colombian Civil Aviation Authority, and a leader in terms of passengers carried on international flights within the Andean
region and Central America (our home markets), according to internal data we derive from MIDT. Our strong presence within the Andean region and Central America enables us to consolidate regional passenger traffic in our hubs and provide
connectivity to international destinations, making us a leader in terms of international air passengers carried from our home markets to both North America and South America.

We operate an extensive route network from our strategically located hubs in Colombia, Peru and El Salvador (plus the focus markets of
Costa Rica and Ecuador). We offer passenger and cargo service through approximately 5,400 weekly scheduled flights to more than 100 destinations in over 25 countries around the world. Our code share alliances, together with our membership in Star
Alliance, provide our customers with access to a worldwide network of over 1,200 destinations. During the year ended December 31, 2014, we transported approximately 26.2 million passengers and 389,779 metric tons of cargo.

Since the combination of Avianca and Taca in February 2010, we have grown significantly. We believe we have already achieved many
revenue-enhancing synergies from the integration of Aviancas and Tacas networks, which was the initial focus of the combination. We are implementing a second stage of our integration plan focused primarily on achieving cost-oriented
synergies from greater operating and administrative efficiencies and economies of scale. Our consolidated operating revenue increased 24.0% from $3,794.4 million in 2011 to $4,703.6 million in 2014, and our consolidated operating profit increased
38.1% from $202.4 million for the year ended December 31, 2011 to $279.5 million in 2014. The revenue-enhancing synergies from our network integration allowed us to optimize our route capacity and efficiency, through which we added new routes
and increased our available seat kilometers (ASKs) and our total passengers carried 23.9% and 28.2%, respectively, from 2011 to 2014 and during the same period our load factor decreased modestly from 79.6% to 79.4%.

Our recent growth has been driven primarily by our network integration and rising demand for passenger and cargo services in the Latin
American region. In general, our passenger revenues are driven by regional and country-specific economic conditions, competitive activity and the allocation of our capacity throughout our route network. Our passenger demand for both international
and domestic flights has risen over the past three years, driven by an improvement in economic conditions in Latin America and in our core markets over the same period. This improvement in economic conditions was characterized by average annual GDP
growth from 2011 to 2014 in Latin America, Colombia, Peru and El Salvador of approximately 2.7%, 5.0%, 5.1% and 1.9%, respectively. This increased demand, together with our efforts to optimize our route network following the Avianca-Taca
combination, have created opportunities for us to carry more business and leisure passengers, grow revenues and increase our capacity and route network while maintaining a stable load factor.

Our operating expenses increased by 4.7% for the year ended December 31, 2014, compared to the prior year, primarily as a result of
growth in our operations. Our CASK excluding fuel increased 0.3% for the year ended December 31, 2014 compared to the prior year. We are now implementing the second stage of our integration plan, which focuses primarily on cost-efficiency
improvements to support our 5.9% capacity growth in ASKs, as well as the growth in our strategic business units, such as cargo and loyalty programs, and integrating the Avianca and Taca legacy operational and administrative platforms to achieve
cost-oriented synergies from greater efficiencies and economies of scale.

Our operating revenue is derived primarily from passenger
transportation. During the year ended December 31, 2014, we derived approximately 82.1% of our operating revenue from passenger transportation, and 17.9% from our cargo and other operations and other sources, including our LifeMiles
loyalty program and maintenance, training and other airport services provided to other carriers.



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Results of Operations

Operating revenue

Passenger revenue. We recognize passenger revenue, including revenue from redemption of miles under our LifeMiles loyalty
program, when transportation service is provided, which we refer to as flown revenue. Passenger revenue is a function of the capacity of our aircraft on the routes we fly, our load factors and our yields. Our passenger capacity is
measured in terms of available seat kilometers (ASKs), which represent the number of seats available on our aircraft multiplied by the number of kilometers the seats are flown. Our passenger usage is measured in terms of revenue passengers
kilometers (RPKs), which represent revenue passengers multiplied by the kilometers these passengers fly. We calculate load factors, or the percentage of our capacity that is actually used by paying customers, by dividing RPKs by ASKs. Our passenger
yield is the average amount that one passenger pays to fly one kilometer.

Fares for unused tickets that are expected to expire are
recognized as revenue based on historical data and experience. We perform periodic evaluations of our air traffic liability relating to unused tickets, and any resulting adjustments to revenue, which can be significant, are recorded in our
consolidated statement of comprehensive income. These adjustments relate primarily to the differences arising from actual events and circumstances such as historical fare sale activity and customer travel patterns which may result in refunds,
exchanges or forfeited tickets differing significantly from estimates. We evaluate these estimates and assumptions and adjust air traffic liability and passenger revenues as necessary.

Cargo and other. We recognize cargo and courier revenue when transportation and/or services are provided. We carry cargo in our
dedicated freighter fleet and, to the extent we have excess capacity, in the bellies of our passenger aircraft. We operate our domestic Colombian courier operations primarily through our DEPRISA brand. Our cargo yield is the average price
paid per one kilometer to fly one metric ton of cargo. Cargo revenue is a function of the total metric tons of cargo carried and cargo yield. Courier revenue is a function of the number of packages shipped and the price per package. Our cargo
capacity is measured in terms of available ton kilometers (ATKs), which represent our cargo metric ton capacity multiplied by kilometers flown. Our cargo usage is measured in terms of revenue ton kilometers (RTKs), which represent the total metric
tons carried multiplied by the kilometers the cargo is flown. Our cargo load factor is determined by dividing RTKs by ATKs.

Our other
revenue-generating activities consist primarily of sales of LifeMiles program rewards to banks for use in credit card reward programs (net of the value of the underlying rewards which, when redeemed, are recognized as passenger revenue). Our
other revenues also include air transport-related services such as maintenance, crew training and other airport services provided to other carriers through our Avianca Services division, as well as service charges and ticket penalties.
Aircraft and property leases, marketing rebates, duty-free sales, charter flights and other general operating revenue are also included in this category.

The following table sets forth our capacity, load factors, yields and operating revenue per available seat kilometer (RASK) for the periods
indicated:



|                                    |  |                         |        |   |      |  |        |      |  |  |        |  
|----------------------------------- |  | ----------------------- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | -
|                                    |  | Year Ended December 31, |       
|                                    |  | 2014                    |        |   | 2013 |  |        | 2012 | 
|Passenger:                          |  |                         |        |   |      |  |        |      |  |  |        |  
|Capacity (in ASKs, in millions)     |  |                         | 41,052 |   |      |  | 38,762 |      |  |  | 36,545 |  
|Load factor(1)                      |  |                         | 79.4   | % |      |  | 80.5   | %    |  |  | 79.6   | %
|Yield (in U.S. cents)(2)            |  |                         | 11.8   |   |      |  | 12.4   |      |  |  | 12.2   |  
|Total passengers (in thousands)     |  |                         | 26,230 |   |      |  | 24,625 |      |  |  | 23,093 |  
|Cargo(3):                           |  |                         |        |   |      |  |        |      |  |  |        |  
|Capacity (in ATKs, in millions)(4)  |  |                         | 1,633  |   |      |  | 1,403  |      |  |  | 1,198  |  
|Load factor(5)                      |  |                         | 64.4   | % |      |  | 60.0   | %    |  |  | 62.5   | %
|Yield (in U.S. cents)(6)            |  |                         | 0.46   |   |      |  | 0.51   |      |  |  | 0.54   |  
|Cargo (in thousands of metric tons) |  |                         | 390    |   |      |  | 319    |      |  |  | 299    |  
|RASK (in U.S. cents)(7)             |  |                         | 11.5   |   |      |  | 11.9   |      |  |  | 11.7   |  



|(1) | Percentage of aircraft seating capacity that is actually utilized by paying customers. We calculate passenger load factors by dividing revenues passenger kilometers (RPKs) by available seat kilometers (ASKs).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Average amount one passenger pays to fly one kilometer.
|--- | -------------------------------------------------------

|(3) | Includes courier services.
|--- | --------------------------

|(4) | ATKs does not include Ecuador Domestic.
|--- | ---------------------------------------

|(5) | We calculate cargo load factors by dividing revenue ton kilometers (RTKs) by available ton kilometers (ATKs).
|--- | -------------------------------------------------------------------------------------------------------------

|(6) | Average amount paid to fly one metric ton of cargo one kilometer.
|--- | -----------------------------------------------------------------

|(7) | Operating revenue divided by ASKs.
|--- | ----------------------------------



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Operating expenses

The main component of our operating expenses is aircraft fuel expense. During 2014, fuel represented approximately 30.4% of our total operating
expenses and 28.6% of our total operating revenue. In addition to aircraft fuel, our principal operating expense categories consist of salaries, wages and benefits, sales and marketing, ground operations, aircraft rentals, maintenance and repairs,
air traffic, depreciation, amortization, and impairment, general and administrative expenses, passenger services and flight operations. A common measure of per-unit costs in the airline industry is cost per available seat kilometer (CASK) which is
generally defined as operating expenses divided by ASKs.

Aircraft fuel.Our aircraft fuel expenses refer to our
into-plane fuel cost (which includes the fuel price, taxes and distribution costs). These expenses are variable and fluctuate based on global oil prices and also vary significantly from country to country primarily due to local
distribution and transportation costs and taxes. During 2014, we purchased approximately 28.6% of our fuel at our largest hub in Bogotá, Colombia where we were able to obtain better fuel distribution prices relative to our other locations of
purchase due to volume discounts. We have approximately 30 fuel suppliers across our international network and seek to fuel our aircraft in those cities where fuel prices are lower. From 2013 to 2014, the price of West Texas Intermediate crude oil,
a benchmark widely used for crude oil prices that is measured in barrels and quoted in U.S. dollars, decreased 4.9% from an average of $97.9 per barrel to an average of $93.2 per barrel.

The following table sets forth certain summary information relating to our fuel expenses for the periods indicated:



|                                                                                |  |                         |         |  |      |  |         |      |  |  |         | 
|------------------------------------------------------------------------------- |  | ----------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                                                |  | Year ended December 31, |        
|                                                                                |  | 2014                    |         |  | 2013 |  |         | 2012 | 
|Average price per gallon of jet fuel into plane (net of hedge) (in US$ dollars) |  |                         | 3.15    |  |      |  | 3.27    |      |  |  | 3.33    | 
|Gallons consumed (in thousands)                                                 |  |                         | 427,785 |  |      |  | 406,143 |      |  |  | 388,066 | 



|* | Data in table does not include regional operations in Central America.
|- | ----------------------------------------------------------------------



|                                                                                |  |                         |         |  |      |  |         |      |  |  |         | 
|------------------------------------------------------------------------------- |  | ----------------------- | ------- |  | ---- |  | ------- | ---- |  |  | ------- | 
|                                                                                |  | Year ended December 31, |        
|                                                                                |  | 2014                    |         |  | 2013 |  |         | 2012 | 
|Average price per gallon of jet fuel into plane (net of hedge) (in US$ dollars) |  |                         | 3.15    |  |      |  | 3.27    |      |  |  | 3.33    | 
|Gallons consumed (in thousands)                                                 |  |                         | 396,973 |  |      |  | 377,696 |      |  |  | 360,374 | 
|Available seat kilometers (in millions)                                         |  |                         | 41,052  |  |      |  | 38,762  |      |  |  | 36,545  | 
|Gallons per ASK (in thousandths)                                                |  |                         | 9.7     |  |      |  | 9.7     |      |  |  | 9.9     | 



|* | Data in table does not include regional operations in Central America or cargo operations.
|- | ------------------------------------------------------------------------------------------

Our total fuel costs are also affected by settlements of our fuel hedge instruments. Our current fuel hedging strategy contemplates hedging
approximately 30% to 40% of our projected next 12-month fuel consumption. As of December 31, 2014 we had hedges in place for approximately 35% of our projected next 15-month fuel consumption through trust mechanisms and futures, forwards and
options contracts. See Item 11. Quantitative and Qualitative Disclosures About Market RiskFuel.

Salaries, wages and
benefits. Our salaries, wages and benefits costs related to personnel expenses (including cockpit crew, flight attendants and maintenance, airport and commercial and administrative personnel) have historically increased as our business has grown
due to the growth in the number of our employees required to support our increased capacity. In some cases, we adjust salaries of our employees based on changes in the cost of living in the countries where these employees work.

Sales and marketing. Our sales and marketing expenses consist primarily of payments made to travel agents and credit card companies for
ticket sales and also include fees related to reservation systems and global distribution systems. Costs related to sales through direct channels, including sales from our ticket offices, our call centers, direct agents and our websites are also
included in selling costs. In 2014, travel agents received average commissions, consisting of base commissions and back-end incentives, equal to approximately 3.3% of ticket prices for ticket sales made in Colombia and 3.2% of ticket prices for
ticket sales made in other countries. Base commissions are accounted for as deferred assets and are expensed when transportation is provided. Back-end incentive commissions, which are incentives for particular travel agencies and are paid on a
periodic basis based on the achievement



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of certain sales targets set by us, are expensed when the sale occurs. Back-end incentive commissions are calculated based on the actual amount of sales of a travel agency compared to the target.
We have encouraged travel agencies to move from standard base commissions to back-end incentive compensation based on sales volume. During the last three years, our commission expense has decreased as a percentage of our passenger revenue, and we
believe it may decrease further as a result of an industry-wide trend to increase the proportion of sales made through direct channels.

Ground operations. Ground operations expenses consist primarily of landing and parking fees, air navigation fees, ramp services and
passenger security related costs. These costs are generally correlated with the number of departures and passengers carried.

Aircraft
rentals. Our aircraft rentals expenses consist of leases of aircraft, engines other equipment, and are generally fixed by the terms of our operating lease agreements. As of December 31, 2014, we held 81, or 42.0%, of our total 193 aircraft
under operating leases, the majority of which had fixed interest rates and therefore were not exposed to interest rate fluctuations during their term, which averages between six and eight years. As of December 31, 2014, the average term
remaining on our aircraft operating leases was three years and five months.

As part of our strategy in recent years, we have replaced
some of the operating leased aircraft in our fleet with aircraft financed by debt. Costs relating to aircraft debt are classified as interest expense, reducing our aircraft rental costs. As of December 31, 2014, we owned 112, or 58.0%, of our
total 193 aircraft.

Maintenance and repairs. Our maintenance and repairs expenses consist primarily of repairs of aircraft
components, engines and equipment and routine maintenance for aircraft. We account for engine and other aircraft components overhaul expenses by using the deferral method pursuant to which the cost of the overhaul is capitalized and then amortized
until the shorter of the period to the next overhaul (based on total flying hours of each overhauled engine or estimated cycles for other aircraft components) and the end of the lease term. Maintenance of flight and aircraft equipment costs is
generally correlated with departures and block hours.

For certain operating leases, we are contractually obligated to return aircraft in
a defined condition. We accrue for restitution costs related to aircraft held under operating leases at the time the asset does not meet return conditions criteria and throughout the remaining duration of the lease. Restitution costs are based on
the net present value of the estimated average costs of returning the aircraft. These costs are reviewed annually and adjusted as appropriate. Our line maintenance and our airframe heavy maintenance for all fleet types are performed by us at our
hubs in Bogotá, Colombia and San Salvador, El Salvador. Line maintenance at other domestic and international destinations is carried out by third-party contractors. We outsource all of our engine and certain other heavy maintenance on
aircraft components.

Air traffic. Our air traffic expenses consist primarily of airport facilities expenses, airport outsourced
personnel, and costs related to passenger compensation for interrupted or over-booked flights.

Depreciation, amortization, and
impairment. Our depreciation, amortization, and impairment costs include depreciation of aircraft assets owned or under finance leases, depreciation of non-aircraft assets, amortization of capitalized projects owned or under finance leases and
amortization of intangible assets. Depreciation, amortization, and impairment costs also include impairment expense, which consists of fleet retirement charges including impairment charges for spare parts.

General, administrative and other. Our general, administrative and other expenses consist primarily of expenses related to
administrative expenses, general services, legal and other professional fees and the gain or loss from the sale of assets. They also include local taxes, such as municipal taxes on sales in Colombia (each municipality has a different rate but the
average tax rate is approximately 1% of sales generated in each municipality). Sales in Colombia are subject to value added tax which we withhold on behalf of the government. Revenue from certain of our domestic routes and all cargo revenue are not
subject to this tax. We pay value added taxes on most of the services and products that we purchase but do not apply a tax credit on our value added tax accounts to all such valued added tax payments. The value added tax payments that are not
registered as tax credits are registered as additional expenses in our Colombian accounting.

Passenger services. Our passenger
services costs consist primarily of costs related to meals and beverages, baggage handling, in-flight entertainment and other costs related to aircraft and airport handling services. These expenses are directly related to the number of passengers we
carry and the number of flights we operate, as well as the type of service provided.

Flight operations. Our flight operations
expense consists primarily of insurance coverage for hull and liabilities (passenger liability, third-party liability), hull war, hull deductible and war excess and also include hotel accommodation, per diem expense, and training costs. We
insure in the London reinsurance market.



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Interest income, interest expense, derivative instruments and foreign exchange

Interest income. Interest income comprises interest income on funds invested (including available-for-sale financial assets), changes in
the fair value of financial assets and gains on interest rate hedging instruments. Interest income is recognized as accrued using the effective interest rate method.

Interest expense.Interest expense comprises interest expense on borrowings, unwinding of the discount on provisions, changes in the
fair value of financial assets and losses on interest rate hedging instruments. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognized using the effective interest
method.

Derivative instruments. Derivative instruments include the net effect of changes in fair value of financial instruments as
a result of variation in the market value of our instruments.

Foreign exchange. Foreign exchange consists primarily of the net
non-cash gain or loss on our assets and liabilities related to the appreciation or depreciation of Colombian pesos against U.S. dollars.

Income taxes

Corporate income tax structure in certain countries. Set forth below are certain highlights relating to the determination of our income
tax in certain countries relevant to our operations, in each case as of December 31, 2014.

Colombia. The corporate income tax
statutory rate was 33% in 2011 and 2012, and the taxable base is the higher of the presumptive income based on taxable net worth and the ordinary base of taxable net profits. For tax years 2013 and 2014, due to a tax reform enacted in December 2012,
the corporate income tax rate was reduced to 25%.

The income tax payment is calculated after the application of tax credits originated by
advance payments and withholdings. The effective income tax rate for Avianca is lower than the statutory rate due to the application of two mechanisms: first, a tax credit based on the proportion of revenue generated by international flights over
total operating revenue; and second, the application of a special deduction based on the value of our investment in productive fixed assets. Both mechanisms are protected from tax reforms until March 2029 through a Legal Stability Contract signed
with the Colombian government.

Additionally, there is an income tax for equity called Impuesto sobre la renta para la equidad, or
CREE, which has a 9% tax rate. CREE has a similar taxable base to the corporate income tax, except for special deductions such as productive fixed assets that are not deductible. Corporate taxpayers of the CREE were exempt from payroll taxes,
provided that the employees of said taxpayers earn, on an individual basis, at least ten times the legal minimum wage. Additionally, from fiscal year 2015 to 2018, a new surcharge will apply to CREE taxable income. These surcharge rates are 5% for
2015, 6% for 2016, 8% for 2017 and 9% for 2018.

Due to a tax reform enacted in December 2014, a new Wealth Tax was introduced that
applies to companies from 2015 to 2017. This tax will be levied at varying rates on Colombian and foreign entities owning a gross-worth net of liabilities equal or higher than COP 1,000,000,000 on January 1, 2015

El Salvador. The corporate income tax rate is 30%, and the taxable base is net profit for the year (that includes some permanent
adjustments between accounting and tax rules). The effective income tax rate for our local legal entity is lower than the statutory rate due to the application of a percentage based on the proportion of flights taking off from El Salvador and other
domestic gross revenue items over total revenues. This percentage is applied to the total costs and expenses to obtain the total deductions. The total deductions are then subtracted from taxable income to obtain the taxable net profits subject to
the 30% tax rate. A presumptive income tax based on gross revenue has a 1% tax rate unless the tax profit and loss statement generates losses. The income tax payment is calculated after the application of the tax credits originated by advance
payments and withholdings.

Peru. The corporate income tax rate is 30%, and the taxable base is net profit for the year (that
includes some permanent adjustments between accounting and tax rules). The income tax payment is calculated after the application of the tax credits originated in advance payments and withholdings. A temporary tax on net assets applies, based on the
tax value of the net assets booked at the previous tax year closing. This tax rate is 0.4%, which is applied to the net assets which value exceeds an exempted threshold.

Costa Rica. The corporate income tax rate is 30%, and the taxable base is the net profit for the year (that includes some permanent
adjustments between the accounting and tax rules). The effective income tax rate for our local legal entity is lower than the statutory rate due to the application of a percentage based on the proportion of flights taking off from Costa Rica and
other domestic gross revenue items over total revenue. This percentage is applied to the total costs and expenses to obtain the total deductions. As a result, the total deductions are subtracted from the taxable income to obtain the taxable net
profits subject to the 30% tax rate. The income tax payment is calculated after application of the tax credits originated in advance payments and withholdings.



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Panama. Revenues at our holding company generated by foreign operations are not subject to
taxation in Panama in accordance with Panamanian legislation since it is not deemed to be earning active income from Panamanian sources.

Bahamas. The Commonwealth of the Bahamas does not impose income taxes on companies organized under its jurisdiction. Revenues of our
subsidiary Grupo Taca Holdings generated by foreign operations are not subject to taxation in accordance with the legislation of the Bahamas. However, the subsidiaries of Grupo Taca Holdings are subject to local taxes in the jurisdictions in which
they operate.

Deferred income tax. Deferred tax is generated by temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is calculated using the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been
enacted or substantially enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred income tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is
probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be
realized. We book this difference in our income statement as deferred income tax. For the years ended December 31, 2013 and 2014, we determined that we would generate sufficient taxable income to realize our deferred tax assets.

Factors Affecting Comparability

Changes in classification of certain accounts

Beginning with the third quarter of 2014, we successfully migrated our accounting platform to a new ERP (enterprise resource planning)
platform. In connection with this change, the grouping of certain expenses and the related presentation of certain line items changed beginning in the third quarter of 2014, which affects the comparability of these line items against prior periods.
The most significant of these changes are described in footnotes to the table under Results of Operations for the Years Ended December 31, 2013 and December 31, 2014. See also Note 35 to our audited consolidated financial
statements.

Seasonality

We expect our quarterly operating results to continue to fluctuate from quarter to quarter due to seasonality. This fluctuation is the result
of high vacation and leisure demand occurring during the northern hemispheres summer season in the third quarter (principally in July and August) and again during the fourth quarter (principally in December). In addition, January is typically
a month in which heavy air passenger demand occurs.

Changes in foreign exchange rates

The average foreign exchange rates of the Colombian peso to the U.S. dollar for 2012, 2013 and 2014 were COP 1,797.7, COP 1,868.9 and COP
2,001.1, respectively. The 7.1% average depreciation of the Colombian peso between 2013 and 2014 had a negative effect on our operating results due to the fact that the percentage of our total revenue denominated in Colombian pesos was greater than
the percentage of our total expenses denominated in Colombian pesos for 2014.

Results of Operations for the Years Ended December 31, 2013 and
December 31, 2014

The following table sets forth certain income statement data for the years indicated:



|                        |  |                         |           |  |                               |   |           |      |  |  |       |   |  |             |       |   |  |  |      |  
|----------------------- |  | ----------------------- | --------- |  | ----------------------------- | - | --------- | ---- |  |  | ----- | - |  | ----------- | ----- | - |  |  | ---- | -
|                        |  | Year Ended December 31, |           |  | % Change                      |  
|                        |  | 2014(1)                 |           |  | 2013                          |   |           | 2014 |  |  | 2013  |   |  | 2013 to2014 |      
|                        |  | (in US$ thousands)      |           |  | (as a % of operating
revenue) |   |           |      | 
|Operating revenue:      |  |                         |           |  |                               |   |           |      |  |  |       |   |  |             |       |   |  |  |      |  
|Passenger               |  | $                       | 3,862,721 |  |                               | $ | 3,862,397 |      |  |  | 82.1  | % |  |             | 83.8  | % |  |  | 0.0  | %
|Cargo and other(2)      |  |                         | 840,850   |  |                               |   | 747,207   |      |  |  | 17.9  | % |  |             | 16.2  | % |  |  | 12.5 | %
|                        |  |                         |           |  |                               |   |           |      |  |  |       |   |  |             |       |   |  |  |      |  
|Total operating revenue |  |                         | 4,703,571 |  |                               |   | 4,609,604 |      |  |  | 100.0 | % |  |             | 100.0 | % |  |  | 2.0  | %



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|                                           |  |                         |           |   |                               |   |           |      |  |  |      |    |  |             |      |    |  |  |       |   
|------------------------------------------ |  | ----------------------- | --------- | - | ----------------------------- | - | --------- | ---- |  |  | ---- | -- |  | ----------- | ---- | -- |  |  | ----- | --
|                                           |  | Year Ended December 31, |           |   | % Change                      |  
|                                           |  | 2014(1)                 |           |   | 2013                          |   |           | 2014 |  |  | 2013 |    |  | 2013 to2014 |     
|                                           |  | (in US$ thousands)      |           |   | (as a % of operating
revenue) |   |           |      | 
|Operating expenses:                        |  |                         |           |   |                               |   |           |      |  |  |      |    |  |             |      |    |  |  |       |   
|Flight operations(3)                       |  |                         | 56,695    |   |                               |   | 82,872    |      |  |  | 1.2  | %  |  |             | 1.8  | %  |  |  | (31.6 | )%
|Aircraft fuel                              |  |                         | 1,345,755 |   |                               |   | 1,325,763 |      |  |  | 28.6 | %  |  |             | 28.8 | %  |  |  | 1.5   | % 
|Ground operations(4)(5)                    |  |                         | 397,625   |   |                               |   | 343,812   |      |  |  | 8.5  | %  |  |             | 7.5  | %  |  |  | 15.7  | % 
|Aircraft rentals                           |  |                         | 299,220   |   |                               |   | 273,643   |      |  |  | 6.4  | %  |  |             | 5.9  | %  |  |  | 9.3   | % 
|Passenger services                         |  |                         | 154,464   |   |                               |   | 143,512   |      |  |  | 3.3  | %  |  |             | 3.1  | %  |  |  | 7.6   | % 
|Maintenance and repairs(4)(5)              |  |                         | 268,894   |   |                               |   | 188,659   |      |  |  | 5.7  | %  |  |             | 4.1  | %  |  |  | 42.5  | % 
|Air traffic                                |  |                         | 206,151   |   |                               |   | 180,140   |      |  |  | 4.4  | %  |  |             | 3.9  | %  |  |  | 14.4  | % 
|Sales and marketing(2)(4)                  |  |                         | 605,674   |   |                               |   | 584,468   |      |  |  | 12.9 | %  |  |             | 12.7 | %  |  |  | 3.6   | % 
|General, administrative and other(3)(5)(6) |  |                         | 165,172   |   |                               |   | 257,273   |      |  |  | 3.5  | %  |  |             | 5.6  | %  |  |  | (35.8 | )%
|Salaries, wages and benefits(3)(6)         |  |                         | 725,793   |   |                               |   | 674,951   |      |  |  | 15.4 | %  |  |             | 14.6 | %  |  |  | 7.5   | % 
|Depreciation, amortization, and impairment |  |                         | 198,660   |   |                               |   | 169,580   |      |  |  | 4.2  | %  |  |             | 3.7  | %  |  |  | 17.1  | % 
|                                           |  |                         |           |   |                               |   |           |      |  |  |      |    |  |             |      |    |  |  |       |   
|Total operating expenses                   |  |                         | 4,424,103 |   |                               |   | 4,224,673 |      |  |  | 94.1 | %  |  |             | 91.6 | %  |  |  | 4.7   | % 
|                                           |  |                         |           |   |                               |   |           |      |  |  |      |    |  |             |      |    |  |  |       |   
|Operating profit                           |  |                         | 279,468   |   |                               |   | 384,931   |      |  |  | 5.9  | %  |  |             | 8.4  | %  |  |  | (27.4 | )%
|Interest expense                           |  |                         | (133,989  | ) |                               |   | (113,330  | )    |  |  | (2.8 | )% |  |             | (2.5 | )% |  |  | 18.2  | % 
|Interest income                            |  |                         | 17,099    |   |                               |   | 11,565    |      |  |  | 0.4  | %  |  |             | 0.3  | %  |  |  | 47.9  | % 
|Derivative instruments                     |  |                         | 5,924     |   |                               |   | (11,402   | )    |  |  | 0.1  | %  |  |             | (0.2 | )% |  |  | 152.0 | % 
|Foreign exchange                           |  |                         | 10,272    |   |                               |   | 23,517    |      |  |  | 0.2  | %  |  |             | 0.5  | %  |  |  | (56.3 | )%
|                                           |  |                         |           |   |                               |   |           |      |  |  |      |    |  |             |      |    |  |  |       |   
|Profit before income tax                   |  |                         | 178,774   |   |                               |   | 295,281   |      |  |  | 3.8  | %  |  |             | 6.4  | %  |  |  | (39.5 | )%
|                                           |  |                         |           |   |                               |   |           |      |  |  |      |    |  |             |      |    |  |  |       |   
|Total income tax expense                   |  |                         | (50,280   | ) |                               |   | (46,460   | )    |  |  | (1.1 | )% |  |             | (1.0 | )% |  |  | 8.2   | % 
|                                           |  |                         |           |   |                               |   |           |      |  |  |      |    |  |             |      |    |  |  |       |   
|Net profit for the year                    |  | $                       | 128,494   |   |                               | $ | 248,821   |      |  |  | 2.7  | %  |  |             | 5.4  | %  |  |  | (48.4 | )%



|(1) | Beginning with the third quarter of 2014, we migrated our accounting platform to a new ERP (enterprise resource planning) platform. In connection with this change, the grouping of certain expenses and the related
presentation of certain line items changed beginning in the third quarter of 2014, which affects the comparability of these line items against prior periods. The most significant of these changes are described in succeeding footnotes.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Prior to the third quarter of 2014, interline commissions related to code sharing were recognized in Cargo and other revenue. In the third quarter and fourth quarters of 2014, $11.3 million of these commissions were
reallocated as credits to Sales and marketing to offset interline commissions expenses instead of being recognized as Cargo and other revenue.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Prior to the third quarter of 2014, pilot, crew and ground staff travel and other expenses were recorded in Flight operations. In the third quarter and fourth quarters of 2014, $24.1 million of these expenses were
recorded primarily in Salaries, wages and benefits and to a lesser degree in General, administrative and other instead of being recorded in Flight operations.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Prior to the third quarter of 2014, courier service costs associated with our DEPRISA business unit were recorded in Ground operations. In the third quarter and fourth quarters of 2014, $11.2 million of these
expenses were recorded Sales and marketing and Maintenance and repairs instead of being recorded in Ground operations.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Prior to the third quarter of 2014, transportation of parts, buildings and rentals, electric energy service and ground equipment maintenance were recorded in Ground operations and General, administrative and other. In
the third quarter and fourth quarters of 2014, $14.8 million of these expenses were recorded in Maintenance and repairs instead of being recorded in Ground operations and General, administrative and other.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Prior to the third quarter of 2014, employee benefits were recorded in General, administrative and other. In the third quarter and fourth quarters of 2014, $18.6 million of these expenses were recorded in Salaries,
wages and benefits instead of being recorded in General, administrative and other.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Net profit

Our net profit for the year was $128.5 million in 2014, a 48.4% decrease from $248.8 million in 2013, primarily as a result of a 27.4%, or
$105.5 million, decrease in operating profit, as a consequence of the adjustment and transition process related to capacity rationalization in Venezuela and lower passenger and cargo yields resulting from a competitive environment in Latin American
markets. We recorded a net gain on foreign exchange of $10.3 million in 2014 compared to a net gain of $23.5 million in 2013, primarily as a result of the average 7.1% depreciation of the Colombian peso against the U.S. dollar in 2014, which
produced a gain in 2014 due to the fact that our average Colombian peso-denominated liabilities exceeded our Colombian peso-denominated assets, partially offset by losses related to the devaluation of the Venezuelan bolivar. During 2014, our
net profit excluding foreign exchange translation adjustment loss and derivative instrument expense was $112.3 million, a 52.6% decrease from $236.7 million in 2013. Our operating revenue per ASK (RASK) was 11.5 and 11.9 cents for the years ended
December 31, 2014 and 2013, respectively.

Operating revenue

Our operating revenue was $4,703.6 million in 2014, a 2.0% increase over $4,609.6 million in 2013, as a result of a $0.3 million increase in
passenger revenue and a $93.6 million increase in revenue from cargo and other revenues. Our operating revenue per ASK was 11.5 cents in 2014, a 3.4% decrease from 11.9 cents in 2013, primarily as a result of a 4.3% decrease in passenger yield and a
9.0% decrease in cargo yield due to increased price competition.

Passenger revenue. Our passenger revenue was $3,862.7 million in
2014, a 0.0% increase over $3,862.4 million in 2013, primarily as a result of a 6.5% increase in passengers carried in 2014, from 24.6 million in 2013 to 26.2 million in 2014, offset by a 6.0% decrease in average fare. Our passenger load
factor decreased from 80.5% in 2013 to 79.4% in 2014 while our capacity increased 5.9% in 2014. Our passenger yield decreased 4.3% from 12.4 cents in 2013 to 11.8 cents in 2014. In addition, passenger revenue related to flight change fees increased
38.3% and revenue related to miles redemptions increase 83.8%, offset by decreases of 73.7% in service charges and 57.4% in passenger code share revenue.

Cargo and other. Our revenue from cargo and other was $840.9 million in 2014, a 12.5% increase over $747.2 million in 2013, primarily
as a result of an 11.9% increase in cargo and courier revenues, from $504.7 million in 2013 to $564.9 million in 2014.

Our cargo revenues
increased in 2014 despite a 9.0% decrease in cargo yields (from 0.51 cents in 2013 to 0.46 cents in 2014) which was more than offset by a 25.5% increase in traffic in terms of RTKs (from 838 million in 2013 to 1,052 million in 2014) and a
16.4% increase in our cargo capacity in terms of ATKs. As our usage grew at a higher rate than our capacity, our cargo load factor increased from 60.0% in 2013 to 64.4% in 2014.

Our other operating revenues were $276.0 million in 2014, a 13.8% increase over $242.5 million in 2013, primarily as a result of a $10.7
million increase in ground operations and maintenance revenue related to an increase in major inspections and technical assistance. In 2014, LifeMiles revenues accounted for 51.2% of our total other operating revenues, air transport-related
services provided to third parties accounted for 13.5%, aircraft leases accounted for 11.1% and other sources such as interline revenues, VIP lounges, duty free sales, vacation packages and other accounted for the remaining 24.1%.

Operating expenses

Operating expenses were $4,424.1 million in 2014, a 4.7% increase over $4,224.7 million in 2013, primarily as a result of a $80.2 million
increase in maintenance and repairs expense, a $53.8 million increase in ground operations expense, a $50.8 million increase in salaries, wages and benefits expense, a $25.6 million increase in aircraft rentals expense and a $20.0 million increase
in aircraft fuel expense. As a percentage of operating revenue, operating expenses increased from 91.6% in 2013 to 94.1% in 2014.

Our
operating expenses excluding aircraft fuel cost increased 6.2% as our capacity in ASKs increased 5.9%. As a result, our CASK excluding fuel increased 0.3% in 2014. The breakdown of our operating expenses per ASK (CASK) is as follows:



|                                   |  |                         |      |  |      |  |      |          |  |  |      |   
|---------------------------------- |  | ----------------------- | ---- |  | ---- |  | ---- | -------- |  |  | ---- | --
|                                   |  | Year Ended December 31, |     
|                                   |  | 2014                    |      |  | 2013 |  |      | % Change | 
|                                   |  | (in US cents)           |      |  |      | 
|Operating expenses per ASK (CASK): |  |                         |      |  |      |  |      |         
|Aircraft fuel                      |  |                         | 3.28 |  |      |  | 3.42 |          |  |  | (4.2 | )%
|Salaries, wages and benefits       |  |                         | 1.77 |  |      |  | 1.74 |          |  |  | 1.5  | % 
|Sales and marketing                |  |                         | 1.48 |  |      |  | 1.51 |          |  |  | (2.2 | )%



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|                                           |  |                         |       |  |      |  |       |          |  |  |       |   
|------------------------------------------ |  | ----------------------- | ----- |  | ---- |  | ----- | -------- |  |  | ----- | --
|                                           |  | Year Ended December 31, |      
|                                           |  | 2014                    |       |  | 2013 |  |       | % Change | 
|                                           |  | (in US cents)           |       |  |      | 
|Ground operations                          |  |                         | 0.97  |  |      |  | 0.89  |          |  |  | 9.2   | % 
|Aircraft rentals                           |  |                         | 0.73  |  |      |  | 0.71  |          |  |  | 3.2   | % 
|Maintenance and repairs                    |  |                         | 0.66  |  |      |  | 0.49  |          |  |  | 34.6  | % 
|Air traffic                                |  |                         | 0.50  |  |      |  | 0.46  |          |  |  | 8.1   | % 
|Depreciation, amortization, and impairment |  |                         | 0.48  |  |      |  | 0.44  |          |  |  | 10.6  | % 
|General, administrative and other          |  |                         | 0.40  |  |      |  | 0.66  |          |  |  | (39.4 | )%
|Passenger services                         |  |                         | 0.38  |  |      |  | 0.37  |          |  |  | 1.6   | % 
|Flight operations                          |  |                         | 0.14  |  |      |  | 0.21  |          |  |  | (35.4 | )%
|                                           |  |                         |       |  |      |  |       |          |  |  |       |   
|Total                                      |  |                         | 10.78 |  |      |  | 10.90 |          |  |  | (1.1  | )%
|Total (excluding fuel)                     |  |                         | 7.50  |  |      |  | 7.48  |          |  |  | 0.3   | % 

Aircraft fuel. Aircraft fuel expense was $1,345.8 million in 2014, a 1.5% increase over $1,325.8
million in 2013, primarily as a result of a 5.3% growth in fuel consumption during 2014 reflecting a 7.2% increase in our block hours, partially offset by a 3.8% decrease in our average into-plane fuel cost (fuel price plus taxes and
distribution costs), which decreased from an average of $3.27 per gallon in 2013 to an average of $3.15 per gallon in 2014. Our higher aircraft fuel expense in 2014 was also partially attributable to losses of $22.4 million in 2014, from settlements
of our fuel hedge instruments. Because our capacity in ASKs increased at a higher rate (5.9%) than our aircraft fuel expense increased, our cost of fuel per ASK decreased 4.2% in 2014.

Salaries, wages and benefits. Salaries, wages and benefits expense was $725.8 million in 2014, a 7.5% increase over $674.9 million in
2013, primarily as a result of a 7.3% increase in total personnel, from 19,153 at December 31, 2013 to 20,545 at December 31, 2014, mainly related to growth of our operations during 2014, particularly as a result of the growth in our
domestic Colombian operations, increases in temporary personnel due to relocation of some domestic routes within Colombia from Puente Aéreo domestic terminal in Bogotá to El Dorado International Airport and average salary adjustments
based on inflation, as well as changes related to the grouping of certain expenses and the related presentation of certain line items which changed beginning in the third quarter of 2014 and affect the comparability of these line items against prior
periods (as described above). In terms of unit cost per ASK, salaries, wages and benefits increased by 1.5% from 1.74 cents in 2013 to 1.77 cents in 2014.

Sales and marketing. Sales and marketing expenses were $605.7 million in 2014, a 3.6% increase over $584.5 million in 2013, primarily
as a result of an increase in travel agent costs, financial partners, incentives related to loyalty programs and other commissions due to an 6.5% increase in our passenger traffic, partially offset by a decrease in costs related to global publicity
and distribution cost optimization initiatives, such as negotiated reduced fees for global distribution systems and increased direct sales. In terms of unit cost per ASK, selling expenses decreased 2.2% from 1.51 cents in 2013 to 1.48 cents in 2014.

Ground operations. Ground operations expense was $397.6 million in 2014, a 15.7% increase over $343.8 million in 2013, primarily
as a result of an 11.2% increase in departures in 2014 compared to 2013, due to the introduction of new routes and frequencies during 2014. This increase also reflected price increases in navigation, ramp services and landing and parking rates, as
well as changes related to the grouping of certain expenses and the related presentation of certain line items which changed beginning in the third quarter of 2014 and affect the comparability of these line items against prior periods (as described
above). In terms of unit cost per ASK, ground operations increased 9.2% from 0.89 cents in 2013 to 0.97 cents in 2014.

Aircraft
rentals. Aircraft rentals expense was $299.2 million in 2014, a 9.3% increase over $273.6 million in 2013, primarily as a result of our incorporation of seven new aircraft (two A320s, two A321, two A330 and one B787) under operating leases in
2014, plus an operating lease for one B767 for use while the delivery of one B787 was delayed, which contributed to the total number of our aircraft under operating leases increasing from 73 as of December 31, 2013 to 81 as of December 31,
2014. In terms of unit cost per ASK, aircraft rentals increased 3.2% from 0.71 cents in 2013 to 0.73 cents in 2014.

Maintenance and
repairs. Maintenance and repairs expense was $268.9 million in 2014, a 42.5% increase from $188.7 million in 2013, primarily as a result of higher return conditions expenses related to the retirement of our ATR42 fleet and one Airbus 330 and an
increase in non-capitalized maintenance events and higher provisions for obsolescence of inventory corresponding to the phase-out of our Fokker 50 aircraft, as well as changes related to the grouping of certain expenses and the related presentation
of certain line items which changed beginning in the third quarter of 2014 and affect the comparability of these line items against prior periods (as described above). In terms of unit cost per ASK, maintenance and repairs increased 34.6% from 0.49
cents in 2013 to 0.66 cents in 2014.



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Air traffic. Air traffic expense was $206.2 million in 2014, a 14.4% increase over $180.1
million in 2013, primarily as a result of an 11.2% increase in departures and the addition of new routes and frequencies added to our network in 2014, as well as changes related to the grouping of certain expenses and the related presentation of
certain line items which changed beginning in the third quarter of 2014 and affect the comparability of these line items against prior periods (as described above), partially offset by initiatives implemented to increase cost efficiency such as
system standardization and airport facilities cost optimization,. In terms of unit cost per ASK, air traffic increased 8.1% from 0.46 cents in 2013 to 0.50 cents in 2014.

Depreciation, amortization, and impairment. Depreciation, amortization, and impairment expense was $198.7 million in 2014, a 17.1%
increase over $169.6 million in 2013, primarily due to maintenance events amortization of $11.0 million and a $12.0 million increase in aircraft depreciation as a result of the increase of the total number of our owned aircraft increasing from 98 as
of December 31, 2013 to 112 as of December 31, 2014 related to our fleet modernization plan. In terms of unit cost per ASK, depreciation, amortization, and impairment expense increased 10.6% from 0.44 cents in 2013 to 0.48 cents in 2014.

General, administrative and other. General, administrative and other expenses were $165.2 million in 2014, a 35.8% decrease from
$257.3 million in 2013, primarily due to an increase in gain on sale of assets of $4.0 million in 2014 and changes related to the grouping of certain expenses and the related presentation of certain line items which changed beginning in the third
quarter of 2014 and affect the comparability of these line items against prior periods (as described above). In terms of unit cost per ASK, general, administrative and other expenses decreased 39.4% from 0.66 cents in 2013 to 0.40 cents in 2014.

Passenger services. Passenger services expense was $154.5 million in 2014, a 7.6% increase over $143.5 million in 2013, primarily
as a result of a 6.5% increase in passengers carried and, to a lesser extent, improvements in on-board service and related equipment across our integrated route network and also includes changes related to the grouping of certain expenses and the
related presentation of certain line items which changed beginning in the third quarter of 2014 and affect the comparability of these line items against prior periods. In terms of unit cost per ASK, passenger services expense increased 1.6% from
0.37 cents in 2012 to 0.38 cents in 2014.

Flight operations. Flight operations expense was $56.7 million in 2014, a 31.6% decrease
from $82.9 million in 2013, primarily as a result of cost optimization in transportation and feeding of operating personnel, a decrease in insurance costs as a result of lower negotiated rates for insurance at renewal due to economies of scale,
safety track records and our improved bargaining position as a result of our larger size after the combination of Avianca and Taca and changes related to the grouping of certain expenses and the related presentation of certain line items which
changed beginning in the third quarter of 2014 and affect the comparability of these line items against prior periods (as described above). In terms of unit cost per ASK, flight operations expense decreased 35.4% from 0.21 cents in 2013 to 0.14
cents in 2014.

Operating profit and operating margin

Our operating profit was $279.5 million in 2014, a 27.4% decrease from $384.9 million in 2013. Our operating margin decreased from 8.4% in 2013
to 5.9% in 2014 as a result of our expenses increasing at a higher rate (4.7%), than our total operating revenues (2.0%), primarily due to an increase related to our growth in capacity measure in ASKs of 5.9%, an 11.2% increase in departures due to
our offering of more frequencies and new flight destinations in 2014, and the increase in our fleet, combined with lower passenger and cargo yields.

Interest expense, interest income, derivative instruments and foreign exchange

Interest expense. Interest expense was $133.9 million in 2014, an 18.2% increase from $113.3 million in 2013, primarily as a result of
$25.8 million of interest related to $250 million bonds issued in the reopening of our international bonds in 2014, and increase in new debt to acquire new aircraft, partially offset by a decrease in the average interest rate of our debt from 4.47%
in 2013 to 4.26% in 2014, and a decrease of COP-denominated debt as consequence of payment of bonds in COP.

Interest income.
Interest income was $17.1 million in 2014, a 47.9% increase from $11.6 million in 2013, primarily as a result of a higher amount of deposits, partially offset by a decrease in the average interest rate on deposits at banks from 2.37% in 2013 to
2.28% in 2014.

Derivative instruments. Derivative instruments expense includes the net effect of changes in fair value of
derivatives (financial instruments). In 2014 we recognized a $5.9 million gain in fair value of derivative instruments compared to a loss of $11.4 million in 2013, primarily as a result of positive variation in the market value of our fuel
derivatives instruments.

Foreign exchange. We recorded a net gain on foreign exchange of $10.3 million compared to a net gain of
$23.5 million in 2013, primarily as a result of the 24.2% depreciation of the Colombian peso against the U.S. dollar at December 31, 2014 compared with the Colombian peso exchange rate at December 31, 2013, which produced a gain in 2014
due to the fact that our average Colombian peso-denominated liabilities exceeded our Colombian peso-denominated assets, partially offset by losses related to the devaluation of the Venezuelan bolivar.



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Provision for income tax expense

Our current income tax expense was $33.8 million in 2014, a 16.2% decrease compared to current income tax expense of $40.3 million in 2013. Our
deferred income tax expense was $16.5 million in 2014, a 167.7% increase from $6.2 million in 2013.

Our total effective tax rate
increased from 15.8% in 2013 to 28.1% in 2014, primarily due to the effect of certain non-deductible expenses in Colombia and the application of a net worth presumptive taxable base for our corporate income tax.

Additionally, in Colombia, the international flights income tax credit decreased by 25.7% from 2013 to 2014, mainly due to the decrease of
profits and the netting of exempted income of Avianca S.A.

Results of Operations for the Years Ended December 31, 2012 and December 31, 2013

The following table sets forth certain income statement data for the years indicated:



|                                           |  |                         |           |   |                               |   |           |      |  |  |       |    |  |             |       |    |  |  |       |   
|------------------------------------------ |  | ----------------------- | --------- | - | ----------------------------- | - | --------- | ---- |  |  | ----- | -- |  | ----------- | ----- | -- |  |  | ----- | --
|                                           |  | Year Ended December 31, |           |   | % Change                      |  
|                                           |  | 2013                    |           |   | 2012                          |   |           | 2013 |  |  | 2012  |    |  | 2012 to2013 |      
|                                           |  | (in US$ thousands)      |           |   | (as a % of operating
revenue) |   |           |      | 
|Operating revenue:                         |  |                         |           |   |                               |   |           |      |  |  |       |    |  |             |       |    |  |  |       |   
|Passenger                                  |  | $                       | 3,862,397 |   |                               | $ | 3,550,559 |      |  |  | 83.8  | %  |  |             | 83.2  | %  |  |  | 8.8   | % 
|Cargo and other                            |  |                         | 747,207   |   |                               |   | 719,097   |      |  |  | 16.2  | %  |  |             | 16.8  | %  |  |  | 3.9   | % 
|                                           |  |                         |           |   |                               |   |           |      |  |  |       |    |  |             |       |    |  |  |       |   
|Total operating revenue                    |  |                         | 4,609,604 |   |                               |   | 4,269,656 |      |  |  | 100.0 | %  |  |             | 100.0 | %  |  |  | 8.0   | % 
|Operating expenses:                        |  |                         |           |   |                               |   |           |      |  |  |       |    |  |             |       |    |  |  |       |   
|Flight operations                          |  |                         | 82,872    |   |                               |   | 84,774    |      |  |  | 1.8   | %  |  |             | 2.0   | %  |  |  | (2.2  | )%
|Aircraft fuel                              |  |                         | 1,325,763 |   |                               |   | 1,305,396 |      |  |  | 28.8  | %  |  |             | 30.6  | %  |  |  | 1.6   | % 
|Ground operations                          |  |                         | 343,812   |   |                               |   | 321,552   |      |  |  | 7.5   | %  |  |             | 7.5   | %  |  |  | 6.9   | % 
|Aircraft rentals                           |  |                         | 273,643   |   |                               |   | 255,566   |      |  |  | 5.9   | %  |  |             | 6.0   | %  |  |  | 7.1   | % 
|Passenger services                         |  |                         | 143,512   |   |                               |   | 132,823   |      |  |  | 3.1   | %  |  |             | 3.1   | %  |  |  | 8.0   | % 
|Maintenance and repairs                    |  |                         | 188,659   |   |                               |   | 222,705   |      |  |  | 4.1   | %  |  |             | 5.2   | %  |  |  | (15.3 | )%
|Air traffic                                |  |                         | 180,140   |   |                               |   | 169,650   |      |  |  | 3.9   | %  |  |             | 4.0   | %  |  |  | 6.2   | % 
|Sales and marketing                        |  |                         | 584,468   |   |                               |   | 522,645   |      |  |  | 12.7  | %  |  |             | 12.2  | %  |  |  | 11.8  | % 
|General, administrative and other          |  |                         | 257,273   |   |                               |   | 206,666   |      |  |  | 5.6   | %  |  |             | 4.8   | %  |  |  | 24.5  | % 
|Salaries, wages and benefits               |  |                         | 674,951   |   |                               |   | 644,901   |      |  |  | 14.6  | %  |  |             | 15.1  | %  |  |  | 4.7   | % 
|Depreciation, amortization, and impairment |  |                         | 169,580   |   |                               |   | 122,080   |      |  |  | 3.7   | %  |  |             | 2.9   | %  |  |  | 38.9  | % 
|                                           |  |                         |           |   |                               |   |           |      |  |  |       |    |  |             |       |    |  |  |       |   
|Total operating expenses                   |  |                         | 4,224,673 |   |                               |   | 3,988,758 |      |  |  | 91.6  | %  |  |             | 93.4  | %  |  |  | 5.9   | % 
|                                           |  |                         |           |   |                               |   |           |      |  |  |       |    |  |             |       |    |  |  |       |   
|Operating profit                           |  |                         | 384,931   |   |                               |   | 280,898   |      |  |  | 8.4   | %  |  |             | 6.6   | %  |  |  | 37.0  | % 
|Interest expense                           |  |                         | (113,330  | ) |                               |   | (122,112  | )    |  |  | (2.5  | )% |  |             | (2.9  | )% |  |  | (7.2  | )%
|Interest income                            |  |                         | 11,565    |   |                               |   | 25,006    |      |  |  | 0.3   | %  |  |             | 0.6   | %  |  |  | (53.8 | )%
|Derivative instruments                     |  |                         | (11,402   | ) |                               |   | (24,042   | )    |  |  | (0.2  | )% |  |             | (0.6  | )% |  |  | (52.6 | )%
|Foreign exchange                           |  |                         | 23,517    |   |                               |   | (56,788   | )    |  |  | 0.5   | %  |  |             | (1.3  | )% |  |  | 141.4 | % 
|                                           |  |                         |           |   |                               |   |           |      |  |  |       |    |  |             |       |    |  |  |       |   
|Profit before income tax                   |  |                         | 295,281   |   |                               |   | 102,962   |      |  |  | 6.4   | %  |  |             | 2.4   | %  |  |  | 186.8 | % 
|                                           |  |                         |           |   |                               |   |           |      |  |  |       |    |  |             |       |    |  |  |       |   
|Total income tax expense                   |  |                         | (46,460   | ) |                               |   | (64,705   | )    |  |  | (1.0  | )% |  |             | (1.5  | )% |  |  | (28.2 | )%
|                                           |  |                         |           |   |                               |   |           |      |  |  |       |    |  |             |       |    |  |  |       |   
|Net profit for the year                    |  | $                       | 248,821   |   |                               | $ | 38,257    |      |  |  | 5.4   | %  |  |             | 0.9   | %  |  |  | 550.4 | % 

Net profit

Our net profit for the year was $248.8 million in 2013, a 550.4% increase over $38.3 million in 2012, primarily as a result of a 37.0%, or
$104.0 million, increase in operating profit, reflecting continuing implementation of our integration strategy aimed at capturing revenue synergies as a result of our enhanced network, improved connectivity through our hubs, our revamped
LifeMiles



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loyalty program and improved customer service. We recorded a net gain on foreign exchange of $23.5 million in 2013 compared to a net loss of $56.8 million in 2012, primarily as a result of the
average 4.0% depreciation of the Colombian peso against the U.S. dollar in 2013, which produced a gain in 2013 due to the fact that our average Colombian peso-denominated liabilities exceeded our Colombian peso-denominated assets. During 2013, our
net profit excluding foreign exchange translation adjustment loss and derivative instrument expense was $236.7 million, a 98.8% increase over $119.1 million in 2012. Our operating revenue per ASK (RASK) was 11.9 and 11.7 cents for the years ended
December 31, 2013 and 2012, respectively.

Operating revenue

Our operating revenue was $4,609.6 million in 2013, an 8.0% increase over $4,269.7 million in 2012, as a result of a $311.8 million increase in
passenger revenue and a $28.1 million increase in revenue from cargo and other revenues. Our operating revenue per ASK was 11.9 cents in 2013, a 1.8% increase over 11.7 cents in 2012, primarily as a result of the implementation of improvements in
our revenue management practices, consolidation of our combined network and the growth of other lines of revenue, primarily our LifeMiles loyalty program and cargo, in each case, as explained more fully below.

Passenger revenue. Our passenger revenue was $3,862.4 million in 2013, an 8.8% increase over $3,550.6 million in 2012, primarily as a
result of a 6.6% increase in passengers carried in 2013, from 23.1 million in 2012 to 24.6 million in 2013, reflecting our 6.1% capacity increase (consisting of a 4.2% increase in international capacity and a 13.6% increase in our domestic
capacity) in terms of ASKs in 2013, resulting in a 7.3% increase in RPKs. Our passenger load factor increased from 79.6% in 2012 to 80.5% in 2013 despite our 6.1% capacity increase in 2013. Our passenger yield increased 1.4% from 12.2 cents in 2012
to 12.4 cents in 2013.

Cargo and other. Our revenue from cargo and other was $747.2 million in 2013, a 3.9% increase over $719.1
million in 2012, primarily as a result of a 4.3% increase in cargo and courier revenues, from $484.1 million in 2012 to $504.7 million in 2013.

Our cargo revenues increased in 2013 despite of a 5.9% decrease in cargo yields (from 0.54 cents in 2012 to 0.51 cents in 2013) which was more
than offset by a 12.0% increase in traffic in terms of RTKs (from 748 million in 2012 to 838 million in 2013) and a 17.1% increase in our cargo capacity in terms of ATKs, primarily as a result of a freighter fleet transition from Boeing
767-200 to Airbus A330-200F which have 56% more capacity than the Boeing aircraft. As our capacity grew at a higher rate than our usage, our cargo load factor decreased from 62.5% in 2012 to 60.0% in 2013.

Our other operating revenues were $242.5 million in 2013, a 3.2% increase over $235.0 million in 2012, primarily as a result of an $11.1
million increase in LifeMiles revenue related to incremental sales to partners and incremental mile redemptions. In 2013, LifeMiles revenues accounted for 58.7% of our total other operating revenues, air transport-related services
provided to third parties accounted for 11.0%, aircraft leases accounted for 10.0% and other sources such as service charges, excess baggage, interline revenues and ticket penalties accounted for the remaining 20.4%.

Operating expenses

Operating expenses were $4,224.7 million in 2013, a 5.9% increase over $3,988.8 million in 2012, primarily as a result of a $61.8 million
increase in sales and marketing expense, a $50.6 million increase in general and administrative expense, a $30.1 million increase in salaries, wages and benefits expense, a $22.3 million increase in ground operations expense and a $20.4 million
increase in aircraft fuel expense. As a percentage of operating revenue, operating expenses decreased from 93.4% in 2012 to 91.6% in 2013.

Our operating expenses excluding aircraft fuel cost increased at the same pace, 8.0%, as our operating revenue, reflecting our efforts to
manage controllable costs. As a result, our CASK excluding fuel increased 1.9% in 2013. The breakdown of our operating expenses per ASK (CASK) is as follows:



|                                   |  |                         |      |  |      |  |      |          |  |  |       |   
|---------------------------------- |  | ----------------------- | ---- |  | ---- |  | ---- | -------- |  |  | ----- | --
|                                   |  | Year Ended December 31, |     
|                                   |  | 2013                    |      |  | 2012 |  |      | % Change | 
|                                   |  | (in US cents)           |      |  |      | 
|Operating expenses per ASK (CASK): |  |                         |      |  |      |  |      |         
|Aircraft fuel                      |  |                         | 3.42 |  |      |  | 3.57 |          |  |  | (4.2  | )%
|Salaries, wages and benefits       |  |                         | 1.74 |  |      |  | 1.76 |          |  |  | (1.3  | )%
|Sales and marketing                |  |                         | 1.51 |  |      |  | 1.43 |          |  |  | 5.4   | % 
|Ground operations                  |  |                         | 0.89 |  |      |  | 0.88 |          |  |  | 0.8   | % 
|Aircraft rentals                   |  |                         | 0.71 |  |      |  | 0.70 |          |  |  | 1.0   | % 
|Maintenance and repairs            |  |                         | 0.49 |  |      |  | 0.61 |          |  |  | (20.1 | )%



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|                                           |  |                         |       |  |      |  |       |          |  |  |      |   
|------------------------------------------ |  | ----------------------- | ----- |  | ---- |  | ----- | -------- |  |  | ---- | --
|                                           |  | Year Ended December 31, |      
|                                           |  | 2013                    |       |  | 2012 |  |       | % Change | 
|                                           |  | (in US cents)           |       |  |      | 
|General, administrative and other          |  |                         | 0.66  |  |      |  | 0.57  |          |  |  | 17.4 | % 
|Air traffic                                |  |                         | 0.46  |  |      |  | 0.46  |          |  |  | 0.1  | % 
|Depreciation, amortization, and impairment |  |                         | 0.44  |  |      |  | 0.33  |          |  |  | 31.0 | % 
|Passenger services                         |  |                         | 0.37  |  |      |  | 0.36  |          |  |  | 1.9  | % 
|Flight operations                          |  |                         | 0.21  |  |      |  | 0.23  |          |  |  | (7.8 | )%
|                                           |  |                         |       |  |      |  |       |          |  |  |      |   
|Total                                      |  |                         | 10.90 |  |      |  | 10.91 |          |  |  | (0.1 | )%
|Total (excluding fuel)                     |  |                         | 7.48  |  |      |  | 7.34  |          |  |  | 1.9  | % 

Aircraft fuel. Aircraft fuel expense was $1,325.8 million in 2013, a 1.6% increase over $1,305.4
million in 2012, primarily as a result of a 4.7% growth in fuel consumption during 2013 reflecting a 3.6% increase in our block hours, partially offset by a 1.8% decrease in our average into-plane fuel cost (fuel price plus taxes and
distribution costs), which decreased from an average of $3.33 per gallon in 2012 to an average of $3.27 per gallon in 2013. Our higher aircraft fuel expense in 2013 was also partially offset by gains of $3.1 million in 2013, from settlements of our
fuel hedge instruments. As a result of the foregoing, our cost of fuel per ASK decreased 4.2% in 2013.

Salaries, wages and
benefits. Salaries, wages and benefits expense was $674.9 million in 2013, a 4.7% increase over $644.9 million in 2012, primarily as a result of a 6.0% increase in total personnel, from 18,071 at December 31, 2012 to 19,153 at
December 31, 2013, mainly related to growth of our operations during 2013, particularly as a result of the growth in our domestic Peruvian operations, increases in variable bonus compensation, cost of living adjustments related to relocating
some of our employees to Bogotá and average salary adjustments based on inflation. In terms of unit cost per ASK, salaries, wages and benefits decreased by 1.3% from 1.76 cents in 2012 to 1.74 cents in 2013.

Sales and marketing. Sales and marketing expenses were $584.5 million in 2013, an 11.8% increase over $522.6 million in 2012, primarily
as a result of an increase in travel agent costs and other commissions due to an 8.8% increase in our passenger revenue, partially offset by a decrease in costs related to packaged travel services and distribution cost optimization initiatives, such
as negotiated reduced fees for global distribution systems and increased direct sales. In terms of unit cost per ASK, selling expenses increased 5.4% from 1.43 cents in 2012 to 1.51 cents in 2013.

Ground operations. Ground operations expense was $343.8 million in 2013, a 6.9% increase over $321.6 million in 2012, primarily as a
result of a 2.7% increase in departures in 2013 compared to 2012, due to the introduction of new routes during 2013. This increase also reflected price increases in navigation, ramp services and landing and parking rates. In terms of unit cost per
ASK, ground operations increased 0.8% from 0.88 cents in 2012 to 0.89 cents in 2013.

General, administrative and other. General,
administrative and other expenses were $257.3 million in 2013, a 24.5% increase from $206.7 million in 2012, primarily due to a decrease in gain on sale of assets of $15.8 million and an increase in professional fees related to fleet renewal, legal
claims and special project implementation, including our U.S. initial public offering and the issuance of the initial issuance of our Senior Notes. In terms of unit cost per ASK, general, administrative and other expenses increased 17.4% from 0.57
cents in 2012 to 0.66 cents in 2013.

Aircraft rentals. Aircraft rentals expense was $273.6 million in 2013, a 7.1% increase over
$255.6 million in 2012, primarily as a result of our incorporation of five new aircraft (four A320s, and one A330) under operating leases in 2013, which contributed to the total number of our aircraft under operating leases increasing from 70 at
December 31, 2012 to 73 at December 31, 2013. In terms of unit cost per ASK, aircraft rentals increased 1.0% from 0.70 cents in 2012 to 0.71 cents in 2013.

Maintenance and repairs. Maintenance and repairs expense was $188.7 million in 2013, a 15.3% decrease from $222.7 million in 2012,
primarily as a result of lower maintenance reserves and engine expenses related to the retirement of our Boeing freighter fleet, the benefits of our ongoing fleet modernization program, which we believe reduces our maintenance and repair costs by
creating a modern and homogenous fleet. In terms of unit cost per ASK, maintenance and repairs decreased 20.1% from 0.61 cents in 2012 to 0.49 cents in 2013.

Air traffic. Air traffic expense was $180.1 million in 2013, a 6.2% increase over $169.7 million in 2012, primarily as a result of a
2.7% increase in departures and the addition of new routes added to our network in 2013, partially offset by initiatives implemented to increase cost efficiency such as system standardization and airport facilities cost optimization. In terms of
unit cost per ASK, air traffic remained stable at 0.46 cents in 2013.



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Depreciation, amortization, and impairment. Depreciation, amortization, and impairment
expense was $169.6 million in 2013, a 38.9% increase over $122.1 million in 2012, primarily due to maintenance events amortization of $31.9 million and a $20.5 million increase in aircraft depreciation as a result of the incorporation of five new
owned aircraft related to our fleet modernization plan. In terms of unit cost per ASK, depreciation, amortization, and impairment expense increased 31.0% from 0.33 cents in 2012 to 0.44 cents in 2013.

Passenger services. Passenger services expense was $143.5 million in 2013, an 8.0% increase over $132.8 million in 2012, primarily as a
result of a 6.6% increase in passengers carried and, to a lesser extent, improvements in on-board service and related equipment across our integrated route network. In terms of unit cost per ASK, passenger services expense increased 1.9% from 0.36
cents in 2012 to 0.37 cents in 2013.

Flight operations. Flight operations expense was $82.9 million in 2013, a 2.2% decrease from
$84.8 million in 2012, primarily as a result of a 3.6% increase in our block hours, partially offset by a decrease in training costs and a decrease in insurance costs as a result of lower negotiated rates for insurance at renewal due to economies of
scale, safety track records and our improved bargaining position as a result of our larger size after the combination of Avianca and Taca. In terms of unit cost per ASK, flight operations expense decreased 7.8% from 0.23 cents in 2012 to 0.21 cents
in 2013.

Operating profit and operating margin

Our operating profit was $384.9 million in 2013, a 37.0% increase over $280.9 million in 2012. Our operating margin increased from 6.6% in 2012
to 8.4% in 2013 as a result of our expenses increasing at a lower rate, 5.9%, than did our total operating revenues, 8.0%, primarily due to an 8.8% increase in passenger revenue and a 3.9% increase in cargo and other revenue.

Interest expense, interest income, derivative instruments and foreign exchange

Interest expense. Interest expense was $113.3 million in 2013, a 7.2% decrease from $122.1 million in 2012, primarily as a result of
$20.6 million of one-time event charges related to the phase-out of older aircraft in our cargo fleet in connection with our fleet modernization plan registered in 2012, partially offset by an increase in the average interest rate of our debt from
4.17% in 2012 to 4.47% in 2013.

Interest income. Interest income was $11.6 million in 2013, a 53.8% decrease from $25.0 million
in 2012, primarily as a result of lower average interest rate on deposits at banks during 2013, which rate averaged 2.37% in 2013 compared to 2.88% in 2012.

Derivative instruments. Derivative instruments expenses include the net effect of changes in fair value of derivatives (financial
instruments). In 2013 we recognized an $11.4 million loss in fair value of derivative instruments compared to a loss of $24.0 million in 2012, primarily as a result of negative variation in the market value of our fuel derivatives instruments.

Foreign exchange. We recorded a net gain on foreign exchange of $23.5 million in 2012 compared to a net loss of $56.8 million in 2012,
primarily as a result of the 9.0% depreciation of the Colombian peso against the U.S. dollar at December 31, 2013 compared with the Colombian peso exchange rate at December 31, 2012, which produced a gain in 2013 due to the fact that our
average Colombian peso-denominated liabilities exceeded our Colombian peso-denominated assets.

Provision for income tax expense

Our current income tax expense was $40.3 million in 2013, a 19.2% decrease compared to current income tax expense of $49.9 million
in 2012. Our deferred income tax expense was $6.2 million in 2013, a 58.4% decrease from $14.8 million in 2012.

Our total effective tax
rate decreased from 62.9% in 2012 to 15.8% in 2013, primarily as a result of exchange rate differences as of December 31, 2013 that had a significant impact on our profits (exchange rate differences are not deductible for income tax purposes)
and other non-deductible expenses.

Additionally, our international flights income tax credit increased following the increase in our
current income tax.

Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. We believe that our estimates and judgments are reasonable; however, actual results and the timing of
recognition of such amounts could differ from those estimates.



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Critical accounting policies and estimates are defined as those that are reflective of
significant judgments and uncertainties and could potentially result in materially different results under different assumptions and conditions. For a discussion of these and other accounting policies, see Note 3 to our audited consolidated
financial statements.

Our consolidated financial statements for the years ended December 31, 2014 and 2013 include our accounts and
the accounts of each of our subsidiaries, including:



|                                              |  |                         |  |                      |       |   |  |  |       |  
|--------------------------------------------- |  | ----------------------- |  | -------------------- | ----- | - |  |  | ----- | -
|Name of Subsidiary                            |  | Country ofIncorporation |  | Ownership Interest % |      
|                                              |  | 2014                    |  |                      | 2013  |  
|Aerolíneas Galápagos, S.A. Aerogal            |  | Ecuador                 |  |                      | 99.62 | % |  |  | 99.62 | %
|Aerovías del Continente Americano S.A.        |  | Colombia                |  |                      | 99.98 | % |  |  | 99.98 | %
|Avianca, Inc.                                 |  | USA                     |  |                      | 100   | % |  |  | 100   | %
|Avianca Leasing, LLC                          |  | USA                     |  |                      | 0     | % |  |  | 0     | %
|Grupo Taca Holdings Limited                   |  | Bahamas                 |  |                      | 100   | % |  |  | 100   | %
|Latin Airways Corp.                           |  | Panama                  |  |                      | 100   | % |  |  | 100   | %
|LifeMiles Corp.                               |  | Panama                  |  |                      | 100   | % |  |  | 100   | %
|Líneas Aéreas Costarricenses, S.A.            |  | Costa Rica              |  |                      | 92.40 | % |  |  | 92.40 | %
|Taca International Airlines, S.A.             |  | El Salvador             |  |                      | 96.84 | % |  |  | 96.84 | %
|Tampa Cargo Logistics, Inc.                   |  | USA                     |  |                      | 100   | % |  |  | 100   | %
|Tampa Cargo S.A.S                             |  | Colombia                |  |                      | 100   | % |  |  | 100   | %
|Technical and Training Services, S.A. de C.V. |  | El Salvador             |  |                      | 99    | % |  |  | 99    | %
|Trans American Airlines S.A.                  |  | Peru                    |  |                      | 100   | % |  |  | 100   | %
|Vu-Marsat S.A.                                |  | Costa Rica              |  |                      | 100   | % |  |  | 100   | %

We determined that we have control, in accordance with IFRS, over Getcom International Investments, SL,
Avianca Leasing, LLC, and Turbo Aviation Two, Limited, after assessing our ability to direct the relevant activities of these companies, our exposure and rights to variable returns, and our ability to affect the amount the companies returns.

Our consolidated financial statements also include the financial statements of 44 special purpose entities.

Intercompany balances and transactions, and any unrealized income and expenses arising from intercompany transactions, are eliminated in
preparing our consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

Goodwill and intangible assets

We measure goodwill initially at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for
non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, we recognize the difference as a gain on bargain purchase.

After the initial recognition, we measure goodwill at cost less any accumulated impairment losses. For the purpose of impairment testing,
goodwill acquired in a business combination is, from the acquisition date, allocated to each of our cash-generating units that are expected to benefit from the acquisition, irrespective of whether other assets or liabilities of the acquired entity
are assigned to those units. Goodwill is tested for impairment annually as of the year end and when circumstances indicate that the carrying value of the cash generating unit to which it pertains may be impaired. Impairment is determined for
goodwill by assessing the recoverable amount of each cashgenerating unit (or group of cashgenerating units) to which the goodwill relates. Where the recoverable amount of the cash generating unit is less than their carrying amount, an
impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

We initially measure
intangible assets acquired at cost in accordance with IAS 38 Intangible Assets. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Internally generated intangible assets,
excluding capitalized development costs, are not capitalized and expenditures are reflected in the consolidated statement of comprehensive income in the year in which the expenditure is incurred.



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We amortize intangible assets with finite lives over their useful economic lives and then these
assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired. We review the amortization period and the amortization method for an intangible asset with a finite useful life at least at the end of each
reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, as appropriate, and are treated as changes
in accounting estimates.

Major maintenance and return conditions

Our aircraft maintenance expense consists of aircraft repair and charges related to light and heavy maintenance of our aircraft and maintenance
of components and materials. We account for engine overhaul expense by using the deferral method pursuant to which the actual cost of the overhaul is capitalized and then amortized, based on total estimated flying hours of each overhauled engine or
estimated cycles for other components. We record this amortization expense under the operating expenses line item depreciation, amortization, and impairment. Routine maintenance expenses of aircraft and engines are charged to expense as
incurred.

For certain operating leases, we are contractually obligated to return aircraft in a defined condition. We accrue for
restitution costs related to aircraft held under operating leases at the time the asset does not meet the return conditions criteria and throughout the remaining duration of the lease. Restitution costs are based on the net present value of the
estimated average costs of returning the aircraft and are recognized under the operating expenses line item maintenance and repairs. These costs are reviewed annually and adjusted as appropriate.

Maintenance deposits

Maintenance deposits refer to the payments we make to leasing companies for future aircraft and engine maintenance work. Management performs
regular reviews of the recovery of maintenance deposits and believes that the values reflected in our consolidated statement of financial position are recoverable. These deposits are used to pay for maintenance performed, and might be reimbursed to
us after termination of the contracts. Certain lease agreements establish that the existing deposits, in excess of maintenance costs are not refundable. Such excess occurs when the amounts previously used in maintenance services are lower than the
amounts deposited. Any excess amounts retained by the lessor upon the lease contract termination date, which are not considered material, are recognized as additional aircraft lease expense. Payments related to maintenance that we do not expect to
perform are recognized when paid as additional rental expense. Some of the aircraft lease agreements do not require maintenance deposits.

Accounting for property and equipment

We measure flight equipment, property and other equipment at cost less accumulated depreciation and accumulated impairment losses in accordance
with IAS 16 Property, Plant and Equipment.

Subsequent costs (replacement of components, improvements and extensions) incurred
for scheduled major maintenance of aircraft fuselages and engines are capitalized and depreciated as a separate component until the next scheduled maintenance or return of the asset. The value of the component replaced is written-off. The rest of
the repairs and maintenance are charged to expense when incurred.

Depreciation of property and equipment is calculated using the
straight-line method over the assets estimated useful lives, except in the case of certain technical components, which are depreciated on the basis of cycles and hours flown.

We evaluate our estimates and assumptions at each reporting period and, if applicable, we adjust these estimates and assumptions. These
adjustments are accounted for on a prospective basis through depreciation, amortization, and impairment expense, as required by IFRS.

Lease accounting

As of December 31, 2014, our fleet was comprised of 193 aircraft, 112 of which were owned and 81 were subject to long-term operating
leases.

Finance leases. Leases in terms of which we assume substantially all the risks and rewards of ownership are classified as
finance leases in accordance with IAS 17 Leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments, which is recognized as a
liability.

Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance charges are recognized in interest (expense) income in the income statement.



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A leased asset is depreciated over the useful life of the asset. However, if there is no
reasonable certainty that we will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating leases. Due to the nature of our operating leases, which do not result in an ownership interest in the subject aircraft, we
recognize no assets or liabilities with respect to the assets leased. All payments made under such leases, exclusive of the amounts related to maintenance deposits, are recorded as operating expenses.

Gains or losses related to sale-leaseback transactions classified as an operating lease after the sale are accounted for as follows:

(i) They are immediately recognized as other (expense) income when it is clear that the transaction is established at fair value;

(ii) If the sale price is below fair value, any profit or loss is immediately recognized as other (expense) income, however, if the loss is
compensated by future lease payments at below market price, it is deferred and amortized in proportion to the lease payments over the contractual lease term; or

(iii) In the event of the sale price is higher than the fair value of the asset, the value exceeding the fair value is deferred and amortized
during the period when the asset is expected to be used. The amortization of the gain is recorded as a reduction in lease expenses.

If
the sale-leaseback transactions result in a financial lease, any excess proceeds over the carrying amount shall be deferred and amortized over the lease term.

Deferred income tax

Deferred tax is recognized for temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.

Deferred tax is recognized for all taxable temporary differences, except:



| |  |  | Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences
will not reverse in the foreseeable future.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.

Deferred tax assets and
liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to
settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

Derivative financial instruments

We use derivative financial instruments such as forward currency contracts, interest rate swaps and forward commodity contracts to hedge our
foreign currency risks, interest rate risks and commodity price risks, respectively. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into. Subsequent to initial
recognition, derivatives are carried at fair value as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.

Commodity contracts that are entered into and continue to be held for the purpose of the receipt or delivery of a non-financial item in
accordance with our expected purchase, sale or usage requirements are held at cost.

Any gains or losses arising from changes in the fair
value of derivatives are taken directly into profit or loss, except for the effective portion of derivatives assigned as cash flow hedges, which is recognized in other comprehensive income.



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Cash flow hedges which meet the strict criteria for hedge accounting are accounted for as
follows:

The effective portion of the gain or loss on the hedging instrument is recognized directly as other comprehensive income in the
equity, while any ineffective portion of cash flow hedge related to operating and financing activities is recognized immediately in the consolidated statement of comprehensive income.

Amounts recognized as other comprehensive income are transferred to the consolidated statement of comprehensive income when the hedged
transaction affects earnings, such as when the hedged financial income or financial expense is recognized or when a forecast sale occurs. Where the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognized
as other comprehensive income are transferred to the initial carrying amount of the nonfinancial asset or liability.

If the forecasted
transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognized in equity is transferred to the consolidated statement of comprehensive income. If the hedging instrument expires or is sold, terminated
or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognized in other comprehensive income remains in other comprehensive income until the forecast transaction or firm
commitment affects profit or loss.

We use forward currency contracts as hedges of our exposure to foreign currency risk in forecasted
transactions and firm commitments, as well as forward commodity contracts for its exposure to volatility in commodity prices.

Revenue recognition

In accordance with IAS 18, we recognize revenue to the extent that it is probable that the economic benefits will flow to us and the revenue
can be reliably measured. We measure revenue at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duty. The following specific recognition criteria must also
be met before revenue is recognized:

Passenger and cargo transportation. We recognize revenue from passenger and cargo
transportation as earned when the service is rendered.

We are required to charge and collect certain taxes and fees on our passenger
tickets. These taxes and fees include transportation taxes, airport passenger facility charges and arrival and departure taxes. These taxes and fees are legal assessments on the customer. As we have a legal obligation to act as a collection agent
with respect to these taxes and fees, such amounts are not included within passenger revenue. We record a liability when the amounts are collected and derecognize the liability when payments are made to the applicable government agency or operating
carrier.

A significant portion of our ticket sales are processed through major credit card companies, resulting in accounts receivable
which are generally short-term in duration and typically collected prior to revenue being recognized. We believe that the credit risk associated with these receivables is minimal.

Cargo is carried out in our dedicated freighter fleet and, to the extent of excess capacity, in the bellies of our passenger aircraft.

Aircraft leasing.We lease certain aircraft to third parties under operating lease agreements and recognize aircraft leasing income as
other revenue in our consolidated statement of comprehensive income when it is earned, according to the terms of each lease agreement.

Frequent flyer. Our LifeMiles frequent flyer program is designed to retain and increase traveler loyalty by offering incentives
to travelers for their continued patronage. Under the LifeMiles program, miles are earned by flying on our airlines or our alliance partners and by using the services of program partners for such things as credit card use, hotel stays, car
rentals, and other activities.

Miles earned can be exchanged for flights or other products or services from alliance partners.

The fair value of consideration in respect of initial sale is allocated between the miles and other components of the sale, including breakage
in accordance with IFRS Interpretations Committee 13 Customer loyalty programs. Revenue allocated to the reward credits is deferred within Air traffic liability until redemption. Components other than the fair value of gross billings are
immediately recognized within Revenue. These components correspond to an initial revenue recognition element, related to the marketing attributes of the miles sold. The amount of revenue deferred is measured by applying statistical
techniques based on market



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approach using observable information in accordance with IFRS 13 Fair Value Measurements. Inputs to the models include assumptions based on managements expected redemption rates and
customer preferences. The amount of revenue recognized related to breakage is based on the number of miles redeemed in a period in relation to the total number expected to be redeemed.

Employee benefits

We sponsor defined benefit pension plans, which require contributions to be made to separately administered funds. We have also agreed to
provide certain additional post-employment benefits to senior employees in Colombia. These benefits are unfunded. The cost of providing benefits under the defined benefit plans is determined separately for each plan using the projected unit credit
cost method. Actuarial gains and losses for defined benefit plans are recognized in full in the period in which they occur in other comprehensive income.

The defined benefit asset or liability comprises the present value of the defined benefit obligation (using a discount rate based on Colombian
Government bonds), and less the fair value of plan assets out of which the obligations are to be settled. Plan assets are held by the Social Security Institute and private pension funds are not available to our creditors, nor can they be paid
directly to us. Fair value is based on market price information and in the case of quoted securities on the published bid price. The value of any defined benefit asset recognized is restricted and the present value of any economic benefits available
in the form of refunds from the plan or reductions in the future contributions to the plan.

Under IAS 19 (2011), we determine the net
interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the net defined benefit liability (asset) at
the beginning of the annual period. It takes into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. The net interest on the net defined benefit liability (asset)
comprises:



| |  |  | interest cost on the defined benefit obligation;
| | - |  | ------------------------------------------------



| |  |  | interest income on plan assets; and
| | - |  | -----------------------------------



| |  |  | interest on the effect of the asset ceiling.
| | - |  | --------------------------------------------

Recently Issued and Amended Accounting
Standards and Interpretations

We applied, for the first time. certain standards and amendments, which are effective for annual
periods beginning on or after January 1, 2014. The nature and the impact of each new standard or amendment is described below:

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)

These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS
10 Consolidated Financial Statements and must be applied retrospectively, subject to certain transition relief. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. These
amendments have no impact on us, since none of our entities qualify to be an investment entity under IFRS 10.

Offsetting Financial
Assets and Financial Liabilities  Amendments to IAS 32

These amendments clarify the meaning of currently has a legally
enforceable right to setoff and the criteria for nonsimultaneous settlement mechanisms of clearing houses to qualify for offsetting. These amendments have no impact on us.

Novation of Derivatives and Continuation of Hedge Accounting  Amendments to IAS 39

These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets
certain criteria. These amendments have no impact on us, as the we have not novated our derivatives during the current or prior periods.

IFRIC 21 Levies

IFRIC 21 is applicable to all levies imposed by governments under legislation, other than outflows that are within the scope of other standards
(e.g., IAS 12 Income Taxes) and fines or other penalties for breaches of legislation.



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The interpretation clarifies that an entity recognizes a liability for a levy no earlier than
when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with
the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, no liability is recognized before the specified minimum threshold is reached. This interpretation had no impact on us, as we have applied recognition
principles under IAS 37 Provisions, Contingent Liabilities and Contingent Assets consistent with the requirements of IFRIC 21 in prior years.

Annual Improvements 20102012 Cycle

In the 20102012 annual improvements cycle, the IASB issued seven amendments to six standards, which included an amendment to IFRS 13 Fair
Value Measurement. The amendment to IFRS 13 is effective immediately and, thus, for periods beginning at January 1, 2014, and it clarifies in the Basis for Conclusions that shortterm receivables and payables with no stated interest rates
can be measured at invoice amounts when the effect of discounting is immaterial. This amendment to IFRS 13 has no impact on the Company.

Annual Improvements 20112013 Cycle

In the 20112013 annual improvements cycle, the IASB issued four amendments to four standards, which included an amendment to IFRS 1
Firsttime Adoption of International Financial Reporting Standards. The amendment to IFRS 1 is effective immediately and, thus, for periods beginning at January 1, 2014, and clarifies in the Basis for Conclusions that an entity may choose
to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entitys first IFRS financial statements.
This amendment to IFRS 1 has no impact on us, as we are an existing IFRS preparer.

We have not early adopted any other standard,
interpretation or amendment that has been issued but is not yet effective.

Standards Issued but Not Yet Effective

IFRS 9 Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments The IASB has previously published versions of IFRS 9 that
introduced new classification and measurement requirements (in 2009 and 2010) and a new hedge accounting model (in 2013). The July 2014 publication represents the final version of the Standard, replaces earlier versions of IFRS 9 and completes the
IASBs project to replace IAS 39 Financial Instruments: Recognition and measurement. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective application is required, but
comparative information is not compulsory. Early application of previous versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before February 1, 2015. We are currently assessing the impact of IFRS 9 and
plans to adopt the new standard on the required effective date.

IFRS 14 Regulatory Deferral

IFRS 14 allows an IFRS firsttime adopter, whose activities are subject to rateregulation, to continue to account, with some limited
changes, in accordance with its previous GAAP, for regulatory deferral account balances both on initial adoption of IFRS and in subsequent financial statement. IFRS 14 is effective for annual periods beginning on or after January 1, 2016. Since
we are an existing IFRS preparer, this standard would have no impact on our financial statements.

IFRS 15 Revenue from Contracts
with Customers

IFRS 15 specifies how to recognize revenue, requiring to provide users of financial statements with more
informative, relevant disclosures. The standard provides a single, principles based, five step model to be applied to revenue arising from contracts with customers. Under IFRS 15 revenue is recognized at an amount that reflects the consideration to
which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognizing revenue. The new revenue standard is applicable to all
entities and will supersede all current revenue recognition requirements under IFRS. The standard was issued in May 2014. Either a full or modified retrospective application is required for annual periods beginning on or after January 1, 2017
with early adoption permitted. We are currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date.

Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests

The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the
activity of the joint operation constitutes a business must apply the relevant IFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the
acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to IFRS 11



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to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party. The amendments
apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective for annual periods beginning on or after January 1, 2016,
with early adoption permitted. These amendments are not expected to have any impact on our financial statements.

Amendments to IAS
16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortization

The amendments clarify the principle in IAS 16
and IAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenuebased
method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets. On May 12, 2014, the IASB published the final amendments to IAS 16 and IAS 38. The amendments
are effective prospectively for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact to on us given that we have not used a revenuebased method to
depreciate its noncurrent assets.

Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants

The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. The amendments are
retrospectively effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact on us as we do not have any bearer plants.

Amendments to IAS 27: Equity Method in Separate Financial Statements

The amendments reinstate the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an
entitys separate financial statements. Entities already applying IFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively. Firsttime IFRS adopters electing to
use the equity method in its separate financial statements will be required to apply this method from the date of transition to IFRS. The amendments are effective for annual periods beginning on or after January 1, 2016, with early adoption
permitted. These amendments will not have any impact on our consolidated financial statements.

Amendments to IAS 28 and IFRS 10:
Sale or contribution of assets between an investor and its associate or joint venture

The amendments address the conflict between
IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that constitute a
business, as defined in IFRS 3 Business Combinations, between an investor and its associate or joint venture, is recognized in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business, however, is
recognized only to the extent of unrelated investors interests in the associate or joint venture. These amendments are effective for annual periods beginning on or after January 1, 2016, with early application permitted. These amendments
will be applied prospectively in accounting the loss of control in any of our subsidiaries, associates or joint ventures.

Amendments to IAS 1: Disclosures initiative

The amendments clarify materiality requirements. In addition, the amendments introduce a clarification that the list of line items to be
presented in the statement of financial position and statement of profit and loss and other comprehensive income can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements and clarify that an
entitys share of OCI of equityaccounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss. Finally, the amendments add
additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes. These amendments are effective for annual periods beginning on or after
January 1, 2016, with earlier application permitted. Application of the amendments need not be disclosed. We are currently assessing the impact of IAS 1 and plans to adopt the new standards on the required effective date.

Recoverable Amount Disclosures for NonFinancial Assets  Amendments to IAS 36

These amendments remove the unintended consequences of IFRS 13 Fair Value Measurement on the disclosures required under IAS 36 Impairment of
Assets. In addition, these amendments require disclosure of the recoverable amounts for the assets or cashgenerating units (CGUs) for which an impairment loss has been recognized or reversed during the period. We have not recognized or
reversed impairment loss as of December 31, 2014. Accordingly, these amendments will be considered for future disclosures but have no impact on our financial position or results of operations.



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Amendments to IAS 19 Defined Benefit Plans: Employee Contributions

IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the
contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to
recognize such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is effective for annual periods beginning on or after
July 2014. This amendment was not relevant to us, since none of our entities have defined benefit plans with contributions from employees or third parties.

Annual Improvements 20122014 Cycle

Amendments to IAS 19: Discount rate, regional market issue

In the 20122014 annual improvements cycle, the IASB issued four amendments to four standards, which included an amendment to IAS 19
Employee benefits. This annual improvement clarifies that the high quality corporate bonds used in estimating the discount rate for postemployment benefits should be denominated in the same currency as the benefits to be paid, thus, the depth
of the market for high quality corporate bonds should be assessed at currency level. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. The annual improvement is effective for annual
periods beginning on or after January 1, 2016 and must be applied prospectively. We are currently assessing the impact of the amendment and plan to adopt the new standards on the required effective date.

Amendments to IFRS 7: Servicing contracts

The annual improvements to IFRS 7 add additional guidance to clarify whether a servicing contract is continuing involvement in a transferred
asset for the purpose of determining the disclosures required. The amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim financial statements, unless such disclosures provide a significant update to the
information reported in the most recent annual report. The annual improvement is retrospectively effective for annual periods beginning on or after January 1, 2016. It is not expected that these amendments will have an impact on our
consolidated financial statements.

Amendments to IFRS 5: Changes in methods of disposal.

The amendment clarifies that the cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa not
be considered a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in IFRS 5. The annual improvement is effective for annual periods beginning on or
after January 1, 2016 and must be applied prospectively. It is not expected that these amendments will have an impact on our consolidated financial statements.

We have not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.



|B. | Liquidity and Capital Resources
|-- | -------------------------------

Our primary sources of funds are cash provided by
operations and cash provided by financing activities. Our primary uses of cash are for working capital, capital expenditures, operating leases and general corporate purposes. Historically, we have been able to fund our short-term capital needs with
cash generated from operations. Our long-term capital needs generally result from our need to purchase aircraft. Our cash and cash equivalents were $403.0 million as of December 31, 2012, $735.6 million as of December 31, 2013 and $640.9
million as of December 31, 2014.

As of December 31, 2014, we had 18 unsecured revolving credit lines with financial
institutions providing for working capital financing of up to $196.9 million in the aggregate. Our outstanding borrowings under these unsecured revolving credit lines were $52.7 million as of December 31, 2012, $94.0 million as of
December 31, 2013 and $171.2 as of December 31, 2014. As of December 31, 2014 and 2013, we had an outstanding balance of short-term and long-term debt with different financial institutions amounting to $273.3 million and
185.2 million, respectively, for working capital purposes. See Item 5. Operating and Financial Review and ProspectsPart B. Liquidity and Capital ResourcesDebt and Other Financing Agreements.



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The average interest rate for all of our financial debt as of December 31, 2014 was 4.26%.

In addition, we are a holding company and our ability to repay our indebtedness and pay dividends to holders of the ADSs, each of which
represents eight preferred shares, is dependent on the generation of cash flow by our subsidiaries and their ability to make such cash available to us, by dividend, debt repayment or otherwise. See Item 3. Key InformationPart D. Risk
FactorsRisks Relating to Our CompanyWe are a holding company with no independent operations or assets, and our ability to repay our debt and pay dividends to holders of the ADSs is dependent on cash flow generated by our subsidiaries,
which are subject to limitations on their ability to make dividend payments to us. Covenants contained in Aviancas Local Bonds (as defined below) restrict Aviancas ability to make dividends and other payments to us. These
restrictions are described in more detail in Debt and Other Financing AgreementsSeries A, B and C Local Bonds. Because of these restrictions, Avianca is currently unable to pay dividends to us. If Avianca were to continue to
be unable to pay dividends to us it would severely impact our liquidity and our ability to pay dividends to holders of the ADSs.

We
believe that the above-mentioned sources, including our revolving credit lines and the cash flow generated from operating activities, are sufficient for our present working capital requirements.

In addition, we do not expect our minimum dividend payment policy (15% of the distributable profits of each year) to have a significant impact
on our liquidity. For the next five years we estimate that, if dividends are paid in accordance with this policy, the dividend policy would have an average effect of approximately $66.9 million, or 10.5% of our estimated average yearly cash and cash
equivalents of $640.9 million. In 2012, the first year we applied the dividend payment policy, the effect was $25.6 million, or 6.4%, of 2012 total cash and cash equivalents. In 2013, the effect was $36.9 million, or 5.0%, of 2013 total cash and
cash equivalents. In 2014, the effect was $38.9 million, or 6.1%, of 2014 total cash and cash equivalents.

Cash Flows provided by
Operating Activities

Our cash flow from operating activities is generated primarily from passenger and cargo sales less our
payments for aircraft leases, fuel, maintenance, ground operations, payroll related expenses, marketing, income taxes and capital expenditures. We use our cash flows provided by operating activities to provide working capital for current and future
operations.

In 2014, net cash flows provided by operating activities were $257.1 million, a 52.9% decrease from $544.6 million in 2013,
primarily due to a decrease in profitability as a result of a net profit of $128.5 million in 2014 compared to a net profit of $248.8 million in 2013. Net profit after non-cash items was $470.4 million in 2014, a 14.5% decrease from $549.9 million
in 2013, primarily due to the impact of a $199.4 million, or 4.7%, increase in our operating expenses compared to a $94.0 million, or 2.0%, growth in total operating revenues, primarily as a result of a 4.8% decrease in yield, a 0.9 percentage point
decrease in load factor and a 5.9% increase in ASKs. Also contributing to the change in our operational cash flow in 2014 compared to 2013 was a decrease in cash flow generated by air traffic liability (liability related to tickets sold in the
period but not flown in the period) of $113.4 million, resulting from fewer advance ticket sales, and a decrease in cash flow generated from accounts receivable of $108.1 million, resulting from the growth in our ticket sales, which resulted in
incremental accounts receivable from travel agencies selling our tickets (which contributed to a decrease in operating cash because of the greater amount of accounts that had not been paid in cash), partially offset by an increase in cash flow from
accounts payable and accrued expenses of $97.6 million resulting from an increase of days payable outstanding (which contributed to an increase in operating cash flow because we used less cash to pay accounts), and a $20.6 million increase in cash
flow generated by provisions, resulting from provisions relating to return conditions payments of leased aircraft (the change in provisions was primarily the result of reimbursement of maintenance reserves, which contributed to increased operating
cash because we received cash that was previously held in reserve).

In 2013, net cash flows provided by operating activities were $544.6
million, a 39.2% increase over $391.2 million in 2012, primarily due to an increase in profitability as a result of a net profit of $248.8 million in 2013 compared to a net profit of $38.3 million in 2012. Net profit after non-cash items was $549.9
million in 2013, a 62.8% increase from $337.8 million in 2012, primarily due to a $311.8 million, or 8.8%, growth in passenger revenues resulting from an increase of 7.3% in RPKs, a 1.4% increase in our average yield and a $28.1 million increase in
cargo and other revenues including an $11.1 million increase in LifeMiles revenues, partially offset by a $235.9 million, or 5.9%, increase in our operating expenses. Also contributing to the change in our operational cash flow in 2013
compared to 2012 was an increase in cash flow generated by air traffic liability (liability related to tickets sold in the period but not flown in the period) of $44.8 million, resulting from higher advance ticket sales, a $24.1 million change in
cash flow generated by provisions, resulting from provisions relating to return conditions payments of leased aircraft (the change in provisions was primarily the result of reimbursement of maintenance reserves, which contributed to increased
operating cash because we received cash that was previously held in reserve), partially offset by a decrease in cash flow generated from accounts receivable of $3.1 million, resulting from the growth in our ticket sales, which resulted in
incremental accounts receivable from travel agencies selling our tickets (which contributed to a decrease in operating cash because of the greater amount of accounts that had not been paid in cash), a decrease in cash flow from accounts payable and
accrued expenses of $13.0 million resulting from a reduction of days



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payable outstanding (which contributed to a decrease in operating cash flow because we used more cash to pay accounts), and a decrease in cash flow from employee benefits of $79.9 million
resulting from updated actuarial calculations as a result of changes in discount rates generated by changes in government treasury rates and other variables (which contributed to a decrease in operating cash because more of our cash was used to fund
pension liabilities).

Cash Flows used in Investing Activities

Our investing activities primarily consist of capital expenditures related to aircraft, special projects and advance payments on aircraft
purchase contracts. Additionally, we use cash for the purchase of spare parts and equipment related to expanding our aircraft fleet.

In
2014, cash flows used in investing activities were $246.9 million, a 48.9% decrease from cash flow used in investing activities of $483.3 million in 2013, primarily as a result of a decrease in acquisition of property and equipment and a decrease in
advance payments on aircraft purchase contracts in 2014.

In 2013, cash flows used in investing activities were $483.3 million, a 60.7%
decrease over $300.8 million in 2012, primarily as a result of increased advance payments on aircraft purchase contracts and a decrease in redemptions of certificates of bank deposits in 2013.

Cash Flows (used in) provided by Financing Activities

Our financing activities primarily consist of the financing of our fleet and working capital needs.

In 2014, cash flows used in financing activities were $52.8 million, a 118.3% decrease from cash flows provided by financing activities of
$289.3 million in 2013, primarily as a result of proceeds from the issuance in our initial public offering of American depositary shares representing shares of our preferred stock in November 2013. Also affecting cash flows provided by financing
activities were proceeds from the issuance of bonds of $250.0 million, compared to $298.6 million in 2013, principal payments of financial obligations of $365.6 million ($292.6 million in 2013), and interest payments of $131.8 million ($98.7 million
in 2013).

In 2013, cash flows provided by financing activities were $289.3 million, a 1,627% increase from $16.7 million in 2012,
primarily as a result of proceeds from the initial issuance of our Senior Notes and the issuance in our initial public offering of American depositary shares representing shares of our preferred stock in November 2013. Also affecting cash flows
provided by financing activities were proceeds from new loans and borrowings of $238.6 million, compared to $465.1 million in 2012, used to finance our purchase of aircraft, partially offset by principal payments of financial obligations of $292.6
million ($285.8 million in 2012), interest payments of $98.7 million ($109.9 million in 2012) and dividends of $36.9 million ($25.6 million in 2012).

Debt and Other Financing Agreements

Historically, we have been able to fund our short-term capital needs by way of cash generated from operations. Our long-term capital needs
generally result from the need to purchase additional aircraft that are financed using finance leases (including export credit agency backed financing), commercial loans, operating leases or accessing the capital markets. We expect to meet all of
our operating obligations as they become due through available cash and internally generated funds, supplemented as necessary by revolving credit lines and/or short term loan facilities.

As detailed further in the table below, as of December 31, 2014, our total outstanding debt was $3,170.6 million, an increase of $905.1
million over our total debt of $2,265.5 million as of December 31, 2013. Total debt as of December 31, 2014 consisted of $2,711.9 million in long-term debt and $458.7 million in current installments of long-term debt and short-term
borrowings. We had 18 unsecured revolving lines of credit with different financial institutions as of December 31, 2014, for a total of $196.9 million. As of December 31, 2014, we had $171.2 million outstanding under these lines of credit.
The average interest rate paid per annum as of December 31, 2014 under all of our indebtedness was 4.26%.



|              |  |                  |  |         |       |   |            |  |       |                          |  |  |              |  |  |  |      |  
|------------- |  | ---------------- |  | ------- | ----- | - | ---------- |  | ----- | ------------------------ |  |  | ------------ |  |  |  | ---- | -
|Type of Debt  |  | OriginalCurrency |  | % Fixed |       |   | % Variable |  |       | Balance inmillions ofUS$ |  |  | Average Rate | 
|Aircraft      |  | U.S. Dollars     |  |         | 85.9  | % |            |  | 14.1  | %                        |  |  | 2,149.7      |  |  |  | 2.97 | %
|Aircraft      |  | Euros            |  |         | 100.0 | % |            |  | 0.0   | %                        |  |  | 21.8         |  |  |  | 2.77 | %
|Corporate     |  | U.S. Dollars     |  |         | 60.8  | % |            |  | 39.2  | %                        |  |  | 210.1        |  |  |  | 2.59 | %
|Corporate     |  | Colombian Pesos  |  |         | 23.6  | % |            |  | 76.5  | %                        |  |  | 62.9         |  |  |  | 7.02 | %
|Bonds         |  | Colombian Pesos  |  |         | 37.3  | % |            |  | 62.7  | %                        |  |  | 177.6        |  |  |  | 9.69 | %
|Bonds         |  | U.S. Dollars     |  |         | 100.0 | % |            |  | 0.0   | %                        |  |  | 548.1        |  |  |  | 7.95 | %
|Local leasing |  | Colombian Pesos  |  |         | 0.0   | % |            |  | 100.0 | %                        |  |  | 0.4          |  |  |  | 8.85 | %
|              |  |                  |  |         |       |   |            |  |       |                          |  |  |              |  |  |  |      |  
|Total         |  |                  |  |         | 82.8  | % |            |  | 17.2  | %                        |  |  | 3,170.6      |  |  |  | 4.26 | %



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Series B and C Local Bonds

Our subsidiary Avianca has an aggregate principal amount outstanding of $66.3 million of Series B bonds due 2016 and $111.3 million of Series C
bonds due 2019, which we refer collectively as the Local Bonds. Subject to certain exceptions, the Local Bonds restrict Aviancas ability to incur additional indebtedness, to make capital investments and to pay dividends to us. On or prior to
December 31, 2015, Avianca may pay dividends to us only if:



| |  |  | there is no default or event of default under any of the Local Bonds;
| | - |  | ---------------------------------------------------------------------



| |  |  | the debt service ratio (i.e., the ratio of Aviancas adjusted EBIDAR (net income + noncash (interest) expenses + financial expenses (depreciation and amortization) + leasing costs) to debt service obligations
(interest and principal payment costs + leasing costs)) is equal or greater than 1.4 times;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount of any such dividend is not more than 20% of Aviancas EBITDA for the fiscal year prior to such payment; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | the amount of any such dividend does not exceed the sum (without duplication) of (i) Aviancas net income for the fiscal year prior to such payment and (ii) its retained earnings.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2014, Avianca was not meeting the adjusted EBIDAR to debt service ratio for purposes of the Local Bonds. However, this
failure does not give holders of the Local Bonds the ability to accelerate this debt.

On or after January 1, 2016, Avianca may pay
dividends to us only if:



| |  |  | there is no default or event of default under any of the Local Bonds;
| | - |  | ---------------------------------------------------------------------



| |  |  | Aviancas debt service ratio (i.e., the ratio of Aviancas adjusted EBIDAR (as described above) to debt service obligations (as described above)) is equal or greater than 1.4 times;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the amount of any such dividend does not exceed the sum (without duplication) of (i) Aviancas net income for the fiscal year prior to such payment and (ii) its retained earnings; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | after giving effect to such dividend, Aviancas liquidity (i.e., its (i) cash and cash equivalents and (ii) cash investments (in the case of each of (i) and (ii), excluding amounts deposited in
special purpose liquidity, interest services or capital services accounts), less (iii) its operating cash flow) is at least 15% of its scheduled debt service projected for such fiscal year.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The events of default under the Local Bonds include failure to timely pay principal or interest, litigation matters resulting in a material
adverse effect not remedied within 75 days, liquidation, acceleration of debt not remedied within 30 days and breaches of covenants and other agreements.

Under the Local Bonds, Avianca is restricted from making certain additional investments (other than investments in Aviancas fleet) and
incurring or guaranteeing additional debt during periods when the debt service ratio described above is less than 1.4 to 1 and a leverage ratio is greater than 4.5 to 1.

The terms above describe the Local Bonds as amended by Addendum No. 2 to the Local Bonds Prospectus, which was approved by the Colombian
Financial Superintendency and the Bondholders Assembly on February 24, 2014 and on December 5, 2013, respectively. Addendum no. 2 primarily increased the flexibility of the covenants initially imposed on Avianca by, among other
modifications:



| |  |  | expanding the scope of permitted investments in affiliated airlines, by increasing the cap on said investments from 2.5% to 4% of the operational income of Avianca during the prior year;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | including a new exception to the prohibition to secure obligations of third parties, allowing Avianca to secure obligations of its affiliated airlines, provided that certain performance ratings are fulfilled;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increasing the maximum amount of dividends that can be distributed (from 12% to 20% of the EBITDA for the prior year); and
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | increasing the leverage ratio from 3.5x to 4.5x.
| | - |  | ------------------------------------------------



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Bank Loans and Export Credit Agency Guarantees

We typically finance our aircraft through a mix of debt financing and sale-leaseback financings in which we sell an aircraft to a financial
institution or leasing company immediately upon delivery from the manufacturer and lease the aircraft back under an operating agreement for a period of time, typically six to eight years. In the future, we may not be able to secure such financing on
terms attractive to us or at all. To the extent we cannot secure such financing on terms acceptable to us or at all, we may be required to modify our aircraft acquisition plans, incur higher than anticipated financing costs or use more of our cash
balances for aircraft acquisitions than we currently expect. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to Our CompanyWe may not be able to obtain the capital we need to finance our growth and modernization
strategy.

As of December 31, 2014, our total fleet contained 193 aircraft (including nine aircraft subleased to OceanAir and
three inactive aircraft) comprised of 180 passenger aircraft and 13 cargo aircraft, 81 of which were subject to operating leases, and 112 which were owned. Of the 112 owned aircraft, 14 are owned outright, 78 have been financed using commercial
loans with separate guarantees issued by export credit agencies, or ECAs in Europe or EXIMs in the United States, and 20 have been financed with loans without ECA/EXIM guarantees. During 2014, we financed the purchase of 13 additional jet aircraft
and 11 regional aircraft with loans provided by commercial lenders with the support of guarantees issued by ECAs for an aggregate amount of $846.5 million. These loans mature in 2026.

Under the terms of our commercial bank loans with guarantees from ECAs, we currently obtain an 80% advance ratio. These loans are typically
denominated in U.S. dollars and accrue interest at a variable interest rate linked to LIBOR. In order to take advantage of current low interest rate levels, we elected to fix the thirteen jet aircraft that we financed during 2014 at an average
interest rate of 3.09%.

Typically aircraft are financed through commercial debt with an export credit agency guarantee in bundles of
three to five aircraft to optimize legal fees and to obtain competitive prices. A bidding process is used for each package and the most competitive offer is selected. Our current fleet is financed with various top tier banks in the U.S. and Europe.

The following table shows our outstanding fleet financing debt by lending bank, ECA guaranteed loans and direct financial loans, as of
December 31, 2014:



|            |  |                     |         |  |                          |  |       |                       |  |  |                 |  |  |                           |       |  |  |  |         | 
|----------- |  | ------------------- | ------- |  | ------------------------ |  | ----- | --------------------- |  |  | --------------- |  |  | ------------------------- | ----- |  |  |  | ------- | 
|Bank        |  | ECA GuaranteedLoans |         |  | Eximbank GuaranteedLoans |  |       | BNDES GuaranteedLoans |  |  | Financial Loans |  |  | Total Fleet FinancingDebt |      
|            |  |                     |         |  |                          |  |       | (in millions of US$)  | 
|Barclays    |  |                     | 132.1   |  |                          |  |      |                       |  |  |                |  |  |                           |      |  |  |  | 132.1   | 
|Bayern      |  |                     | 21.8    |  |                          |  |      |                       |  |  |                |  |  |                           |      |  |  |  | 21.8    | 
|BNDES       |  |                     |        |  |                          |  |      |                       |  |  | 93.7            |  |  |                           |      |  |  |  | 93.7    | 
|BNP Paribas |  |                     | 236.9   |  |                          |  | 177.3 |                       |  |  |                |  |  |                           | 79.2  |  |  |  | 493.4   | 
|Calyon      |  |                     | 31.6    |  |                          |  |      |                       |  |  |                |  |  |                           |      |  |  |  | 31.6    | 
|CFC         |  |                     |        |  |                          |  |      |                       |  |  |                |  |  |                           | 5.3   |  |  |  | 5.3     | 
|Citibank    |  |                     | 258.6   |  |                          |  |      |                       |  |  |                |  |  |                           |      |  |  |  | 258.6   | 
|PEFCO       |  |                     |        |  |                          |  | 5.0   |                       |  |  |                |  |  |                           |      |  |  |  | 5.0     | 
|JP Morgan   |  |                     | 728.5   |  |                          |  |      |                       |  |  |                |  |  |                           |      |  |  |  | 728.5   | 
|KFW         |  |                     |        |  |                          |  |      |                       |  |  |                |  |  |                           | 30.8  |  |  |  | 30.8    | 
|Natixis     |  |                     | 29.6    |  |                          |  |      |                       |  |  |                |  |  |                           | 49.8  |  |  |  | 79.4    | 
|HSBC        |  |                     | 138.5   |  |                          |  |      |                       |  |  |                |  |  |                           |      |  |  |  | 138.5   | 
|Wells Fargo |  |                     |        |  |                          |  |      |                       |  |  |                |  |  |                           | 152.8 |  |  |  | 152.8   | 
|            |  |                     |         |  |                          |  |       |                       |  |  |                 |  |  |                           |       |  |  |  |         | 
|Total       |  |                     | 1,577.6 |  |                          |  | 182.3 |                       |  |  | 93.7            |  |  |                           | 317.9 |  |  |  | 2,171.5 | 

Subsequent to the combination of Avianca and Taca, we agreed with the ECAs on a standard transaction
structure, or the Avianca-ECA Structure, based on the then-current Taca structure, to be used in all ECA-supported deliveries. The documentation for Avianca aircraft delivered prior to the combination was subsequently restructured to harmonize it
with the agreed post-combination structure, while the documentation for Taca aircraft delivered prior to the combination was subsequently cross-collateralized with the Avianca fleet.

In addition, with the exception of the structure used for the pre-combination Taca deliveries, these financings impose certain restrictions on
us and require us to maintain compliance with certain financial covenants.

The agreed Avianca-ECA Structure, which applies to
post-combination Avianca deliveries, post-combination Taca deliveries and pre-combination Avianca deliveries, requires us to maintain compliance with financial covenants. Under these covenants, we must maintain an EBITDAR coverage ratio of not less
than 1.85 to 1.00 from January 1, 2014 to December 31, 2014, and of not less than 2.00 to 1.00 from January 1, 2015 onward. Additionally, these financial covenants require that we maintain a capitalization ratio of not more than 0.86
to 1.00 from January 1, 2014 onward.



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Avianca anticipated and communicated to all related parties that it will likely fail to comply
with the requirement to maintain a minimum EBITDAR Coverage Ratio of (i) 1.85:1.00 for the period commencing January 1, 2014 and ending December 31, 2014. The ECA facility agent, on behalf of the ECA lenders, agreed that any
obligation of a guarantor under any ECA transaction document to ensure that the EBITDAR coverage ratio shall not be less than 1.85 to 1.00 for the year ending December 31, 2014 shall be waived strictly on the following conditions:



| |  |  | the EBITDAR Coverage Ratio for the year ending December 31, 2014 shall not be less than 1.50 to 1.00; and
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | the cash reserves held or controlled or otherwise available to the guarantor, or its subsidiaries shall be at least equal to $250 million at all times from the date of the waiver until the relevant testing date in
respect of the period ending December 31, 2015.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Avianca-ECA Structure also imposes a negative pledge on us which
prevents us from creating or permitting any security interest over any of our assets other than a security interest arising by operation of law in the ordinary course of business, a security interest in respect of less than fifty per cent
(50%) of our issued capital stock (provided that such security interest is created in connection with the raising of finance for a member of the Avianca group), or any security interest created with the prior written consent of the relevant
security trustee.

We also financed aircraft through commercial financings not supported by ECAs using documentation similar to the
Avianca-ECA Structure. This structure also imposes financial covenants that mirror those from the ECA documentation.

Senior Notes

On May 10, 2013, we completed a $300,000,000 private offering of our Senior Notes under Rule 144A and Regulation S under the U.S.
Securities Act of 1933, as amended. On April 8, 2014, we completed a $250,000,000 private offering of additional Senior Notes first issued on May 10, 2013.

The Senior Notes are due in 2020 and bear interest at the rate of 8.375% per year, payable semi-annually in arrears on May 10 and
November 10. Two of our subsidiaries, Taca and Avianca Leasing, LLC, are jointly and severally liable under the Senior Notes as co-issuers. The Senior Notes are fully and unconditionally guaranteed by three of our subsidiaries, Taca
International Airlines, S.A., Líneas Aéreas Costarricenses, S.A., and Trans American Airlines, S.A. Avianca Leasing, LLCs obligations as a co-issuer of the Senior Notes are unconditionally guaranteed by our subsidiary Avianca in
an amount equal to $375,000,000.

The Senior Notes may be redeemed at our option, in whole or in part, at any time on or after
May 10, 2017 at the redemption prices plus accrued and unpaid interest, if any, to the date of the redemption, as described in the offering memorandum document. In addition, prior to May 10, 2016, we may redeem up to 35% of the Senior
Notes from the proceeds of certain qualifying equity offerings at a price of 108.375% of the principal amount thereof. The Senior Notes may also be redeemed in whole, but not in part, at 100% of their principal amount, plus accrued and unpaid
interest upon the occurrence of specified events relating to tax laws and as described in the offering memorandum relating to the Senior Notes. In addition, we have the option to redeem some or all of the Senior Notes at a price equal to 100% of the
principal amount, plus a make-whole premium, plus accrued and unpaid interest at any time prior to May 10, 2017.

Avianca Credit Agreement

Avianca is party to a credit agreement, dated September 14, 2012, with Banco Davivienda S.A. providing for borrowings of $40,000,000.
These borrowings accrue interest at six-month LIBOR plus 2.90% and are repayable in quarterly installments over a three-year term.

Tampa Credit Agreement

Tampa Cargo S.A.S. is party to a credit agreement, dated July 27, 2012, with Banco Davivienda S.A. providing for borrowings of
$20,750,000. These borrowings accrue interest at six-month LIBOR plus 2.90% and are repayable in quarterly installments over a three-year term.



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Taca International Credit Agreement

Taca International is party to a credit agreement, dated December 13, 2010, or the Taca International Credit Agreement, with Banco
Davivienda S.A. (formerly known as HSBC Salvador) providing for borrowings of $15,000,000. These borrowings accrue interest at three-month LIBOR plus 4.46% and are repayable in quarterly installments over a five-year term.

New Aircraft and Engine Purchases

As of December 31, 2014, we had entered into several agreements to acquire up to 11 Boeing 787s for delivery between 2015 and 2019, 50
Airbus A320 family aircraft for delivery between 2015 and 2019 and one ATR72s for delivery on February 2015. We intend to meet our pre-delivery payment requirements for these new aircraft using cash generated from our operations and short- to
medium-term commercial loans. These payments are due at signing, with additional payments due at 24, 18 and 12 months prior to delivery.

The following table sets forth our firm contractual deliveries currently scheduled through 2019:



|               |  |      |    |  |      |  |    |      |  |  |      |  |  |      |    |  |       |  |    |  |  |  |    | 
|-------------- |  | ---- | -- |  | ---- |  | -- | ---- |  |  | ---- |  |  | ---- | -- |  | ----- |  | -- |  |  |  | -- | 
|Aircraft Type  |  | 2015 |    |  | 2016 |  |    | 2017 |  |  | 2018 |  |  | 2019 |    |  | Total | 
|Boeing 787     |  |      | 3  |  |      |  | 3  |      |  |  | 2    |  |  |      |   |  |       |  | 3  |  |  |  | 11 | 
|Airbus A319S   |  |      | 1  |  |      |  |   |      |  |  |     |  |  |      |   |  |       |  |   |  |  |  | 1  | 
|Airbus A320S   |  |      | 5  |  |      |  | 8  |      |  |  |     |  |  |      |   |  |       |  |   |  |  |  | 13 | 
|Airbus A321S   |  |      | 3  |  |      |  |   |      |  |  |     |  |  |      |   |  |       |  |   |  |  |  | 3  | 
|Airbus A319neo |  |      |   |  |      |  |   |      |  |  | 7    |  |  |      | 9  |  |       |  | 3  |  |  |  | 19 | 
|Airbus A320neo |  |      |   |  |      |  |   |      |  |  | 3    |  |  |      | 2  |  |       |  | 5  |  |  |  | 10 | 
|Airbus A321neo |  |      |   |  |      |  |   |      |  |  | 1    |  |  |      | 1  |  |       |  | 2  |  |  |  | 4  | 
|ATR72          |  |      | 1  |  |      |  |   |      |  |  |     |  |  |      |   |  |       |  |   |  |  |  | 1  | 
|               |  |      |    |  |      |  |    |      |  |  |      |  |  |      |    |  |       |  |    |  |  |  |    | 
|Total(1)       |  |      | 13 |  |      |  | 11 |      |  |  | 13   |  |  |      | 12 |  |       |  | 13 |  |  |  | 62 | 



|(1) | We also have purchase rights options to purchase up to 10 Boeing 787 Dreamliners, 21 Airbus A320s, 15 ATR72s and eight Embraers. We have also entered into an MOU whereby we expect to enter into a purchase agreement to
acquire 100 A320 neos for delivery between 2019 and 2024, but such aircraft are not currently firm orders.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Company also
has eight firm orders for the acquisition of spare engines with deliveries between 2015 and 2020.

Pension Liabilities

We update the value of our pension plan liabilities at each reporting period based on an actuarial valuation prepared by the independent firm
hired by us for such purposes, which includes the valuation of ordinary payments, additional payments, and financial assistance for funeral expenses that are borne by us, as applicable. As of December 31, 2014, we had outstanding retirement
pension plan and employee benefits obligations in the amount of $222.7 million, which according to Act 860 of 2003 will have a maximum period of payment until 2023 in the case of Avianca and Tampa.

See Item 3. Key InformationPart D. Risk FactorsRisks Relating to our CompanyWe may be liable for the potential
under-funding of a pilots pension fund.

Restrictions on Repatriation of Cash from Venezuela

On December 31, 2014, we held $544.2 million in assets located in Venezuela, of which 51.7% were cash and cash equivalents. On a
consolidated basis, our cash and cash equivalents in Venezuela represented 43.9% of our total cash and cash equivalents, and our total assets in Venezuela represented 8.8% of our total assets, in each case as of December 31, 2014. See
Item 3. Key InformationPart D. Risk FactorsRisks Relating to Colombia, Peru, Venezuela, Central America and Other Countries in which We OperateWe have significant local currency cash balances in Venezuela, which we may be
unable to repatriate or exchange into U.S. dollars or any other currency.



|C. | Research and Development, Patents and Licenses
|-- | ----------------------------------------------

Intellectual Property

We believe the Aviancabrand is a household name in Colombia. We have registered the trademark Avianca with the trademark office
in Colombia as well as in other countries, including the United States. We decided to register Avianca Holdings S.A. as the owner of the new figurative trade mark while Aerovias del Continente Americano S.A. remains the owner of AVIANCAs trade
mark.



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Both, the figurative and the nominative trademark Avianca, are currently used to identify
the business of all operating airlines in all the territories from the commercial standpoint, except for Brazil and Guatemala where some regulatory authorizations are pending.

We use the DEPRISA trademark under a license agreement with our Panamanian subsidiary company, International Trade Marks Agency Inc.,
to identify our Colombian courier services. We use Avianca Expresstrademark to identify international courier services from the United States to Colombia under a license agreement and we also have a franchise agreement by which we use
the Avianca Express trademark to commercialize courier services from Spain to some Andean countries. We began the use of Avianca Cargo trademark to identify the international cargo services provided by the subsidiary companies Tampa Cargo
S.A.S. and by the different airlines of Grupo Taca. We use the LifeMiles trademark, a registered trademark of our subsidiary Life Miles Corp, to identify our frequent flyer program. We license the new figurative trade mark and the
Avianca trademark to OceanAir Linhas Aereas S.A., a Brazilian company. All of our material trademarks are registered with the trademark office in different jurisdictions as required by our commercial needs.

Information Technology

During 2010 to
2012 we completed the successful implementation of the first phase of our Enterprise Transformation Project (ETP). In this phase we standardized our commercial and passenger processes, services and platforms. This effort included all of
our airline subsidiaries which were certified under the industry leading suite Amadeus Altea. During 2013 we completed the second phase of our ETP which included call center consolidation as well as the implementation of our single
commercial code. Additionally, our IT group completed the technical readiness requirements which enabled the company to incorporate the Boeing 787 into our fleet (e-enabling). As part of our strategic planning for 2015, we are focused on the
successful homogenization and implementation of our flight operations platforms , the completion of the unified MRO software solution as well as continuing to deploy our new unified ERP.



|D. | Trend Information
|-- | -----------------

During 2015, we currently expect to continue growing our passenger
business segment. After a steep decline at the end of 2014, fuel prices have remained relatively stable to date in 2015, but volatility still remains inherent in the commodity. In addition, international political conflicts especially in the Middle
East and Ukraine put additional pressure on international fuel prices, which is significant to us because fuel costs represent approximately 30% of our total operating expenses. We intend to continue to seek to manage increases in fuel prices
through our fuel-hedging policy and, to the extent permitted by competitive conditions, the use of pass-through mechanisms for both our passenger and cargo operations.

During 2015 specifically, we currently expect revenue growth in the passenger operations, reflecting our capacity expansion and traffic growth
and the consolidation of the redeployed capacity over 2014. As such we expect that our capacity for 2015 will increase between 5% to 7% and that our passenger numbers will increase between 6% to 8%. Our capacity, measured in ASKs, increased 5.9%
during 2014 compared to 2013. In addition, our passenger traffic, measured in RPKs, grew 4.5%, with a consolidated load factor of 79.4%. Our growth in RPKs in 2014 did not translate into a meaningful increase in our passenger revenue because of an
offsetting 4.8% decrease in yields compared to 2013. In 2015, we expect to continue to face strong competition, weakening macroeconomic conditions in Latin America, and depreciated local currencies, which will put pressure on our yields and the
yields of our competitors throughout the region. Total operating revenues increased to $4,703.6 million, up 2.0% from 2013 due mainly to a 12.5% increase in Cargo and other revenue, primarily as a result of an increase in our cargo and loyalty
program revenues.

Over the first quarter of 2015, we received one ATR72 and one Airbus A320 and expect to receive three 787 Boeing
Dreamliners and eight Airbus A320s equipped with sharklets over the next eight months. Furthermore, in July 2015, we expect to expand our Bogotá to London route into a daily route and initiate non-stop operation from our Bogotá hub to
Los Angeles. Over the course of the next months, we expect last years redeployed capacity to other markets will continue to mature.

In our loyalty business, we aim to grow our member-base and enhance the value of this business unit to our customers as we continue to expand
the program to other potential markets. Furthermore, over the first half of 2015 we will continue to develop the LifeMiles loyalty program as separate business unit and evaluate potential partnerships and investors for LifeMiles Corp.

We also expect increased expenses over the course of the year compared to 2014 due to increased maintenance costs associated with the return
conditions of our Airbus A330 fleet as we continue to incorporate our brand new B787 dreamliners.



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In our cargo business, we seek to continue to optimize the use of the capacity that we have
already deployed over the past 12 months. In furtherance of that goal we anticipate to further harmonize our cargo network with Aerounion as well as our commercial partnership in Brazil. We expect export flows from Latin America to other markets may
recover from the impact of currency depreciation across the region and pressure on fuel prices. We will continue to monitor the cargo market trends in order to react as soon as possible if necessary. Also, we plan to continue to optimize the
utilization of the bellies of our passenger aircraft to maximize synergies associated with our integrated passenger/cargo business model.

We also seek to make our cost structure more efficient and to offset potential decreases in demand with more efficient asset utilization, and
aim to enhance efficiency by streamlining our support processes to reduce commercial costs. In addition, we aim to increase operational productivity through the standardization of our operational technology platform, productivity improvements in
airports, and realizing the simplification benefits of our brand and operations integration.



|E. | Off-Balance Sheet Arrangements
|-- | ------------------------------

We have significant obligations for aircraft that are
classified as operating leases and therefore are not recorded as liabilities on our balance sheet. As of December 31, 2014, 77 of the 181 aircraft in our operative fleet were subject to operating leases. We are responsible for all maintenance,
insurance and other costs associated with operating these aircraft; however, we have not made any residual value or other guarantees to our lessors. As of December 31, 2014, the balance of our aircraft off-balance sheet arrangements was
$1,089.6 million.



|F. | Contractual Obligations
|-- | -----------------------

Our non-cancelable contractual obligations (excluding
contributions to benefit plans) as of December 31, 2014 included the following:



|                                            |  |                        |          |  |                 |  |         |           |  |  |           |  |  |                  |         |  |  |  |         | 
|------------------------------------------- |  | ---------------------- | -------- |  | --------------- |  | ------- | --------- |  |  | --------- |  |  | ---------------- | ------- |  |  |  | ------- | 
|                                            |  | Payments Due By Period |         
|Contractual Obligations(1)                  |  | Total                  |          |  | Less than 1year |  |         | 1-3 years |  |  | 3-5 years |  |  | More than5 years |        
|(in $ millions)                             |  |                        |          |  |                 |  |         |           |  |  |           |  |  |                  |         |  |  |  |         | 
|Aircraft and engine purchase commitments(2) |  |                        | 7,223.3  |  |                 |  | 1,406.4 |           |  |  | 4,202.0   |  |  |                  | 1,614.9 |  |  |  |        | 
|Aircraft operating leases                   |  |                        | 1,089.6  |  |                 |  | 276.7   |           |  |  | 534.7     |  |  |                  | 114.5   |  |  |  | 163.7   | 
|Engine operating leases                     |  |                        | 6.9      |  |                 |  | 4.2     |           |  |  | 2.7       |  |  |                  |        |  |  |  |        | 
|Aircraft debt(3)                            |  |                        | 2,171.5  |  |                 |  | 235.6   |           |  |  | 472.7     |  |  |                  | 474.8   |  |  |  | 988.4   | 
|Bonds                                       |  |                        | 725.7    |  |                 |  | 32.8    |           |  |  | 69.5      |  |  |                  | 73.4    |  |  |  | 550.0   | 
|Other debt                                  |  |                        | 273.3    |  |                 |  | 190.3   |           |  |  | 46.9      |  |  |                  | 13.1    |  |  |  | 23.0    | 
|Interest expense                            |  |                        | 667.0    |  |                 |  | 135.2   |           |  |  | 232.2     |  |  |                  | 184.3   |  |  |  | 115.3   | 
|                                            |  |                        |          |  |                 |  |         |           |  |  |           |  |  |                  |         |  |  |  |         | 
|Total                                       |  |                        | 12,157.3 |  |                 |  | 2,281.2 |           |  |  | 5,560.7   |  |  |                  | 2,475.0 |  |  |  | 1,840.4 | 



|(1) | Future interest payments are calculated based on interest rates of current debt and projected interest payments at negotiated rates for projected future debt to meet our capital expenditure requirements.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes firm commitment obligations to purchase aircraft and aircraft engines under existing purchase contracts. Amounts based on aircraft and engine list prices. See Item 5. Operating and Financial Review and
ProspectsPart B. Liquidity and Capital ResourcesNew Aircraft and Engine Purchases above for current firm commitments for aircraft and engine purchases.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes obligations under debt used to finance owned and finance leased aircraft.
|--- | ----------------------------------------------------------------------------------



|Item 6. | Directors, Senior Management and Employees
|------- | ------------------------------------------



|A. | Directors and Senior Management
|-- | -------------------------------

Board of Directors

Our board of directors is composed of 11 members. Our board of directors is focused on determining our overall strategic direction and as a
result is responsible for establishing our general business policies and for appointing our chief executive officer and supervising its management.

Members of our board of directors are elected by our shareholders at our general shareholders meetings and serve for a period of one
year and may be reelected. We do not have a mandatory retirement age for our directors. Our board of directors currently meets on quarterly basis, or more frequently if needed, and may deliberate and act with the presence and votes of the majority
of its members. Our board of directors is comprised of a majority of independent directors.



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The current board of directors was elected at a shareholders meeting held on April 17,
2015. Its term expires in March 2016. The table below lists our directors:



|                      |  |                                    |  |     |  |                         
|--------------------- |  | ---------------------------------- |  | --- |  | ------------------------
|Name                  |  | Position                           |  | Age |  | Nationality             
|Germán Efromovich     |  | Chairman of the Board of Directors |  | 65  |  | Brazilian and Colombian 
|Roberto José Kriete   |  | Director                           |  | 62  |  | Salvadoran and Colombian
|José Efromovich       |  | Director                           |  | 61  |  | Brazilian and Colombian 
|Alexander Bialer      |  | Director                           |  | 68  |  | Brazilian               
|Raul Campos           |  | Director                           |  | 68  |  | Brazilian               
|Isaac Yanovich        |  | Director                           |  | 72  |  | Colombian               
|Alvaro Jaramillo      |  | Director                           |  | 63  |  | Colombian               
|Juan Guillermo Serna  |  | Director                           |  | 61  |  | Colombian               
|Ramiro Valencia       |  | Director                           |  | 69  |  | Colombian               
|Monica Aparicio Smith |  | Director                           |  | 61  |  | Colombian               
|Oscar Darío Morales   |  | Director                           |  | 62  |  | Colombian               

Mr. Germán Efromovich has been the Chairman of our board of directors since August 2013.
Mr. Efromovich has served as our director since February 2010 and has acted as a director of Avianca since December 2004. He was appointed as Chairman of the board of directors in August 2013. Mr. Efromovich was appointed as our director
by Synergy pursuant to an agreement entered into between the two principal holders of our common shares, Synergy and Kingsland, or the Shareholders Agreement, which was replaced by the Joint Action Agreement effective November 5, 2013.
Mr. Efromovich together with his brother José indirectly control Synergy, our largest shareholder. Synergy also indirectly controls other companies in the aerospace industry. Mr. Efromovich holds a bachelors degree in
mechanical engineering from the University of Brazil, FEI, São Paulo. He also serves as director and executive officer of Synergy Group Corp. Mr. Germán Efromovich is Mr. José Efromovichs brother.

Mr. Kriete served as the Chairman of our board of directors from February 2010 to August 2013 and was a director of Taca from 1982 to February
2010 and CEO of Taca from 2001 to February 2010. Mr. Kriete was initially appointed as our director by Kingsland pursuant to the Shareholders Agreement. Under the Joint Action Agreement, Kingsland has a right to appoint Mr. Kriete as
our director so long as Kingsland holds at least 1% of our outstanding common stock. Mr. Kriete is the Chairman of Kingsland Holdings Limited, our second largest shareholder. Mr. Kriete holds a masters in business administration from
Boston College and a degree in economics from the University of Santa Clara. Mr. Kriete currently serves as President of the Kriete Investment Company Group and President of the Gloria de Kriete Foundation as well as a member of the boards of
Teléfonos de México, S.A.B. de C.V. and Escuela Superior de Economica y Negocios (ESEN). He has extensive experience in the airline industry as founder and Member of the Board of Directors of Volaris in Mexico, and
President of the Latin American and Caribbean Air Transport Association (ALTA).

Mr. José Efromovich has served as our director since
February 2010 and was a director of Avianca from July 2005 to February 2010. Mr. Efromovich was appointed as our director by Synergy pursuant to the Shareholders Agreement. Mr. Efromovich together with his brother Germán
indirectly control Synergy, our largest shareholder. Synergy also indirectly controls other companies in the aerospace industry. For 35 years he has participated in the development and expansion of Synergy. Mr. Efromovich holds a degree in
civil engineering from the Mackenzie Engineering School, São Paulo, Brazil. He also indirectly controls OceanAir in Brazil and serves as director and executive officer of Synergy Group Corp. Mr. José Efromovich is
Mr. Germán Efromovichs brother.

Mr. Bialer has served as our director since February 2010 and was a director of Avianca
from December 2004 to February 2010. Mr. Bialer was appointed as our director by Synergy pursuant to the Shareholders Agreement. Mr. Bialer holds a degree in mechanical engineering from Instituto Tecnológico da
AeronáuticaITA, Brazil, and an MBA/LS in systems management from Fundaçao Getúlio Vargas. He spent most of his career at General Electric, as Director of Business Development in South America, until retiring in
2002. Mr. Bialer also serves on the Boards of Companhia de Saneamento Basico do Estado de Sao Paulo (Sabesp), Andritz Hydro Inepar, and the GE Brasil pension fund (Gebsaprev). He has previously served on the Boards of
Pacific Rubiales, Romi and Jereissati, as well as in a number of non-listed companies.

Mr. Raul Camposhas served as our director since April
2015. Mr. Campos holds a degree from the Catholic University of Rio de Janeiro and a masters degree from The American University in Washington D.C., both in Economics. He did further post-graduate studies at the George Washington University,
also in Washington D.C., with specialization in finance and development. He previously served as the Chief Financial Officer of Synergy Group and as the Investor Relations Manager for Petrobras. Mr. Campos currently serves as the Communications
Executive Director of the Brazilian Institute of Investor Relations.

Mr. Yanovichhas served as our director since February 2010 and was a
director of Avianca from September 2007 to February 2010. Mr. Yanovich holds a degree in industrial engineering from Universidad de los Andes in Colombia and Pittsburgh University and a graduate degree in industrial management from
Massachusetts Institute of Technology. He was a founding member and director of



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Banca de Inversión Betainvest S.A., Executive Vice-President of Tecnoquímicas S.A., Lloreda Grasas S.A. from 1981 until 1986, Invesa S.A. from 1987 until 1997
and Ecopetrol S.A. from 2002 until 2006. Mr. Yanovich is a member of the board of directors ofInversiones Mundial S.A., Tecnoquímicas S.A., Carvajal Internacional S.A., Universidad Icesi and CTEEP.

Mr. Jaramillo has served as our director since February 2010 and has been a director of Avianca during several periods of its history, the most
recent from September 2007 to February 2010. Mr. Jaramillo obtained a degree in business administration from Universidad del Norte in Barranquilla. He is the founding partner of iQ Outsourcing, Colombia ́s largest BPO and was
previously the chief executive officer of Avianca, Banco de Colombia and of several financial institutions in Colombia and Vice President of the Philadelphia National Bank from 1973 to 1981. He currently serves as a member of the board of
Constructora ConConcreto S.A, PetroWorks S.A. and Tribeca Asset Management.

Mr. Serna has served as our director since February
2010 and was a director of Avianca from September 2007 to February 2010. Mr. Serna obtained a degree in business administration and a masters in economics from Universidad Nacional de Colombia in Bogotá. He was the chief financial
officer for Organización Corona S.A. from 1994 until 2001, and the chief executive officer for Organización Terpel S.A. from 2001 until 2006. Mr. Serna also served as a director of the Fondo Nacional de
Garantías FinancierasFOGAFIN, economic secretary of the Presidency of Colombia, director of the Colombian National Budget, auditor of the Colombian Coffee Federation in New York, and Secretary of the Colombian Security and Exchange
Commission. He serves as a member of the board of directors of Inversiones GLP S.A.S. (Vidagas SA) and Oleoducto Central de Colombia S.A.

Mr. Valenciahas served as our director since February 2010 and was a director of Avianca from September 2007 to February 2010. Mr. Valencia
holds a law degree from Universidad Pontificia Bolivariana in Medellín, Colombia. Mr. Valencia is currently the Executive President of Camara Colombiana de Informática y Telecomunicaciones (CCIT). Mr. Valencia
was formerly general manager of Empresas Publicas de Medellín, Colombias Minister of Energy, Colombias ambassador to New Zealand, the Governor of Antioquia, the general manager of Licores de Antioquia, the Mayor of
Medellín, Colombias Secretary of Education for the city of Medellín, the chairman of the board of Comfamiliar-Camacol, the chairman of the board of Universidad de Antioquia and member of the board of director
of Anato, Ecopetrol, Isa and Isagen, among others.

Ms. Apariciohas served as our director since August 2013 and has been a
director of Avianca since March 2010. Ms. Aparicio obtained a degree in economics from Universidad de los Andes in Bogotá. She is an independent consultant of multilateral organizations. She served as Executive Director of the
Fondo de Garantías de Instituciones Financieras from July 2008 to March 2012, CEO and Country Head of Banco Santander Puerto Rico and Colombia, Monetary and International Vice President of Banco de la República,
Representative of the Colombian Government to the World Bank, Head of Unidad de Inversiones Públicas del Departamento Nacional de Planeación, Economist in the Office Counselor related to coffee matters of the National Government
in the Federación Nacional de Cafeteros.

Mr. Morales has served as our director since April 2012. Mr. Morales obtained a
degree in public accounting from Javeriana University in Cali with a specialty in finance. He was the Chief Executive Officer of the CARVAJAL Group from 2007 to April 2013. He was a managing partner of Deloitte & Touche Colombia ,
President of the Board of Deloitte Latin America (Colombia), and managing partner, Central America and the Caribbean, Costa Rica & Panama at Deloitte & Touche (20012007). He has served as a member of the board of
Propal, Assenda, Carpak, Integrar, Pensions y Cesantias Colpatria, Cali Chamber of Commerce, Andi, Ciamsa, Industrias Lehner, among others.

Executive Officers

We are managed by a
board of directors and our executive officers. Our chief executive officer is appointed by our board of directors. The other executive officers are selected by the chief executive officer. On March 25, 2014, our Articles of Incorporation were
amended to designate, as one of our executive officers, a vice-president of revenue who acts as Chief Revenue Officer. The table below sets forth our executive officers:



|                               |  |                                                      |  |     |  |            
|------------------------------ |  | ---------------------------------------------------- |  | --- |  | -----------
|Name                           |  | Position                                             |  | Age |  | Nationality
|Fabio Villegas Ramírez         |  | Chief Executive Officer                              |  | 59  |  | Colombian  
|Gerardo Grajales López         |  | Executive Vice-President and Chief Financial Officer |  | 52  |  | Colombian  
|Estuardo Ortiz                 |  | Executive Vice-President and Chief Revenue Officer   |  | 44  |  | Guatemalan 
|Santiago Andrés Diago Heilbron |  | Executive Vice-President and Chief Operating Officer |  | 47  |  | Colombian  
|Elisa Murgas                   |  | General Secretary, Vice-President of Legal Affairs   |  | 60  |  | Colombian  
|Eduardo Asmar                  |  | Vice-President of Corporate Planning                 |  | 49  |  | Colombian  
|Ivonne de León                 |  | Vice-President of Human Resources                    |  | 44  |  | Guatemalan 



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Mr. Villegas has served as our Chief Executive Officer since February 2010 and was Aviancas
Chief Executive Officer from March 2005 to February 2010. He has a degree in economics from Universidad Jorge Tadeo Lozano in Bogotá, a diploma in development planning from London University, and a master in science from the London
School of Economics. Prior to his service at Avianca, Mr. Villegas worked as the president of ANIF, the Colombian National Association of Financial Institutions, from 2001 until 2005. He has also held several other positions in the public and
private sectors, including as a managing director for both Deutsche Bank and the Rothschild Group in Bogotá, an advisor for Organización Luis Carlos Sarmiento Angulo, as the Colombian ambassador before the Organization of
American States (Organización de los Estados Americanos), or OAS, Colombian Minister of State and Secretary General of the Colombian Presidency.

Mr. Grajales has served as our Executive Vice-President and Chief Financial Officer since February 2010 and was Aviancas Chief Financial
Officer from May 2002 to February 2010. He has a B.S. in business administration from Universidad ICESI in Cali and an M.S. in finance from Baltimore University. Prior to his service with us, Mr. Grajales was the treasurer of Gillette
Colombia from 1991 to 1995. He joined Baxter Pharmaceutical as the chief financial officer in 1995 and acted also as that companys marketing director for the Andean countries of Ecuador, Peru and Venezuela. In 1998, he entered the electric
power industry in Colombia acting as the chief financial officer for three power distribution companies owned by Houston Power and Light in Colombia and subsequently acted as chief executive officer for two thermal power plants located near
Cartagena, Colombia operated by AES Corp.

Mr. Ortiz has served as our Chief Revenue Officer since November 2013. Prior to November 2013, he
served as Executive Vice-President and Chief Operations Officer since February 2010, and was Tacas Executive Vice President and Chief Operating Officer from January 2009 to February 2010. Prior to 2009, Mr. Ortiz served as the
Vice-President of Commercial Operations at Taca from 2006 to 2008 and as Vice-President of Sales at Taca from 2005 to 2006. He previously developed a successful international career for 11 years in Philip Morris International and Kraft Foods,
serving in a variety of roles in Sales, Marketing and General Management; including Country Manager El Salvador, Business Unit Director Caribbean and Director Sales Strategy for Latin America & Canada. He has a degree in chemical
engineering from the Universidad Rafael Landivar in Guatemala and an MBA from the Universidad Francisco Marroquin in Guatemala. He has completed executive programs at Kellogg School of Management, Darden School of Business and Harvard
Business School.

Mr. Diago has served as our Executive Vice-President and Chief Operating Officer since January 2014, and was Vice President
of Flight Operations at Avianca from May 2001 to May 2009. Prior to January 2014, Mr. Diago served as Executive President of OceanAir Linhas Aéreas S.A., which conducts business under the trade name Avianca on domestic flights within
Brazil. He has a law degree with emphasis in SocioEconomic Sciences from the Javeriana University of Bogotá and is an A320 pilot.

Ms. Murgas has served as our General Secretary and Vice-President of Legal Affairs and has been working with Avianca since October 1986. She holds
a degree in law and political science from the Universidad Santo Tomás and a masters degree in commercial law from the Pontificia Universidad Javeriana. Prior to her service at Avianca, Ms. Murgas was a lawyer at the Colombian
Welfare and Protection Ministry, where she had different positions, including as a lawyer for the General Division of Labor Matters.

Mr. Asmar has served as our Vice-President of Corporate Planning since August 2010. He has a degree in systems engineering from the Universidad de
Los Andes in Bogotá. Mr. Asmar served as our Vice-President of Planning from November 2005 to August 2010. From 2002 until 2005, Mr. Asmar served as our Director of Network Planning, after having served from 1995 until 2002 as our
Chief of Network Planning.

Ms. de León has served as our Vice President, Human Resources since February 2010 and was Tacas
Vice-President of Human Resources from 2005 to February 2010. Ms. de Leon received her Bachelor of Science in economics and Master of Science in re-engineering and insurance technologies from the Universidad Francisco Marroquin in
Guatemala and her specialization in management of human resources strategy from the Andersen School of Business of the U.C.L.A. From January 1999 to January 2005, Ms. de Leon served as our Organizational Development Director.

The business address for all of our directors and senior management is c/o Avianca, Avenida Calle 26, No. 5915, Centro
Administrativo, 10th Floor, Bogotá, Colombia.



|B. | Compensation
|-- | ------------

In 2014, we paid approximately $5.2 million in aggregate cash compensation
to our executive officers. In addition, in 2014 we paid approximately $0.5 million in aggregate to our board members for their service on our board, and they and their spouses were entitled to travel free on our domestic and international flights.
In addition, during 2014, pursuant to an agreement entered into in 2009 in anticipation of the combination of Avianca and Taca, we allowed members of the Efromovich and Kriete families to travel free on a total of 839 of our domestic and
international flights. We anticipate allowing such family members a similar number of free flights in 2015. We have not set aside any funds for future payments to executive officers or directors.



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We intend to continue to compensate non-management directors for their service on our board. We
currently expect to pay each such director $12,000 per year plus expenses incurred to attend our board of directors meetings. In addition, members of committees of the board of directors will receive $1,000 for each committee meeting. All of the
members of our board of directors and their spouses will also be entitled to travel free on our domestic and international flights each year.

We had accrued pension benefits and employee benefits of $222.7 million, $328.7 million and $458.1 million as of December 31, 2014,
December 31, 2013 and December 31, 2012, respectively.

Compensation Plan

On March 15, 2012, we adopted an executive compensation plan linked to the trading price of our preferred shares listed in the Colombian
Stock Exchange, or the Compensation Plan, for the benefit of the members of our board of directors, our Chief Executive Officer, our Chief Financial Officer, our Executive Vice-President and Chief Operations Officer and our General Secretary,
Vice-President of Legal Affairs as well as for the benefit of certain Vice Presidents and Division Directors of Avianca, Taca International, Taca Costa Rica, Transamerican Airlines, Tampa Cargo, LACSA, Aerogal and Technical and Training Services, or
the Beneficiaries. Payments due to the Beneficiaries under the Compensation Plan will be effected by an autonomous trust managed by Fiduciaria Bogotá, a Colombian trust company (sociedad fiduciaria).

One bonus trust unit is equivalent to one preferred share listed in the Colombian Stock Exchange. In the case that the holder redeems its
bonus trust units, settlement will be in cash and no delivery of preferred shares to the bonus units holder will be made.

Bonus units
have been distributed among the Beneficiaries in accordance with the following percentages:



|                                                      |  |            |        |  
|----------------------------------------------------- |  | ---------- | ------ | -
|Beneficiaries                                         |  | Percentage |       
|Our board members (11 beneficiaries)                  |  |            | 5.00   | %
|President and Chief Executive Officer                 |  |            | 4.30   | %
|Executive Vice-President and Chief Financial Officer  |  |            | 2.03   | %
|Executive Vice-President and Chief Revenue Officer    |  |            | 2.03   | %
|Executive Vice-President and Chief Operations Officer |  |            | 1.14   | %
|Vice Presidents (20 beneficiaries)                    |  |            | 20.94  | %
|Division Directors (100 beneficiaries)                |  |            | 55.70  | %
|Future officers reserve                               |  |            | 8.86   | %
|                                                      |  |            |        |  
|Total                                                 |  |            | 100.00 | %

The Compensation Plan has a four-year term, starting as of March 15, 2012 and ending on March 15,
2016. The Compensation Plan includes four accreditation dates (March 15, 2013, March 15, 2014, March 15, 2015 and March 15, 2016) on which the Beneficiaries are given the right to redeem their bonus trust units. At each
accreditation date, the Beneficiaries will have a five-year term to redeem 25% of their respective bonus units. The first tranche vested on March 15, 2013, however, no rights have been redeemed as of December 31, 2014 because our stock had
not reached the established strike price.



|                    |  |                                         
|------------------- |  | ----------------------------------------
|Accreditation Dates |  | Redemption period                       
|March 15, 2013      |  | From March 16, 2013 until March 15, 2018
|March 15, 2014      |  | From March 16, 2014 until March 15, 2019
|March 15, 2015      |  | From March 16, 2015 until March 15, 2020
|March 15, 2016      |  | From March 16, 2016 until March 15, 2021

The Compensation Plan participants have the option to redeem the vested portion of their respective rights for
cash, with the payment being equal to the difference between the trading share price of the preferred shares of Avianca Holdings, S.A., as reported by the Colombia Stock Exchange during the 30 calendar days immediately preceding redemption and COP
5,000.

On November 5, 2013, the Company listed its ADSs on the New York Stock Exchange. As a consequence, the terms of the
Compensation Plan have been modified as follows: Starting on the effective date of the sale of ADSs in the market, the value of each award, as long as the result is positive, will be (i) the difference between the average quote of the ADSs
representative of preferred shares of Avianca Holdings, S.A., as reported by the New York Stock Exchange during the 30 calendar days immediately prior to each vesting date of the Compensation Plan and $15, and (ii) divided by eight, considering
that each ADS represents eight preferred shares, and multiplying the resulting amount by the exchange rate of COP 1,901.22 per $1 (the exchange rate as of November 5, 2013 or the effective date of listing of the ADSs in the New York Stock
Exchange). However, this modification does not affect the first tranche which vested on March 15, 2013.



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Additionally, the Company issued 1,840,000 new awards, or the New Awards, to the Board of
Directors and certain executives on November 6, 2013. These New Awards vest in four equal tranches and expire five years after the vesting date. The value of each New Award is determined in the same way as the modified terms of the Compensation
Plans.

As of December 31, 2014, 18,026,158 awards were outstanding. A summary of the terms of the 1,840,000 New Awards is as
follows:



|                 |  |                   |    |   |                   |                                               
|---------------- |  | ----------------- | -- | - | ----------------- | ----------------------------------------------
|Vesting dates    |  | Percentagevesting |    |   | Redemption period
|November 6, 2014 |  |                   | 25 | % |                   | From November 7, 2014 through November 6, 2019
|November 6, 2015 |  |                   | 25 | % |                   | From November 7, 2015 through November 6, 2020
|November 6, 2016 |  |                   | 25 | % |                   | From November 7, 2016 through November 6, 2021
|November 6, 2017 |  |                   | 25 | % |                   | From November 7, 2017 through November 6, 2022

Participants who are terminated, or resigned, cease to participate in the Compensation Plan. The awards were
only issued to board members and key management.



|C. | Board Practices
|-- | ---------------

Our board of directors is currently comprised of eleven members. The
terms of each of our current directors will expire in March 2016. See Item 6. Directors, Senior Management and EmployeesPart A. Directors and Senior Management. None of our directors has entered into any service contract with us.

Committees of the Board of Directors

The following is a brief description of certain of the committees of our board of directors.

Audit Committee

Our audit committee consists of Mr. Oscar Dario Morales, Mr. Isaac Yanovich, Ms. Monica Aparicio Smith and Mr. Juan
Guillermo Serna. All of the members of our Audit Committee are independent.

The audit committee provides assistance to our board of
directors in monitoring the quality, reliability and integrity of our accounting policies and consolidated financial statements, overseeing our compliance with legal and regulatory requirements and reviewing the independence, qualifications and
performance of our internal and independent auditors. The audit committee is also responsible for:



| |  |  | the appointment, compensation, and oversight of our internal auditor;
| | - |  | ---------------------------------------------------------------------



| |  |  | reviewing and approving the audit annual plan presented by our internal auditor;
| | - |  | --------------------------------------------------------------------------------



| |  |  | reviewing, on an annual basis, a report by the internal auditor describing the our internal quality control procedures, any material issues raised by the most recent internal quality control review, or peer review, of
the auditing firm, and all relationships between us and the internal auditor;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | discussing the annual audited and quarterly unaudited consolidated financial statements with management and the independent auditor;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | assessing the performance of our internal auditor,
| | - |  | --------------------------------------------------



| |  |  | reporting to the board of directors with respect to (i) the quality and sufficiency of our consolidated financial statements, (ii) our compliance with legal and regulatory requirements, (iii) the
performance and independence of our external auditor, and (iv) the performance of the internal auditor;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reviewing and approving material related party transactions to address potential conflicts of interest;
| | - |  | -------------------------------------------------------------------------------------------------------



| |  |  | meeting periodically with the independent auditor, internal auditors and management;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | together with the independent auditor, reviewing any difficulty encountered by the internal audit team during the audit process;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | establishing policies regarding our hiring of employees or former employees of the independent auditor;
| | - |  | -------------------------------------------------------------------------------------------------------



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| |  |  | annually reviewing and reassessing the adequacy of audit committees written charter and recommending any proposed changes to the board of directors;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | conducting an annual performance review and evaluation of the audit committee; and,
| | - |  | -----------------------------------------------------------------------------------



| |  |  | handling other matters that are specifically delegated to the audit committee by the board of directors from time to time.
| | - |  | --------------------------------------------------------------------------------------------------------------------------

Compensation Committee

Our compensation and human resource committee consists of Mr. Roberto Kriete, Mr. Ramiro Valencia Cossio and Mr. José
Efromovich. Our compensation committee provides assistance to our board of directors with respect to the compensation of our directors, executive officers and employees. Our compensation committee recommends to our board of directors the basic
compensation policies that it believes should be undertaken by us with respect to our executive officers and employees and also recommends the objectives that should be taken into account in connection with the compensation of our directors and
executives officers.

Financial Committee

Our financial committee consists of Mr. Germán Efromovich, Mr. Juan Guillermo Serna, Mr. Alvaro Jaramillo and
Mr. Alexander Bialer. This committee is responsible for setting our financial and risk management policies. Our financial committee is also empowered to provide recommendations to our board of directors with respect to our capital structure.



|D. | Employees
|-- | ---------

As of December 31, 2014, we had a total of 20,545 employees, including
cooperative members that provide certain ordinary-course services. As of December 31, 2014, the cooperatives with which we had contractual arrangements had approximately 4,613 cooperative members in Colombia. These cooperative members
are not employed by us, and our contractual obligations run to the cooperatives and not to their members.

Approximately 58% of our
employees are located in Colombia, 7% in Peru, 5% in Ecuador, 16% in El Salvador, 5% in Costa Rica and 8% elsewhere. Our employees can be categorized as follows:



|                                                               |  |                 |        |  |      |  |        |      |  |  |        |  |  |      |        |  |  |  |        | 
|-------------------------------------------------------------- |  | --------------- | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ------ |  |  |  | ------ | 
|                                                               |  | At December 31, |       
|                                                               |  | 2014            |        |  | 2013 |  |        | 2012 |  |  | 2011   |  |  | 2010 |       
|Pilots                                                         |  |                 | 1,999  |  |      |  | 1,774  |      |  |  | 1,693  |  |  |      | 1,652  |  |  |  | 1,474  | 
|Flight attendants                                              |  |                 | 3,179  |  |      |  | 2,818  |      |  |  | 2,782  |  |  |      | 2,427  |  |  |  | 2,067  | 
|Mechanics(1)(2)                                                |  |                 | 2,159  |  |      |  | 1,681  |      |  |  | 1,971  |  |  |      | 1,855  |  |  |  | 1,756  | 
|Customer service agents, reservation agents, ramp and other(2) |  |                 | 9,303  |  |      |  | 8,662  |      |  |  | 6,730  |  |  |      | 6,997  |  |  |  | 6,244  | 
|Management and clerical(2)                                     |  |                 | 3,905  |  |      |  | 4,218  |      |  |  | 4,895  |  |  |      | 4,429  |  |  |  | 3,799  | 
|                                                               |  |                 |        |  |      |  |        |      |  |  |        |  |  |      |        |  |  |  |        | 
|Total employees                                                |  |                 | 20,545 |  |      |  | 19,153 |      |  |  | 18,071 |  |  |      | 17,360 |  |  |  | 15,340 | 



|(1) | The number of our mechanics fluctuates based on the scheduling of our aircraft maintenance. We are able to optimize the number of mechanics serving us because of the short-term nature of their employment contracts.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes third-party contractors and cooperative members in the following amounts:
|--- | ----------------------------------------------------------------------------------



|                                                            |  |              |       |  |      |  |       |      |  |  |       |  |  |      |       |  |  |  |       | 
|----------------------------------------------------------- |  | ------------ | ----- |  | ---- |  | ----- | ---- |  |  | ----- |  |  | ---- | ----- |  |  |  | ----- | 
|                                                            |  | December 31, |      
|                                                            |  | 2014         |       |  | 2013 |  |       | 2012 |  |  | 2011  |  |  | 2010 |      
|Mechanics                                                   |  |              | 821   |  |      |  | 682   |      |  |  | 574   |  |  |      | 616   |  |  |  | 585   | 
|Customer service agents, reservation agents, ramp and other |  |              | 3,476 |  |      |  | 3,576 |      |  |  | 3,243 |  |  |      | 3,298 |  |  |  | 2,859 | 
|Management and clerical                                     |  |              | 316   |  |      |  | 111   |      |  |  | 132   |  |  |      | 1,094 |  |  |  | 755   | 
|                                                            |  |              |       |  |      |  |       |      |  |  |       |  |  |      |       |  |  |  |       | 
|Total cooperative members                                   |  |              | 4,613 |  |      |  | 4,369 |      |  |  | 3,949 |  |  |      | 5,008 |  |  |  | 4,199 | 

Collective Bargaining Arrangements

Typically, our collective bargaining agreements in Colombia, Argentina, Uruguay, Brazil, Ecuador, Peru and Mexico last two to five years. We
provide an essential public service, and as a result strikes and work interruptions are forbidden by law. Nevertheless, slow-down or stoppage or any prolonged dispute with our employees who are represented by any of these unions, or any other
sizable number of our employees, could have a material adverse impact on our operations. These risks are typically exacerbated during periods of renegotiation with the unions. For example, in 2005 we experienced pilots union work
slow-downs during contract negotiations.



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We provide sponsor employee benefit plans and arrangements that provide bonuses, seniority and
retirement benefits, partial medical benefits and disability coverage and other benefits to certain of our non-unionized employees and participating retirees. Many of these benefits are provided under various benefits plans, while others are
provided on a voluntary basis as a means to recruit and retain valuable employees. Voluntary benefit plans cover pilots, flight attendants and ground personnel, and are scheduled to remain in effect. These plans may be subject to litigation
especially during the time following significant plan changes.

Colombia

In Colombia, approximately 17.9% of our 5,822 employees, including 38% of our 1,150 pilots, are unionized as of December 31, 2014. The
remainder of our employees in Colombia are members of our voluntary benefits program. We believe we generally maintain good relations with our union and non-union employees, and have not experienced material work stoppages for the past nine years.
There are currently eight unions covering our employees in Colombia: the National Workers Union of Avianca, the National Union of Aircraft Industry Workers, the Colombian Association of Flight Attendants, the Colombian Association of Civil Aviators,
the Colombian Association of Aircraft Mechanics, the Colombian Association of Flight Engineers, the Colombian Union of Air Transportation Workers and the Association of Tampa Cargo Workers.

On October 8, 2013, we successfully concluded negotiations with our non-unionized Colombian pilots and reached an agreement to modify the
terms of our voluntary benefits program with them. On October 25, the new voluntary benefits program went into effect. These non-unionized pilots represent approximately 62% of our pilots in Colombia. This agreement with the non-unionized
Colombian pilots includes a system of variable compensation goals associated with productivity, fuel savings and on-time performance metrics. We estimate that this new compensation system will result in an approximately 11% increase in salaries for
these pilots, which will be retroactive to March 2013, but if the variable compensation goals are achieved, we believe other cost savings will result that will contribute to offset the increased salary costs associated with such agreement.

Simultaneously with our negotiations with the non-unionized Colombian pilots, we offered the terms of such voluntary benefits program to the
Colombian Association of Civil Aviators, or ACDAC, in the context of our ongoing negotiation of the terms of a new collective bargaining agreement. On October 8, 2013, ACDAC stepped aside and terminated negotiations with us. The prior
collective bargaining agreement we had with ACDAC expired in March 2013, so the collective bargaining agreement between us and this union was automatically extended to a six-month period by law. Pursuant to a judicial order, we were required to
resume our suspended negotiations with ACDAC on March 21, 2014. No agreement was reached during these negotiations, which expired on April 10, 2014, and we are awaiting for the matter to be submitted to binding arbitration to resolve this
dispute. Currently, the union pilots are compensated according to the terms of the expired collective bargaining agreement, but union pilots have the option of leaving the union and accepting the increased compensation under the voluntary benefits
program available to our non-unionized Colombian pilots. Approximately 38% of our Colombian pilots are in ACDAC as of December 31, 2014. The pilots in ACDAC have continued to fly our aircraft but stopped following certain of our cost-saving and
time-saving operating practices, adversely affecting our flight schedules and fuel costs. See Item 3. Key Information RisksPart D. Risk FactorsRisks Relating to Our Company Labor disputes may result in a material adverse
effect on our results of operations.

Pursuant to a recent judicial order, we were required to begin negotiations with the Colombian
Union of Air Transportation Workers (SINTRATAC). In October 2014, we were negotiating a new collective bargaining agreement with SINTRATAC, but were unable to reach an agreement. We currently do not have a collective bargaining agreement in place
with SINTRATAC and are awaiting confirmation of binding arbitration to resolve this dispute.

We expect to negotiate with the Association
of Avianca workers (SINTRAVA) National Union of Aircraft Industry Workers (SINDITRA), the Colombian Association of Aircraft Mechanics (ACMA) and the Colombian Association of Flight Engineers (ACDIV), and the Association of Tampa Cargo workers
(ASOTRATAMPA) during the second quarter of 2015.

Other Countries

There are currently eight unions in six different countries covering 5% of our 8,551 employees outside Colombia. Only two of them will be
subject to negotiations in 2015, the Workers Union of Trans American Airlines, S.A., and the Pilots Union of Trans American Airlines. There are other unions, which we are only subject to industry negotiations. We believe we maintain
generally good relations with our union and non-union employees, in all countries. We currently do not have any material labor claims and have not experienced material work stoppages for the past sixteen years.



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Our non-union employees outside Colombia are also members of our voluntary benefits program and
we also provide some of them with sponsor employee benefit plans and arrangements that provide bonuses, seniority and retirement benefits, partial medical benefits and disability coverage and other benefits.

Employee Incentive Programs

We have goal driven compensation incentive programs for our management and employees that utilize financial and operating goals, including a
profit sharing program for our management based on goals set on a quarterly and annual basis. We also have employee incentives for the achievement of monthly on time performance goals. We believe that our management and employee incentive
programs contribute to our success by rewarding the accomplishment of pre-defined financial and operating goals with variable compensation. Bonuses are usually paid two months after the end of each semester and can represent anywhere from 10% to 50%
of an employees total annual base salary. Typically, 50% of the bonus amount is based on corporate performance, and the remaining 50% is based on the achievement of individual goals, as determined for managers in each department. Although
our incentive programs are designed to reward outstanding operations, financial performance and customer service, safety is our priority, included on key performance indicators dashboards for executives. See Item 6. Directors, Senior
Management and EmployeesPart B. CompensationCompensation Plan.



|E. | Share Ownership
|-- | ---------------

Mr. Germán Efromovich and Mr. José Efromovich
may be deemed to have beneficial ownership of shares in us held by Synergy and Mr. Roberto Kriete may be deemed to have beneficial ownership of shares in us held by Kingsland. See Item 7. Major Shareholders and Related Party
TransactionsPart A. Major Shareholders. As of April 28, 2015, each of the other members of our board of directors and our executive officers owns less than one percent of our preferred shares and of our common shares.



|Item 7. | Major Shareholders and Related Party Transactions
|------- | -------------------------------------------------



|A. | Major Shareholders
|-- | ------------------

Beneficial Ownership of our Capital Stock

The following table sets forth information relating to the beneficial ownership of our capital stock as of March 31, 2015.



|                              |  |                                             |             |  |   |  |       |                 |  |  |             |     |  |  |       |  
|----------------------------- |  | ------------------------------------------- | ----------- |  | - |  | ----- | --------------- |  |  | ----------- | --- |  |  | ----- | -
|                              |  | Beneficial ownership
(as of March 31, 2015) |            
|                              |  | CommonShares                                |             |  | % |  |       | PreferredShares |  |  | %           |    
|Synergy Aerospace Corp(1)     |  |                                             | 516,000,000 |  |   |  | 78.1  | %               |  |  |            |     |  |  |      |  
|Kingsland Holdings Limited(2) |  |                                             | 144,800,003 |  |   |  | 21.9  | %               |  |  |            |     |  |  |      |  
|Directors and officers        |  |                                             |            |  |   |  |      |                 |  |  | 17,934      |     |  |  | 0.0   | %
|Other                         |  |                                             |            |  |   |  |      |                 |  |  | 340,489,983 | (3) |  |  | 100.0 | %
|Total                         |  |                                             | 660,800,003 |  |   |  | 100.0 | %               |  |  | 340,507,917 | (3) |  |  | 100.0 | %



|(1) | A company registered according to the laws of the Republic of Panama, 100% property of the Synergy Group Corp. a company also constituted in Panama. Mr. Germán Efromovich and Mr. José Efromovich
have dispositive voting power of Synergys shares.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Special purpose company incorporated according to the laws of the Bahamas, 100% indirect property of Atlantis Trust. Mr. Roberto Kriete and his family have dispositive voting power of Kingslands shares.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Including 4,320,632 preferred shares held by Fidubogota on behalf of us.
|--- | ------------------------------------------------------------------------

Approximately 33.7%
of our outstanding capital stock (not including preferred stock held by us) is represented by our preferred shares, including the preferred shares represented by the ADSs, and approximately 78.1% and 21.9% of our common shares are held by Synergy
and Kingsland, respectively.

In May 2011, Synergy and Kingsland converted 15,000,000 and 42,600,000 common shares, respectively, into
preferred shares in connection with the initial public offering of our preferred shares in Colombia.

In November 2013, Kingsland Holdings
Limited, Inter Allied Holdings Two Corp. and Mr. A. Daniel Ratti converted 69,999,997, 2,800,000 and 2,800,000 common shares, respectively, into preferred shares in connection with the initial public offering of our ADSs in the United States.



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Synergy and its control persons own controlling interests in a number of other businesses,
including OceanAir, a Brazilian airline, with which we have significant business transactions and agreements. For further information regarding our relationship with Ocean Air, see Item 7. Major Shareholders and Related Party
TransactionsPart B. Related Party Transactions. Mr. Germán Efromovich and his brother Mr. José Efromovich are the ultimate beneficial owners of Synergy.

Kingsland Holdings Limited is a special purpose Bahamian company organized for the purpose of holding our shares for the benefit of certain
members of the Kriete family.

As of February 28, 2014, there were no record holders of our common shares in the United States. It is
not practicable for us to determine the number of holders of our preferred shares in the United States.

Joint Action Agreement with Synergy and
Kingsland

We and our controlling shareholders, Synergy and Kingsland, are parties to the Joint Action Agreement that became effective
upon the consummation of our November 2013 U.S. initial public offering and gave Synergy and Kingsland veto power over certain strategic and operating transactions. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to
the ADSs and our Preferred SharesOur two principal shareholders have veto power over certain strategic and operating transactions, and their interests may differ significantly from the interests of other shareholders and Item 7.
Major Shareholders and Related Party Transactions Related Party TransactionsJoint Action Agreement.



|B. | Related Party Transactions
|-- | --------------------------

We currently engage in, and expect from time to time in the
future to engage in, financial and commercial transactions with related parties (within the meaning of the SEC rules). Unless otherwise indicated below, such transactions are conducted on an arms-length basis in the ordinary course
of business, on terms that would apply to transactions with third parties.

Termination of Aviancas option to acquire OceanAir and resulting debt
owing to Avianca and subsidiaries.

On January 1, 2009, our subsidiary Avianca entered into an agreement, or the Option Agreement,
with Germán Efromovich, José Efromovich and SpSYn Participações S.A., or SpSYn, the shareholders of OceanAir Linhas Aereas S.A., or OceanAir. Synergy Group Corp., or Synergy Group, guaranteed the obligations
of OceanAir and of its shareholders under the Option Agreement. Synergy Group is beneficially owned by Germán and José Efromovich and José Efromovich controls SpSYn. Under the Option Agreement, Avianca received an option to
acquire all the outstanding shares of OceanAir and in exchange was obligated to provide the working capital required by OceanAir during the term of the Option Agreement in the form of loans, advances or capital contributions. The option exercise
price was equal to the outstanding balance of the debt of OceanAir, its shareholders and their affiliates with Avianca and its subsidiaries at the exercise date of the option.

The Option Agreement provided that if Avianca did not exercise its option to acquire the shares of OceanAir during the term of the Option
Agreement, Avianca would no longer have any obligation to provide working capital to OceanAir, and OceanAir would be obligated to repay all its debts owing to Avianca and its subsidiaries. This debt included debt arising out of the lease of certain
aircraft leases to OceanAir by Aviation Leasing Services Investments S.A., a subsidiary of Avianca, and additional debt incurred by OceanAir as a result of Aviancas obligation to provide working capital under the Option Agreement.

The initial one-year term of the Option Agreement was extended twice and expired on June 30, 2010. On December 30, 2010 the parties
to the Option Agreement entered into an agreement to restructure the payment obligations to Avianca and its subsidiaries that became due and payable upon expiration of the Option Agreement. Pursuant to this restructuring agreement, SpSYn assumed
OceanAirs obligation to repay the full amount of its debt owing to Avianca and its subsidiaries (approximately $60.7 million) as follows: $5.0 million upon signing of the termination agreement, $12.0 million on December 31, 2011, $18.0
million on December 31, 2012 and $25.7 million on December 31, 2013. The unpaid amount of such debt bore interest at a rate of three-month LIBOR plus 5.50%. Synergy Group, Germán Efromovich and José Efromovich each guaranteed
SpSYns obligation to repay such debt. This payment schedule was amended initially on December 30, 2011 and again on February 28, 2012 so that the debt was payable as follows: $6.6 million on March 30, 2012, $10.6 million on
December 31, 2012, $15.9 million on December 31, 2013 and $22.6 million on December 31, 2014.

The $6.6 million payment due
on March 30, 2012 was paid on such date. On February 28, 2012, Avianca executed an agreement to purchase from Synergy Group a share of a real property in Bogotá, Colombia, which both parties had acquired jointly in 2007. Avianca
agreed to offset the COP 12,666 million purchase price of the share (approximately $7.2 million) against the outstanding balance of the debt of SpSYn under the termination agreement. The balance of the $10.6 million payment due on
December 31, 2012 was paid on such date. On December 3, 2013 a public deed was granted which formalized the transfer to Avianca of the share on the real property previously owned by Synergy except with respect to one piece of land which is
pending to be released from a foreclosure action by a third party. We continue advancing with the commercial efforts to achieve the consummation of the sale of this property.



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On December 31, 2014, the $22.6 million payment became due under the termination agreement
but was not received. On March 24, 2015, we entered into an agreement with SpSYn and the other parties under the termination agreement whereby Synergy committed to make this payment (plus interest accruing at LIBOR plus 5.50%) with equal
payments of $11.5 million in each of 2015 and 2016.

Licensing of Avianca name to OceanAir

In December 2009, we entered into an agreement with OceanAir pursuant to which OceanAir uses our Avianca trademark in its operations. We
believe that by using Aviancas trade name in Brazil, OceanAir increases our commercial presence in Brazil. In addition, since December 5, 2005, we have licensed Aviancas Cóndor trademark to OceanAir for use throughout
Brazil. On February 20, 2014 there was an amendment to this licensing agreement in order to include the licensing of the new figurative trademark. This trademark arrangement may be terminated by either party on 60 days notice, upon breach
by either party or by mutual consent.

Lease and sublease of aircraft to and from OceanAir

As of December, 2014, we leased five Fokker-100s to OceanAir through several trusts administered by Wilmington Trust Company, of which our
subsidiary, Aviation Leasing Services Investments S.A., or ALS, is the beneficial owner. Each lease is scheduled to expire in October 15, 2015, and OceanAir is required to make lease payments $56,000 per month for each aircraft.

In addition, as of December 31, 2014, we subleased three Airbus 319 to OceanAir. The leases and subleases are scheduled to expire on
April 7, 2016, May 4, 2022 and July 2, 2020. OceanAir is required to make lease payments of $363,893, $327,000 and $339,000 per month for the three aircraft. In the event that OceanAir does not pay us the amounts per month
described above, we remain liable for such payments to the lessor, as we are the primary obligor on each such lease. As of December 31, 2014, $6.5 million of lease payments from OceanAir were past due. We reached an agreement with OceanAir
whereby OceanAir will pay us this $6.5 million (plus interest accruing at LIBOR plus 5.50%) to settle these agreements.

During the first
half of 2014 we subleased an A330F to OceanAir and entered into a block space international cargo operations agreement and an intermediary commercial agreement for domestic cargo operations in which OceanAir is the operator in both the domestic and
international markets.

Passenger sales agency and code sharing agreements with OceanAir

Since September 1, 2012, OceanAir Lihnas Aereas S.A. has been acting as a general sales agent for passenger transportation services for
Avianca, Transamerican Airlines S.A. and LACSA in Brazil. Under an agreement we have entered into with OceanAir, OceanAir has the capacity to promote and sell services of those companies and act as their representative for commercial purposes.
OceanAir is paid a commission equivalent to 1.6% of the net flown revenue for each such company and has a minimum guaranteed payment of approximately $2.8 million to cover its expenses. There are other ancillary services provided related to legal
representation and management of passengers claims. OceanAir has been acting as general sales agent for passenger transportation services for Avianca since 2005. We believe the services provided under these agreements and the compensation therefor
are consistent with market practices in all material respects. This agreement may be terminated by either party at any time on 60 days notice.

Under an agreement effective March 15, 2010, our subsidiary Avianca Inc. acts as promotion and sales agent for passenger and cargo
transportation services and as sales and purchase agent for aeronautical materials and services for OceanAir in the United States and Canada. Avianca Inc. is paid a commission of 1% of net sales made by travel agencies, OceanAirs web portal
and Avianca Inc.s ticket offices in the United States and Canada. In addition, Avianca Inc. is paid a fee equal to 3% of the operational and administrative expenses it incurs in performing its services as sales and purchase agent. This
agreement automatically renews annually unless either party gives notice of termination 60 days in advance of the termination date.



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We also have several code share agreements with OceanAir pursuant to which we may sell seats on
OceanAirs São Paulo-Rio de Janeiro flights.

Handling agreement with OceanAir

Our subsidiary, Avianca Inc., also acts as OceanAirs agent for handling aeronautical equipment, such as spare parts, within the United
States, and for final delivery thereof to Brazil under an agency agreement effective as of April 2, 2007. We believe the services provided under this agreement and the compensation therefor are consistent with market practices in all material
respects.

Other arrangements with OceanAir

We also have airport services agreements with OceanAir to support check in and dispatch of passengers at the different airports where Avianca,
Transamerican Airlines S.A. and LACSA operate.

Arrangements with affiliated service providers

We pay certain of our affiliates for services related to maintenance, cargo and courier services, hotel accommodation services, personnel
ground transportation and other services. Empresariales S.A.S., an affiliate of Synergy, provides ground transportation for our crew and other employees. Transportadora del Meta S.A.S., an affiliate of Synergy, provides ground cargo
and courier services in connection with our cargo and courier business. Global Operadora Hotelera S.A., entity controlled by a foundation created by Germán Efromovich, provides hotel accommodation services for our crew and other
employees. Aeromantenimiento S.A., an affiliate of Kingsland, provides us with maintenance services related to our fleet. All of these arrangements were entered into on an arms length basis and were approved by a majority of our
independent directors.

During the year ended December 31, 2014, our total expenses related to services provided by these affiliates
was $34.9 million.

Joint Action Agreement

We are a party to a Joint Action Agreement with Synergy and Kingsland. The Joint Action Agreement provides Synergy and Kingsland each with the
right to nominate a number of directors in proportion to their respective holdings of our common shares and obligates us to take the necessary actions to give effect to the provisions of the Joint Action Agreement. The Joint Action Agreement also
provides that a majority of our directors will be independent under the rules and regulations of the NYSE.

Our operations are controlled
by our management under the direction and supervision of our board of directors, however the Joint Action Agreement gives Synergy and Kingsland veto power over certain strategic and operating transactions including, among others:



| |  |  | mergers and consolidations;
| | - |  | ---------------------------



| |  |  | certain acquisitions or investments in excess of $30 million in any single instance and $75 million in the aggregate during any fiscal year, except as already contemplated in our annual budget;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our business plan and annual budget;
| | - |  | ------------------------------------



| |  |  | capital expenditures in excess of $120 million, except as already contemplated in our annual budget;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | changes to our charter and bylaws or other similar document;
| | - |  | ------------------------------------------------------------



| |  |  | issuance of voting stock; and
| | - |  | -----------------------------



| |  |  | related party transactions.
| | - |  | ---------------------------

In the event that Kingsland exercises any of its veto rights
above, Synergy has the option to deliver a buyout notice with respect to 100 million of our common shares held by Kingsland, or if Kingsland owns less than 100 million common shares, all such common shares, or the Buyout Shares. After the
issuance of a buyout notice, Kingsland and Synergy will attempt to come to a mutual agreement regarding the matter with respect to which Kingsland exercised its veto. If all necessary Board and stockholder approvals are obtained and the matter is
not resolved prior to the later of the 21st day after of the issuance of the buyout notice or the third business day after the Board or stockholder approval, or the Buyout Determination Date,
Synergy may purchase the Buyout Shares at a price per share equal to the weighted average price per preferred share (as derived from the price per ADS) during the 60 trading days immediately prior to the date on which Kingsland exercised its veto
plus a premium. Synergy also has the option to withdraw the



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buyout notice within 120 days following delivery by Synergy to Kingsland of the buyout notice, and if Synergy fails to purchase the Buyout Shares within 180 days following delivery by Synergy to
Kingsland of the buyout notice, Synergy will be obligated to pay Kingsland 10% of the fair value of the Buyout Shares. If Synergy purchases the Buyout Shares, Kingslands veto is deemed withdrawn, we may consummate the matter, and Kingsland
will lose its veto rights under the Joint Action Agreement.

In addition, under the Joint Action Agreement, certain transactions require
the approval of a majority of the independent directors before being submitted to the full board for approval, including:



| |  |  | commencement and/or settlement of litigation in excess of $5 million;
| | - |  | ---------------------------------------------------------------------



| |  |  | commencement of any bankruptcy or insolvency proceeding and/or dissolving or liquidating or agreeing to dissolve or liquidate;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | certain incurrences of indebtedness;
| | - |  | ------------------------------------



| |  |  | adoption or amending of any equity incentive plan;
| | - |  | --------------------------------------------------



| |  |  | execution of certain material or long-term contracts and licenses;
| | - |  | ------------------------------------------------------------------



| |  |  | modification of our dividend policy; and
| | - |  | ----------------------------------------



| |  |  | other potentially significant strategic and operational actions affecting us.
| | - |  | -----------------------------------------------------------------------------

In the event
that Synergy sells to a buyer substantially all of its airline assets or undergoes a change of control, Kingsland will have the option, upon written notice, to require such buyer (and if such buyer fails to do so, Synergy) to purchase our shares
from Kingsland.

In the event that the Chief Executive Officer or Chief Financial Officer position becomes vacant, a search firm (in the
case of a Chief Executive Officer vacancy) or the Chief Executive Officer (in the case of a Chief Financial Officer vacancy) will put together a slate of candidates, and each of Kingsland and Synergy will have the right to veto up to one-third of
such candidates before the remaining candidates are presented to the board of directors for approval and appointment.

Kingslands
veto rights will partially terminate when Synergy owns more than four times the amount of our common shares as Kingsland and Kingsland owns less than 16.5% of our common shares. Kingslands and Synergys veto rights and their rights to
nominate directors will terminate when Synergy owns more than five and one half times the amount of our common shares as Kingsland. The Joint Action Agreement will also terminate if Kingsland undergoes a change in control or when Kingsland owns less
than 3% of our common shares, but if the agreement terminates because of a decrease in Kingslands common share ownership percentage Kingsland will continue to have the right to nominate Roberto Kriete as our director so long as it owns at
least 1% of our common shares. The Joint Action Agreement can be terminated upon agreement by its parties.

Amendment to our articles of incorporation
(Pacto Social)

Upon the consummation of our November 2013 U.S. initial public offering, our articles of
incorporation (Pacto Social) were amended to reflect the replacement of the Shareholders Agreement with the Joint Action Agreement. On March 25, 2014, our articles of incorporation (Pacto Social) were further amended to
reflect the appointment of a Vice-President of Operations who shall act as Chief Operating Officer of the Company.

Registration Rights Agreement

We, Synergy and Kingsland are party to a registration rights agreement, which was amended upon the consummation of our November 2013
U.S. initial public offering, pursuant to which Synergy and Kingsland have certain registration rights, including the ability to require us to register their common shares, preferred shares or ADSs in a registered public offering (subject to certain
restrictions and limitations). In connection with our November 2013 U.S. initial public offering, each of Synergy and Kingsland agreed with the underwriters to a lock-up period of 180 days. In addition, under the registration rights agreement,
Synergy has agreed, for the benefit of Kingsland, not to sell or otherwise dispose of its common shares or preferred shares during the 360-day period beginning on November 5, 2013.



|C. | Interests of Experts and Counsel
|-- | --------------------------------

Not applicable.



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|Item 8. | Financial Information
|------- | ---------------------



|A. | Consolidated Statements and Other Financial Information
|-- | -------------------------------------------------------

See Item 3. Key
InformationPart A. Selected Financial Data, Item 18. Financial Statements and our consolidated financial statements and the notes thereto beginning on page F-1.

Litigation

Our subsidiaries are subject
to several lawsuits regarding labor and civil actions in which an adverse decision may result in payment obligations of our subsidiaries. We intend to defend vigorously against these claims, but we cannot assure you that we will be successful. In
the case of an adverse final decision in any of these lawsuits or in the event we are required to establish a reserve, our business, financial condition and ability to pay dividends or make other distributions would likely be materially and
adversely affected. Out of the total claims and legal actions management has estimated a probable loss of $14.2 million. See Note 32Provisions for legal claims to our audited consolidated financial statements as of and for the year
ended December 31, 2014.

Dividends and Dividend Policy

The payment of dividends on our shares is subject to the discretion of our common shareholders. Under Panamanian law, we may pay dividends only
out of retained earnings or capital surplus. So long as we do not default in our payments under our loan agreements, there are no covenants or other restrictions on Avianca Holdings S.A.s ability to declare and pay dividends. Our articles of
incorporation provide that all dividends declared by our board of directors will be paid equally with respect to all of the preferred shares and common shares. Our articles of incorporation also provide that our preferred shares have a right to a
minimum preferred dividend that will be paid on a preferential basis over the dividend corresponding to our common stock. See Item 10. Additional InformationPart B. Memorandum and Articles of AssociationDescription of Capital
StockPreferred SharesMinimum Preferred Dividend.

Our shareholders have adopted a dividend policy that provides for the
payment of annual dividends equal to at least 15% of our annual distributable profits (defined below). Annual distributable profits are defined in our by-laws as our annual profits (after taxes), minus amounts used to offset
losses of previous fiscal periods, minus amounts necessary to fund legal and other reserves, if any. Panamanian law does not currently provide for a required legal reserve.

Holders of the preferred shares and ADSs are entitled to receive a minimum dividend to be paid preferentially over holders of common shares,
so long as dividends have been declared by our shareholders at their annual meeting. If no dividends are declared, none of our shareholders will be entitled to any dividends. If dividends are declared and our annual distributable profits are
sufficient to pay a dividend per share of at least COP 50 per share to all our holders of preferred and common shares, such profits will be paid equally with respect to our preferred and common shares. However, if our annual distributable
profits are insufficient to pay a dividend of at least COP 50 per share to holders of our preferred and common shares, a minimum preferred dividend of COP 50 per share will be distributed pro rata to the holders of our preferred
shares, and any excess above such minimum preferred dividend will be distributed solely to holders of our common shares. See Item 10. Additional InformationPart B. Memorandum and Articles of AssociationDescription of Capital
StockPreferred SharesMinimum Preferred Dividend.

A majority of our common shareholders may, in their sole discretion
and for any reason, amend or discontinue the dividend policy. Future dividends with respect to shares of our common stock, if any, will depend on, among other things, our results of operations, cash requirements, financial condition, contractual
restrictions, business opportunities, provisions of applicable law and other factors that our board of directors may deem relevant. See Item 3. Key InformationPart D. Risk FactorsRisks Relating to the ADSs and Our Preferred
SharesOur controlling shareholders have the ability to direct our affairs and their interests could conflict with those of our ADS holders.

Avianca and certain of its subsidiaries are parties to bonds, leases and loan agreements that restrict their ability to pay dividends or make
distributions to us. For a description of such restrictions, see Item 5. Operating and Financial Review and ProspectsPart B. Liquidity and Capital ResourcesDebt and Other Financing Agreements.

On March 27, 2015, an annual dividend of $0.06691 per share was declared at our general shareholders meeting which is to be paid to
shareholders of record no later than October 31, 2015 and represents an aggregate dividend payment of approximately $66.9 million, payable to the holders of the preferred and common shares, including the ADSs.



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On March 25, 2014, an annual dividend of COP 75 (approximately $0.04) per share was declared
at our general shareholders meeting which was paid to shareholders of record on April 25, 2014 and represented an aggregate dividend payment of COP 75,098 million ($39.0 million), payable to the holders of the preferred and common shares,
including the ADSs.

On March 21, 2013, an annual dividend of COP 75 (approximately $0.04) per share was declared at our general
shareholders meeting which was paid to shareholders of record on April 28, 2013 and represented an aggregate dividend payment of COP 67,598 million ($36.9 million), payable to the holders of the preferred and common shares.

On March 30, 2012, an annual dividend of COP 50 (approximately $0.03) per share was declared at our general shareholders meeting which
was paid to shareholders of record on April 27, 2012 and represented in an aggregate dividend payment of COP 45,064 million ($25.6 million), payable to the holders of the preferred and common shares.

Prior to the March 2012 dividend payment, we had not paid a dividend since the combination of Avianca and Taca in 2010.



|B. | Significant Changes
|-- | -------------------

None.



|Item 9. | The Offer and Listing
|------- | ---------------------



|A. | Offer and Listing Details
|-- | -------------------------

The ADSs

Our ADSs have been listed on The New York Stock Exchange since November 2013.

Our Preferred Shares

Our preferred
shares are currently registered in the Colombian National Registry of Securities and Issuers (Registro Nacional de Valores y Emisores) kept by the Colombian Superintendency of Finance (Superintendencia Financiera de Colombia) and trade
on the Colombian Stock Exchange (Bolsa de Valores de Colombia) under the symbol PFAVH. On March 31, 2015, the closing price of our preferred shares on the Colombian Stock Exchange was COP 3,665, or $1.42 per share (based on
the exchange rate on such date, which was COP 2,576.05 per US$1.00).

The following table sets forth for each year since our
preferred shares began trading on May 11, 2011 and since our ADSs began trading on November 6, 2013 the high and low closing prices of our preferred shares on the Colombian Stock Exchange as reported by the Colombian Stock Exchange and of
our ADSs on the NYSE.



|                                                                  |  |                  |       |  |                |  |       |      |  |  |       |  |  |  |       | 
|----------------------------------------------------------------- |  | ---------------- | ----- |  | -------------- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                                                                  |  | Preferred Shares |       |  | ADSs           | 
|                                                                  |  | High             |       |  | Low            |  |       | High |  |  | Low   | 
|                                                                  |  | (in COP/share)   |       |  | (in US$/share) | 
|2011 (beginning from the commencement of trading on May 11, 2011) |  |                  | 5,390 |  |                |  | 3,105 |      |  |  |      |  |  |  |      | 
|2012                                                              |  |                  | 4,705 |  |                |  | 3,290 |      |  |  |      |  |  |  |      | 
|2013 (in the case of the ADSs, beginning on November 6, 2013)     |  |                  | 4,646 |  |                |  | 3,435 |      |  |  | 15.44 |  |  |  | 14.00 | 
|2014                                                              |  |                  | 4,485 |  |                |  | 3,205 |      |  |  | 18.39 |  |  |  | 10.46 | 

The following table sets forth for each quarter since January 1, 2012 in the case of our preferred shares
and since November 6, 2013 in the case of our ADSs the high and low closing prices of our preferred shares on the Colombian Stock Exchange as reported by the Colombian Stock Exchange and of our ADSs on the NYSE.



|               |  |                  |       |  |                |  |       |      |  |  |     |  |  |  |   | 
|-------------- |  | ---------------- | ----- |  | -------------- |  | ----- | ---- |  |  | --- |  |  |  | - | 
|               |  | Preferred Shares |       |  | ADSs           | 
|               |  | High             |       |  | Low            |  |       | High |  |  | Low | 
|               |  | (in COP/share)   |       |  | (in US$/share) | 
|2012:          |  |                  |       |  |                |  |       |      |  |  |     |  |  |  |   | 
|First quarter  |  |                  | 4,405 |  |                |  | 3,290 |      |  |  |    |  |  |  |  | 
|Second quarter |  |                  | 4,050 |  |                |  | 3,595 |      |  |  |    |  |  |  |  | 



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|                                                                        |  |                  |       |  |                |  |       |      |  |  |       |  |  |  |       | 
|----------------------------------------------------------------------- |  | ---------------- | ----- |  | -------------- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|                                                                        |  | Preferred Shares |       |  | ADSs           | 
|                                                                        |  | High             |       |  | Low            |  |       | High |  |  | Low   | 
|                                                                        |  | (in COP/share)   |       |  | (in US$/share) | 
|Third quarter                                                           |  |                  | 4,300 |  |                |  | 3,850 |      |  |  |      |  |  |  |      | 
|Fourth quarter                                                          |  |                  | 4,705 |  |                |  | 4,060 |      |  |  |      |  |  |  |      | 
|2013:                                                                   |  |                  |       |  |                |  |       |      |  |  |       |  |  |  |       | 
|First quarter                                                           |  |                  | 4,645 |  |                |  | 4,370 |      |  |  |      |  |  |  |      | 
|Second quarter                                                          |  |                  | 4,465 |  |                |  | 4,120 |      |  |  |      |  |  |  |      | 
|Third quarter                                                           |  |                  | 4,195 |  |                |  | 3,680 |      |  |  |      |  |  |  |      | 
|Fourth quarter (in the case of the ADSs, beginning on November 6, 2013) |  |                  | 4,265 |  |                |  | 3,435 |      |  |  | 15.44 |  |  |  | 14.00 | 
|2014:                                                                   |  |                  |       |  |                |  |       |      |  |  |       |  |  |  |       | 
|First quarter                                                           |  |                  | 4,485 |  |                |  | 3,740 |      |  |  | 18.39 |  |  |  | 15.24 | 
|Second quarter                                                          |  |                  | 4,340 |  |                |  | 3,570 |      |  |  | 17.76 |  |  |  | 14.90 | 
|Third quarter                                                           |  |                  | 3,930 |  |                |  | 3,470 |      |  |  | 16.71 |  |  |  | 13.58 | 
|Fourth quarter                                                          |  |                  | 3,860 |  |                |  | 3,205 |      |  |  | 14.89 |  |  |  | 10.46 | 
|2015:                                                                   |  |                  |       |  |                |  |       |      |  |  |       |  |  |  |       | 
|First quarter                                                           |  |                  | 3,850 |  |                |  | 3,355 |      |  |  | 12.55 |  |  |  | 10.78 | 

The following table sets forth for each of the most recent six months in the case of our preferred shares and
since November 6, 2013 in the case of our ADSs the high and low closing prices of our preferred shares on the Colombian Stock Exchange as reported by the Colombian Stock Exchange and of our ADSs on the NYSE.



|              |  |                  |       |  |                |  |       |      |  |  |       |  |  |  |       | 
|------------- |  | ---------------- | ----- |  | -------------- |  | ----- | ---- |  |  | ----- |  |  |  | ----- | 
|              |  | Preferred Shares |       |  | ADSs           | 
|              |  | High             |       |  | Low            |  |       | High |  |  | Low   | 
|              |  | (in COP/share)   |       |  | (in US$/share) | 
|October 2014  |  |                  | 3,860 |  |                |  | 3,430 |      |  |  | 14.89 |  |  |  | 13.36 | 
|November 2014 |  |                  | 3,830 |  |                |  | 3,450 |      |  |  | 14.80 |  |  |  | 12.85 | 
|December 2014 |  |                  | 3,480 |  |                |  | 3,205 |      |  |  | 12.18 |  |  |  | 10.46 | 
|January 2015  |  |                  | 3,730 |  |                |  | 3,355 |      |  |  | 12.50 |  |  |  | 11.10 | 
|February 2015 |  |                  | 3,820 |  |                |  | 3,600 |      |  |  | 12.55 |  |  |  | 11.83 | 
|March 2015    |  |                  | 3,850 |  |                |  | 3,535 |      |  |  | 12.13 |  |  |  | 10.78 | 



|B. | Plan of Distribution
|-- | --------------------

Not applicable.



|C. | Markets
|-- | -------

Prior to 2001, there were three stock exchanges in Colombia: the Stock Exchange
of Bogota created in 1928, the Stock Exchange of Medellin (1950) and the Stock Exchange of Occidente (1970).

After the limited
economic growth during the 1980s, the economic expansion of the 1990s resulted in the Colombian capital markets growing at unprecedented rates, as indicated or measured by listed companys market capitalization, the total value traded in the
stock markets and the total amount of outstanding domestic public and private bonds.

Such rapid growth has resulted in the increased
regulation of the Colombian capital markets. In addition, such growth precipitated the merger of the Stock Exchanges of Bogota, Medellin and Occidente into the Colombian Stock Exchange in July 2001.

The Colombian Stock Exchange handles relatively minor trading and liquidity compared to stock exchanges in major financial centers. In
addition, very few issuers represent a disproportionately large percentage of market capitalization and trading volume on the Colombian Stock Exchange. The Colombian Stock Exchange is subject to the inspection and supervision of the Colombian
Financial Superintendency.



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On November 22, 2010, the Colombian Stock Exchange completed its equity markets integration
process of the Latin American Integrated Market (Mercado Integrado Latinoamericano), with the equity stock markets of Chile and Peru, which allows integrated trading and settlement. The Latin American Integrated Market is the leading market
in terms of number of issuers (approximately 554 as of December 2012), the second in terms of market capitalization and the third in terms of volume in Latin America.

The total value of equities traded on the Colombian Stock Exchange during 2014 was COP 40.4 trillion (including spot and repurchase and
securities lending transactions). Spot transactions over equities traded during 2014 was COP 40.4 trillion with a daily average of COP 165.4 billion, representing a nominal decrease of 3.0% from the daily average value of equities traded in 2013.
Both debt and equity securities are traded on the Colombian Stock Exchange, including stocks and bonds of private sector corporations, although the vast majority of securities traded are fixed income government debt securities.

The table below sets forth certain year-end information concerning equity securities listed on the Colombian Stock Exchange since 2007.



|                                            |  |      |     |  |      |  |     |      |  |  |      |  |  |      |     |  |      |  |     |      |  |  |      |  |  |  |     |  |  |  |     | 
|------------------------------------------- |  | ---- | --- |  | ---- |  | --- | ---- |  |  | ---- |  |  | ---- | --- |  | ---- |  | --- | ---- |  |  | ---- |  |  |  | --- |  |  |  | --- | 
|                                            |  | 2014 |     |  | 2013 |  |     | 2012 |  |  | 2011 |  |  | 2010 |     |  | 2009 |  |     | 2008 |  |  | 2007 | 
|Number of listed companies                  |  |      | 74  |  |      |  | 79  |      |  |  | 82   |  |  |      | 83  |  |      |  | 86  |      |  |  | 87   |  |  |  | 89  |  |  |  | 90  | 
|Market capitalization (in trillions of COP) |  |      | 364 |  |      |  | 416 |      |  |  | 484  |  |  |      | 404 |  |      |  | 418 |      |  |  | 287  |  |  |  | 196 |  |  |  | 205 | 



|Source: | Colombian Stock Exchange.
|------- | -------------------------

At December 31, 2014, the ten companies with
the largest market capitalizations on the Colombian Stock Exchange represented approximately 71% of the total market capitalization of all companies listed and the ten most actively traded stocks on the Colombian Stock Exchange during the year 2014
represented 66% of the total trading volume during that period. Annual trading values of equity securities by exchange are set forth in the table below.



|                                                                                         |  |      |    |  |      |  |    |      |  |  |      |  |  |      |    |  |      |  |    |      |  |  |    |  |  |  |    | 
|---------------------------------------------------------------------------------------- |  | ---- | -- |  | ---- |  | -- | ---- |  |  | ---- |  |  | ---- | -- |  | ---- |  | -- | ---- |  |  | -- |  |  |  | -- | 
|Annual Trading Values of Equity Securities (in trillions of COP) Year Ended December 31, | 
|2014                                                                                     |  | 2013 |    |  | 2012 |  |    | 2011 |  |  | 2010 |  |  | 2009 |    |  | 2008 |  |    | 2007 | 
|40                                                                                       |  |      | 49 |  |      |  | 71 |      |  |  | 68   |  |  |      | 54 |  |      |  | 40 |      |  |  | 40 |  |  |  | 32 | 



|Source: | Colombian Stock Exchange.
|------- | -------------------------

Price movements in the Colombian equity market are
reflected in the indices of equity securities traded on the Colombian Stock Exchange. The Colombian Stock Exchange has different market indices including: (i) the Stock Capitalization Index (COLCAP), (ii) the Stock Liquidity Index (COL20)
and (iii) the General Index of the Colombian Stock Exchange (IGBC).

Our preferred shares are included on the COLCAP and IGBC
indices.

The COLCAP is a capitalization index that reflects changes in the prices of the 20 most liquid shares of the Colombian
Securities Exchange (BVC), where the weight of each share in the index is determined by the corresponding value of the adjusted market capitalization (companys float multiplied by the last price of its share). The selection function is the
measure of liquidity used by the BVC to determine the shares that make up the COLCAP basket. Information on volume, turnover and frequency of each of the eligible shares is required to calculate this function. Recomposition of the index consists of
the selection of shares that will make up the share basket of the index for the following year. During the recomposition process, the weight in the index of each share selected for the following quarter is also determined. The COLCAP recomposition
is carried out after market closing on the last business day of October and will be in force from the first business day of November of the same year to the last business day of October of the following year. Index rebalancing consists of
determining the weight of each share in the basket. COLCAP rebalancing is carried out on the last business day of the months of January, April and July each year. Rebalancing results in the adjustment of the weights of the shares that make up the
index to reflect the changes in the adjusted market capitalization of each share. Under certain conditions, shares can be added to or removed from the index during a rebalancing period. Given its replicable index construction, the COLCAP has become
the relevant benchmark for the Colombian stock market.

The IGBC is an index comprising stocks that meet certain frequency and turnover
criteria. The weight of the shares in the index basket is determined by the amount of shares traded of each constituent. It has 7 sector indices associated with its methodology (Agricultural, Retail, Financial, Industrial, Investment Companies,
Public Services and Other Services).



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Regulation of the Colombian securities market

Regulatory authorities

The Colombian stock market is regulated by the Colombian Congress and by the Colombian government through the Ministry of Finance and Public
Credit and the Colombian Superintendency of Finance. The Colombian Government is responsible for the overall economic policy making in Colombia. Pursuant to Article 150(19)(d) of the Colombian Constitution, the Colombian Congress must determine the
principles, criteria and objectives that the National Government of Colombia must observe when regulating all financial activities. Also, under Article 189(24) of the Colombian Constitution, the national government of Colombia must regulate,
supervise and control institutions in the financial, insurance and securities industry.

The responsibilities of the Colombian government
include the adoption of rules and regulations pertaining to, among other things, the public offering of securities; the operation and administration of the Integral Information System of the Securities Market, and the procedures for registration of
securities, the establishment, operation and dissolution of infrastructure providers (such as central securities depositories and stock exchanges, among others), the disclosure obligations of periodic and relevant issuers of securities that are
registered in the National Register of Securities and Issuers, regulation of market intermediaries, and establishing transparent criteria and best practices of negotiation.

On July 8, 2005, the Colombian Congress enacted the Colombian Securities Market Law (Ley del Mercado de Valores, Law 964 of 2005).
Pursuant to Law 964 and Decree 663 of 1993, the Ministry of Finance and Public Credit is the governmental agency in charge of regulating the financial, insurance and securities markets. Direct supervisory authority of the financial, insurance and
securities markets has been entrusted to the Colombian Superintendency of Finance.

Regulatory framework

Law 964 of 2005 provides the principal legal framework that governs the Colombian securities market. The primary scope of Law 964 is to promote
the efficiency, transparency and integrity and the development of the Colombian securities market. Law 964 also sets forth certain corporate governance standards for listed companies and issuers, such as the requirement that at least 25% of the
board members be independent directors (as defined in Law 964), that the company maintain an audit committee with at least three board members, including all independent members, and that the companys legal representatives adopt
and implement internal control procedures and adequate mechanisms for disclosure of information and certify the truthfulness of the financial and other relevant information disclosed to the market.

In order to comply with the foregoing disclosure obligations, issuers must disclose relevant information through the Colombian Superintendency
of Finances website as soon as the event to be disclosed has occurred or as soon as the issuer knows of its occurrence.

As a
general rule, pursuant to Decree 2555, as amended, any transaction involving the sale of publicly traded stock in an amount of Colombian pesosequivalent or superior to 66,000 Units of Real Value (Unidades de Valor Real), an index
calculated by the Central Bank of Colombia on a daily basis based on the monthly fluctuation of the consumer price index (índice de precios al consumidor) (equivalent to Ps.13,474,434.6 as of January 31, 2013), must be effected
through transaction modules subject to the inspection and supervision of the Colombian Superintendency of Finance. Trading transactions of securities of non-Colombian companies outside Colombia are generally exempt from this requirement. Stock
transfers originated in operations different from buying or selling or conducted between two parties who are acting for the same beneficial owner are exempt as well, but must be informed to the Colombian Superintendency of Finance five days prior to
the transaction. Decree 2555 expressly prohibits any issuer from registering such transactions which do not comply with these requirements in its share registry.

Regulation of the Colombian Stock Exchange

Trading on the Colombian Stock Exchange is subject to specific private regulations issued by the Colombian Stock Exchange, particularly the
General Rules of the Colombian Stock Exchange, as amended from time to time, the Regulation Letter (Circular Única de la Bolsa de Valores de Colombia), as amended from time to time, and Decree 2555 of 2010. These rules mainly govern listing
and trading activities in the Colombian Stock Exchange. In particular, they include (i) listing requirements, (ii) suspension and/or cancellation of the securities listed with the Colombian Stock Exchange, and (iii) admission
requirements for broker-dealers.

Prior to 1992, settlement procedures for trades on the Colombian Stock Exchange occurred through
physical delivery of the securities and were regulated by the Colombian Stock Exchange. Deceval was established in 1992 as a centralized securities depository and clearing facility for securities of private issuers in charge of administering the
transfer and registry of securities and facilitating the exercise of economic and political rights of securities holders. Deceval formally began operations in 1994 and its



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activities are regulated by Law 964 and Decree 2555, as amended. Settlement procedures could then be made either through physical delivery or in book-entry form. Except for some specific public
auction procedures, since 2001 the settlement of securities transactions on the Colombian Stock Exchange is customarily made at T+3 through Decevals book-entry system. There also exists in Colombia a limited clearing facility through the
Colombian Central Bank for government-issued or government-guaranteed securities. In addition, by means of Resolution No. 0093 of 1995, in 1996 the Colombian Stock Exchange implemented an electronic system in order to access the information
related to both the stocks and their issuers and the quantities and prices of each offering, demand and transactions traded on the exchanges (Sistema Electrónico Transaccional).



|D. | Selling Shareholders
|-- | --------------------

Not applicable.



|E. | Dilution
|-- | --------

Not applicable.



|F. | Expenses of the Issue
|-- | ---------------------

Not applicable.



|Item 10. | Additional Information
|-------- | ----------------------



|A. | Share Capital
|-- | -------------

Not applicable.



|B. | Memorandum and Articles of Association
|-- | --------------------------------------

We are principally engaged in the air
transportation of passengers and cargo, although our articles of incorporation grant us general powers to engage in other lawful businesses as set forth in Article 2 of our articles of incorporation.

Description of Capital Stock

General

Our articles of incorporation authorize us to issue 4,000,000,000 shares of capital stock, par value of $0.125 per share, which may be
divided into common shares and shares with preferred dividend and limited voting rights, or our preferred shares.

As of December 31,
2014, we had 660,800,003 common shares and 340,507,917 preferred shares outstanding (including 4,320,632 preferred shares held by Fidubogota on behalf of us). Subject to certain exceptions, the number of preferred shares cannot exceed the number of
common shares. If at any time preferred shares represent more than 75% of our capital stock, preferred shares may be issued upon the affirmative vote of holders of at least 70% of the outstanding common shares and holders of at least 70% of the
outstanding preferred shares. Common shares may be freely converted into preferred shares upon the declaration of effectiveness of a registration statement associated with an ADR program of our preferred shares, provided that there shall be a
minimum of 5 common shares at all times.

Preferred Shares

Our preferred shares are currently registered in the Colombian National Registry of Securities and Issuers (Registro Nacional de Valores y
Emisores) kept by the Colombian Superintendency of Finance (Superintendencia Financiera de Colombia) and trade on the Colombian Stock Exchange. Pursuant to article 6.15.1.1.2 of Decree 2555 of 2010 issued by the Ministry of Credit and
Public Finance of Colombia, or Decree 2555, subject to certain exceptions, all trades and sales of shares listed on the Colombian Stock Exchange must be made through the trading systems of the Colombian Stock Exchange. A holder of preferred shares
must meet the requirements set forth by applicable Colombian regulations for the sale or transfer of the preferred shares to be a perfected interest and such sale or transfer must be properly registered in the Colombian centralized securities
depository, or Deceval. Accordingly, any dispute that arises from the sale and purchase of preferred shares is subject to the Colombian laws and regulations and to the jurisdiction of Colombian courts.

The laws of Colombia govern any transfer or encumbrance of preferred shares except for matters that are governed by the laws of Panama or by
our by-laws. Any claims brought against us by our shareholders shall be filed pursuant to the laws of Panama.



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The holders of preferred shares are not entitled to receive notice of, attend to or vote at any
general shareholders meeting of holders of common shares except as described in our articles of incorporation or under Shareholders Meetings.

Rights

Each
holder of preferred shares is entitled to, among other things:



| |  |  | a minimum preferential dividend of COP 50 per share. See Item 10. Additional InformationPart B. Memorandum and Articles of AssociationPreferred SharesMinimum Preferred Dividend;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | subject to certain conditions, together with the holders of common shares a pro rata portion of our distributable profits;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | preferential reimbursement of its capital contributions once our other creditors are duly paid in the case of our dissolution or liquidation;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | exercise of certain tag along rights. See Item 10. Additional InformationPart B. Memorandum and Articles of AssociationPreferred SharesTag Along Rights; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | any other right granted by our by-laws to the holders of common shares, except for, subject to certain conditions: (i) pre-emptive rights of holders of common shares to subscribe capital stock different from
preferred shares; (ii) the right to inspect our corporate books and records and (iii) right to participate and vote in a general shareholders meeting.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Minimum Preferred Dividend

Our articles of incorporation (Pacto Social) provide that holders of our preferred shares have a right to a minimum preferred dividend
that will be paid on a preferential basis over the dividend corresponding to our common stock. If our annual distributable profits are sufficient to pay a dividend per share of at least COP 50 per share to all our holders of preferred and
common shares, such profits will be paid equally with respect to our preferred and common shares. However, if our annual distributable profits are not sufficient to pay a dividend of at least COP 50 per share to holders of common shares and
holders of preferred shares, a minimum preferred dividend of up to COP 50 per share will be distributed pro rata to the holders of preferred shares, and any excess above such minimum preferred dividend will be distributed solely to
holders of common shares.

Dividends must be paid in one or more installments, within the twelve (12) months following the date in
which the dividend payment terms and conditions are approved by the general shareholders meeting. Dividends are payable to the holders that are registered in the book-entry system of Deceval as of the ex-dividend date established pursuant to
Colombian law. Dividends are payable in Colombian pesos and, when the dividends are approved in a currency different than Colombian pesos, dividends will be converted to Colombian pesos using the current market exchange rate (tasa representativa
del mercado), or TRM, in force in the previous business day in which payment must be made. All dividend payments of preferred shares shall be made through Deceval. Dividends paid to the holders of ADSs will be converted into U.S. dollars by the
depositary.

To the extent permitted by applicable law, our articles of incorporation and Decevals internal systems, we may either
pay dividends outside Colombia to shareholders who are non-Colombian residents or, if possible, transfer the funds corresponding to the non-Colombian resident shareholders to an account held by Deceval outside Colombia. Thereafter, Deceval, on our
behalf, will pay the dividends to the non-Colombian resident shareholders outside Colombia. In any case, payments of dividends will be conducted in accordance with foreign exchange regulations.

A majority of our shareholders may, in their sole discretion and for any reason, amend or discontinue the dividend policy.

Liquidation Preference

Upon liquidation, each holder of preferred shares, and consequently ADSs, will be entitled to a preferential reimbursement of its capital
contribution (aporte) out of the surplus assets available for distribution to shareholders. This reimbursement, if any, is payable in Colombian pesos before any distribution or payment may be made to holders of common shares. Amounts in
Colombian pesos will be converted by the depositary into U.S. dollars and paid to the holders of ADSs, net of fees, expenses and any taxes. If, upon any liquidation, assets that are available for distribution among the holders of preferred shares
and ADSs (in liquidation) are insufficient to pay in full their respective liquidation preferences, such assets will be distributed among those holders pro rata.



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Limited Voting Rights

Each holder of preferred shares is entitled to vote at a general shareholders meeting only in connection with the following matters,
subject to certain conditions:



| |  |  | our anticipated dissolution, merger or transformation or change of our corporate purpose;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | the suspension or cancellation of the registration of preferred shares at the Colombian Stock Exchange; and
| | - |  | -----------------------------------------------------------------------------------------------------------



| |  |  | determination by the Colombian Financial Superintendency that there have been concealed or diverted benefits that decreased our distributable profits.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------

Also, each holder of preferred shares shall be entitled to one vote on all matters submitted to a vote at a general shareholders meeting
when the holders of preferred shares represent more than 75% of our capital stock.

Tag Along Rights

Holders of preferred shares are entitled to participate in any sale or transfer of common shares if Kingsland or Synergy sell or transfer a
number of common shares, or the Shares Transfer, that would result in a change of control with respect to us, or the Tag Along Right. The Tag Along Right does not apply for sales or share transfers between Kingsland and Synergy and/or their
respective affiliates.

If Kingsland or Synergy plans to enter into a Shares Transfer that would result in a change of control, such
holder of common shares must send a written notification to our legal representative and a description of the main conditions of the Shares Transfer. Within five business days of receipt of the written notification, our legal representative shall
publish the main conditions of the Share Transfer in a Colombian recognized newspaper and on the websites of the Colombian Financial Superintendency and Colombian Stock Exchange.

Any Tag Along Right provided herein does not oblige us, the holders of common shares or the buying third party to launch special transactions
in the Colombian Stock Exchange.

Common Shares

Each holder of common shares is entitled to, among other things, (i) one vote on all matters submitted to a vote at a general
shareholders meeting; (ii) share equally in dividends from sources legally available therefor as declared at our annual shareholders meeting; (iii) convert its common shares into preferred shares; (iv) freely inspect the
corporate books and records; and (v) any rights set forth in our articles of incorporation or Panamanian law.

Each holder of common
shares is entitled to vote on all matters submitted to a vote at a general shareholders meeting, including in connection with the following matters:



| |  |  | any proposed amendment to our articles of incorporation;
| | - |  | --------------------------------------------------------



| |  |  | the issuance of common or preferred shares; and
| | - |  | -----------------------------------------------



| |  |  | the sale, transfer or disposition of all or substantially all of our assets.
| | - |  | ----------------------------------------------------------------------------

Shareholders
Meetings

General shareholders meetings may be ordinary or extraordinary. Ordinary meetings occur at least once a year during
the first three months following the end of the prior fiscal year. Extraordinary meetings may take place when duly summoned for a specified purpose or purposes.

At ordinary annual meetings of shareholders, the board of directors is elected and our annual consolidated financial statements, audit and
management reports and any other issues required by applicable law or our by-laws are approved. Extraordinary meetings may be summoned by the chairman of our board of directors when deemed appropriate, or by our chief executive officer or by our
auditors, or whenever a meeting is requested by shareholders representing at least 20% of holders of our common shares.

A notice of an
extraordinary general shareholders meeting, listing the matters to be addressed at such meeting, must be published in a newspaper of wide circulation in Colombia, at least five business days prior to the meeting.

For both ordinary and extraordinary general shareholders meetings to be convened, a quorum represented by the presence of a plurality of
shareholders representing at least 50% (plus one share) entitled to vote at the relevant meeting is required.



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General shareholders meetings related to (i) any amendment that would impair the rights of
the holders of preferred shares; (ii) the conversion of preferred shares into common shares; or (iii) the number of preferred shares would exceeding the number of common shares, require the presence of the holders of at least 70% of the
outstanding preferred shares.

Each holder of preferred shares is entitled to vote at a general shareholders meeting only in
connection with the following matters, subject to certain conditions: (i) our anticipated dissolution, merger or transformation or change of our corporate purpose; (ii) the suspension or cancellation of the registration of preferred shares
at the Colombian Stock Exchange; and (iii) determination by the Colombian Financial Superintendency that there have been concealed or diverted benefits that decreased our distributable profits. Also, each holder of preferred shares shall be
entitled to one vote on all matters submitted to a vote at a general shareholders meeting when the holders of preferred shares represent more than 75% of our capital stock.

In the case of any shareholders meeting to consider any of the significant corporate events above in respect of which holders of
preferred shares may vote, notice of the shareholders meeting must be given 15 business days in advance of the meeting date.

The
Joint Action Agreement among Synergy, Kingsland and us contains several provisions relating to the rights of Synergy and Kingsland to approve certain corporate decisions at our shareholders meetings. See Item 7. Major Shareholders and
Related Party TransactionsPart B. Related Party TransactionsJoint Action Agreement.

Amendment to our articles of incorporation
(Pacto Social)

Upon the consummation of our November 2013 U.S. initial public offering, our articles of incorporation (Pacto
Social) were amended to reflect the replacement of the Shareholders Agreement with the Joint Action Agreement. On March 25, 2014, our articles of incorporation (Pacto Social) were further amended to reflect the appointment of a
Vice-President of Operations who shall act as Chief Operating Officer of the Company.

Summary of Significant Differences between Shareholders
Rights and other Corporate Governance Matters under Panamanian Corporate Law and Delaware Corporate Law

Avianca Holdings is a
Panamanian corporation (sociedad anónima). The Panamanian corporation law was originally modeled after the Delaware General Corporation Law. As such, many of the provisions applicable to Panamanian and Delaware corporations are
substantially similar, including (1) a directors fiduciary duties of care and loyalty to the corporation, (2) a lack of limits on the number of terms a person may serve on the board of directors, (3) provisions allowing
shareholders to vote by proxy and (4) cumulative voting if provided for in the articles of incorporation. The following table highlights the most significant provisions that materially differ between Panamanian corporation law and Delaware
corporation law.



|                                                                                                                                                                                                                                     |  |                                                                                                                                                                                                                                                                                                                                                                       
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Panama                                                                                                                                                                                                                               |  | Delaware                                                                                                                                                                                                                                                                                                                                                              
|Directors                                                                                                                                                                                                                           
|Conflict of Interest Transactions. Transactions involving a Panamanian corporation and an interested director or officer are initially subject to the approval of the board of directors.                                            |  | Conflict of Interest Transactions. Transactions involving a Delaware corporation and an interested director of that corporation are generally permitted if:                                                                                                                                                                                                           
|                                                                                                                                                                                                                                     | 
|At the next shareholders meeting, shareholders will then have the right to disapprove the board of directors decision and to decide to take legal actions against the directors or officers who voted in favor of the
transaction. |  | (1) the material facts as to the interested directors relationship or interest are disclosed and a majority of disinterested directors approve the transaction;                                                                                                                                                                                                      
|                                                                                                                                                                                                                                     | 
|                                                                                                                                                                                                                                     |  | (2) the material facts are disclosed as to the interested directors relationship or interest and the stockholders approve the transaction; or                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                     | 
|                                                                                                                                                                                                                                     |  | (3) the transaction is fair to the corporation at the time it is authorized by the board of directors, a committee of the board of directors or the stockholders.                                                                                                                                                                                                     
|                                                                                                                                                                                                                                     | 
|Terms. Panamanian law does not set limits on the length of the terms that a director may serve. Staggered terms are allowed but not required.                                                                                        |  | Terms. The Delaware General Corporation Law generally provides for a one-year term for directors. However, the directorships may be divided into up to three classes with up to three-year terms, with the years for each class
expiring in different years, if permitted by the articles of incorporation, an initial by-law or a by-law adopted by the shareholders.



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|                                                                                                                                                                                                                                                                                                                                                                                                      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Panama                                                                                                                                                                                                                                                                                                                                                                                                |  | Delaware                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Number. The board of directors must consist of a minimum of three members, which could be natural persons or legal entities.                                                                                                                                                                                                                                                                          |  | Number. The board of directors must consist of a minimum of one member.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Authority to take Actions. In general, a simple majority of the board of directors is necessary and sufficient to take any action on behalf of the board of directors.                                                                                                                                                                                                                                |  | Authority to take Actions. The articles of incorporation or by-laws can establish certain actions that require the approval of more than a majority of directors.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                     
|Shareholder Meetings and Voting Rights                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Quorum. The quorum for shareholder meetings must be set by the articles of incorporation or the by-laws. If the articles of incorporation and the notice for a given meeting so provide, if quorum is not met a new meeting can
be immediately called and quorum shall consist of those present at such new meeting.                                                                                  |  | Quorum. For stock corporations, the articles of incorporation or bylaws may specify the number to constitute a quorum but in no event shall a quorum consist of less than one-third of shares entitled to vote at a meeting. In
the absence of such specifications, a majority of shares entitled to vote shall constitute a quorum.                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Action by Written Consent. Panamanian law permits shareholder action without formally calling a meeting, but the decision must be adopted by Unanimous Written Consent of all the stockholders.                                                                                                                                                                                                       |  | Action by Written Consent. Unless otherwise provided in the articles of incorporation, any action required or permitted to be taken at any annual meeting or special meeting of stockholders of a corporation may be taken
without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action to be so taken, is signed by the holders of outstanding shares having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and noted.                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                     
|Other Shareholder Rights                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Shareholder Proposals. Shareholders representing 5% of the issued and outstanding capital of the corporation have the right to require a judge to call a general shareholders meeting and to propose the matters for
vote.                                                                                                                                                                           |  | Shareholder Proposals. Delaware law does not specifically grant shareholders the right to bring business before an annual or special meeting. If a Delaware corporation is subject to the SECs proxy rules, a shareholder
who owns at least $2,000 in market value, or 1% of the corporations securities entitled to vote, may propose a matter for a vote at an annual or special meeting in accordance with those rules.                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Appraisal Rights. Shareholders of Panamanian corporation do not have the right to demand payment in cash of the judicially determined fair value of their shares in connection with a merger or consolidation involving the
corporation. Nevertheless, in a merger, the majority of shareholders could approve the total or partial distribution of cash, instead of shares, of the surviving entity. |  | Appraisal Rights. Delaware law affords shareholders in certain cases the right to demand payment in cash of the judicially-determined fair value of their shares in connection with a merger or consolidation involving their
corporation. However, no appraisal rights are available if, among other things and subject to certain exceptions, such shares were listed on a national securities exchange or designated national market system or such shares were held of record by
more than 2,000 holders.                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Shareholder Derivative Actions. Any shareholder, with the consent of the majority of the shareholders, can sue on behalf of the corporation, the directors of the corporation for a breach of their duties of care and loyalty to
the corporation or a violation of the law, the articles of incorporation or the by-laws.                                                                            |  | Shareholder Derivative Actions. Subject to certain requirements that a shareholder make prior demand on the board of directors or have an excuse not to make such demand, a shareholder may bring a derivative action on behalf
of the corporation to enforce the rights of the corporation against officers, directors and third parties. An individual may also commence a class action suit on behalf of himself and other similarly-situated stockholders if the requirements for
maintaining a class action under the Delaware General Corporation Law have been met. Subject to equitable principles, a three-year period of limitations generally applies to such shareholder suits against officers and
directors.



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|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Panama                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |  | Delaware                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Inspection of Corporate Records. Shareholders representing at least 5% of the issued and outstanding shares of the corporation have the right to require a judge to appoint an independent auditor to examine the corporate
accounting books, the background of the companys incorporation or its operation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Inspection of Corporate Records. A shareholder may inspect or obtain copies of a corporations shareholder list and its other books and records for any purpose reasonably related to a persons interest as a
shareholder.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|Anti-takeover Provisions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Panamanian corporations may include in their articles of incorporation or by-laws classified board and super-majority provisions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Delaware corporations may have a classified board, super-majority voting and shareholders rights plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 
|Panamanian securities law (article 150 unified text) hostile-takeover provisions apply only to companies that are (1) registered with the SMV for a period of six months before the public offering; (2) have over 3,000
shareholders, the majority of which reside outside of Panama; (3) have a permanent office in Panama with full time employees and investments in the country for more than $1,000,000; and (4) the corporation is organized under the laws of
the Republic of Panama or duly register as a foreign company in the Public Registry of Panama.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Unless Delaware corporations specifically elect otherwise, Delaware corporations may not enter into a business combination, including mergers, sales and leases of assets, issuances of securities and similar transactions,
with an interested stockholder, or one that beneficially owns 15% or more of a corporations voting stock, within three years of such person becoming an interested shareholder unless:                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 
|These provisions are triggered when a buyer makes a public offer to acquire 5% or more of any class of shares with a market value of at least $5,000,000. In sum, the buyer must deliver to the corporation a complete and accurate
statement that includes (1) the name of the company, the number of securities outstanding of the class which the buyer proposes to acquire and the number of the shares that the buyer intends to acquire and the purchase price; (2) the
identity and background of the person acquiring the shares; (3) the source and amount of the funds or other goods that will be used to pay the purchase price; (4) the plans or project the buyer has once it has acquired the control of the
company; (5) the number of shares of the company that the buyer already has or is a beneficiary of and those owned by any of its directors, officers, subsidiaries, or partners or the same, and any transactions made regarding the shares in the
last 60 days; (6) contracts, agreements, business relations or negotiations regarding securities issued by the company in which the buyer is a party; (7) contract, agreements, business relations or negotiations between the buyer and any
director, officer or beneficiary of the securities; and (8) any other significant information. If the offeror is a corporation, the information must extend to all shareholders, directors and other persons controlling the offeror or its
controlling company. This declaration will be accompanied by, among other things, a copy of the buyers financial statements. |  | (1) the transaction that will cause the person to become an interested shareholder is approved by the board of directors of the target prior
to the transactions;  (2) after the completion of the transaction in which the person
becomes an interested shareholder, the interested shareholder holds at least 85% of the voting stock of the corporation not including shares owned by persons who are directors and also officers of interested shareholders and shares owned by
specified employee benefit plans; or  (3) after the person becomes an interested
shareholder, the business combination is approved by the board of directors of the corporation and holders of at least 66.67% of the outstanding voting stock, excluding shares held by the interested shareholder.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | 
|If the board of directors believes that the statement does not contain all required information or that the statement is inaccurate, the board of directors must send the statement to the SMV within 45 days from the buyers
initial delivery of the statement to the SMV. The SMV may then hold a public hearing to determine if the information is accurate and complete and if the buyer has complied with the legal requirements. The SMV may also start an inquiry into the case,
having the power to decide whether or not the offer may be made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |                                                   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------
|Panama                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  | Delaware                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|Regardless of the above, the board of directors has the authority to submit the offer to the consideration of the shareholders. The board should only convene a shareholders meeting when it deems the statement delivered by the
offeror to be complete and accurate. If convened, the shareholders meeting should take place within the next 30 days. At the shareholders meeting, two-thirds of the holders of the issued and outstanding shares of each class of shares of
the corporation with a right to vote must approve the offer and the offer is to be executed within 60 days from the shareholders approval. If the board decides not to convene the shareholders meeting within 15 days following the receipt
of a complete and accurate statement from the offeror, shares may then be purchased. In all cases, the purchase of shares can take place only if it is not prohibited by an administrative or judicial order or injunction. |  |                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|The law also establishes some actions or recourses of the sellers against the buyer in cases the offer is made in contravention of the law.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|Previously Acquired Rights                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|In no event can the vote of the majority shareholders deprive the shareholders of a corporation of previously-acquired rights. Panamanian jurisprudence and doctrine has established that the majority shareholders cannot amend the
articles of incorporation and deprive minority shareholders of previously-acquired rights nor impose upon them an agreement that is contrary to those articles of incorporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  | No comparable provisions exist under Delaware law.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 
|Once a share is issued, the shareholders become entitled to the rights established in the articles of incorporation and such rights cannot be taken away, diminished nor extinguished without the express consent of the shareholders
entitled to such rights. If by amending the articles of incorporation, the rights granted to a class of shareholders is somehow altered or modified to their disadvantage, those shareholders will need to approve the amendment unanimously.                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                   



|C. | Material Contracts
|-- | ------------------

English translation of Irrevocable Administration Mercantile Trust Agreement, dated
as of March 23, 2012, by and between Fiduciaria Bogotá S.A. and Avianca Holdings S.A. (formerly AviancaTaca Holding S.A.).

English
translation of Temporary Bonus Plan adopted on March 6, 2012.

English translation of Lease Agreement No. OP-DC-CA-T2-0060-12, dated October 7,
2012, between Sociedad Concesionaria Operadora Aeroportuaria Internacional S.A.Opain S.A. and Aerovias del Continente Americano S.A. Avianca, as amended.

English translation of Lease Agreement, dated as of July 30, 2004, between U.A.E. Aeronautica Civil and Aerovias Nacionales de Colombia S.A. Avianca, as
amended.

English translation of Fuel Supply Contract, dated as of April 22, 2013, between Terpel S.A. and Aerovías del Continente Americano
S.A. Avianca.

A320 Purchase Agreement, dated March 19, 1998, between Atlantic Aircraft Holding Limited and Airbus Industry relating to Airbus
A320-Family, as amended.

A320 Purchase Agreement, dated April 16, 2007, between Aerovías del Continente Americano S.A. Avianca and Airbus
S.A.S. relating to Airbus A320-Family, as amended



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Assignment, Assumption and Amendment Agreement dated as of May 18, 2012, entered into among Aerovías
del Continente Americano S.A. Avianca, Synergy Aerospace Corp. and Airbus S.A.S. in respect of four (4) A330-200F of the thirteen (13) A330-200 and A330-200F under the Purchase Agreement dated September 5, 2011 (the A330-200F Purchase
Agreement), as amended

A320 Family and A320 NEO Family Purchase Agreement dated as of December 27, 2011 between Avianca Holdings S.A. (formerly
known as AviancaTaca Holding S.A.) and Airbus S.A.S. relating to Airbus A320-Family and A320 NEO Family, as amended.

Purchase Agreement No. 3075,
dated October 3, 2006, as amended and supplemented, between Aerovías del Continente Americano S.A. Avianca (The Company) and The Boeing Company, relating to the purchase and sale of ten (10) Boeing Model 787-859 aircraft, as
amended.

Sale and Purchase Contract dated as of January 18, 2013, between Avianca Holdings S.A. (formerly known as AviancaTaca Holding S.A.) and
Avions de Transport Regional G.I.E. as amended and restated, relating to ATR 72-600 Aircraft, as amended.

Trent 700 General Terms Agreement, dated
June 15, 2007, among Rolls Royce PLC, Rolls Royce Total Care Services Limited and Aerovías del Continente Americano S.A. Avianca, as amended.

General Terms Agreement 700 DEG 7308, dated June 1, 2012, between Rolls-Royce PLC, Rolls-Royce Total Care Services Limited and Aerovías del
Continente Americano S.A. Avianca and Tampa Cargo S.A.

General Terms Agreement No. CFM-03-2007, dated as of March 29, 2007, between CFM
International, Inc. and Aerovías del Continente Americano S.A. Avianca, as amended.

General Terms Agreement No. GE-1-1090789943, dated as of
December 18, 2007, between General Electric Corporation, GE Engine Services and Atlantic Aircraft Holding, Ltd.

OnPoint Solutions Rate per Engine
Flight Hour Engine Services Agreement, dated as of January 18, 2008, between GE Engine Services, Inc. and Aerovías del Continente Americano S.A. Avianca.

Rate Per Flight Hour Agreement for CFM56-5B Engine Shop Maintenance Services, dated as of February 6, 2013, between CFM International, Inc. and Avianca
Holdings S.A. (formerly known as AviancaTaca Holding S.A.).

General Terms Agreement No. CFM-1-2887169891, dated as of February 6, 2013, between CFM
International, Inc. and Avianca Holdings S.A. (formerly known as AviancaTaca Holding S.A.)

Rate Per Flight Hour Agreement for LEAP 1-A Engine Shop
Maintenance Services, dated as of February 6, 2013, between CFM International, Inc. and Avianca Holdings S.A. (formerly known as AviancaTaca Holding S.A.).

Amended and Restated V2500® General Terms of Sale, dated as of December 18, 2008, between IAE
International Aero Engines AG and Atlantic Aircraft Holdings Limited, as amended

Amended and Restated V2500-A5 Fleet Hour Agreement, dated as of
December 18, 2008, between IAE International Aero Engines AG and Atlantic Aircraft Holdings Limited.

Trent 1000 General Terms Agreement, dated
June 15, 2007, among Rolls Royce PLC, Rolls Royce Total Care Services Limited and Aerovías del Continente Americano S.A. Avianca, as amended.



|D. | Exchange Controls
|-- | -----------------

In 1990, the Colombian government adopted a policy of gradual
currency liberalization. Foreign exchange holdings abroad were permitted and, in a series of decrees, control of the exchange rate was shifted from the Colombian Central Bank to the commercial foreign exchange market (mercado cambiario).

Law 9 of 1991 and Resolution 8 of 2000 of the Central Bank establish two types of markets for foreign currency exchange: (1) the free
market, which consists of all foreign currencies originated in sales of services, donations, remittances and all other inflows or outflows that do not have to be channeled through the FX market (as defined below), or the free market. The free market
also includes assets and investments abroad, including its profits, owned by Colombian residents prior to September 1, 1990; and (2) the controlled market, or the FX market, which consists of (a) all foreign currencies originated in
operations considered to be operations of the FX market, or the controlled operations, which may only be transacted through foreign exchange intermediaries or through the registered compensation accounts mechanism, or the compensation accounts, or
(b) foreign currencies, which although not required to be bought from a foreign exchange, including the FX market, are voluntarily channeled through such market.



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Under Colombian FX regulations, foreign exchange intermediaries, or FX intermediaries, are
authorized to enter into foreign exchange transactions, or FX transactions, to convert Colombian pesos into foreign currencies or foreign currencies into Colombian pesos. In addition, there are certain requirements and obligations established by law
and by the board of directors of the Central Bank, in order to transfer currency into or out of Colombia. Colombian law provides that the Colombian Central Bank may intervene in the foreign exchange market in case the value of the Peso experiences
significant volatility. The Colombian Government and the Central Bank may also limit, on a temporary basis, the remittance of funds abroad by Colombian residents whenever the international reserves of Colombia fall below an amount equivalent to
three months worth of imports. Since the institution of the current foreign exchange regime in 1991, the Colombian Government and the Colombian Central Bank have not limited the remittance of funds abroad. We cannot assure you that these
authorities will not intervene in the future.

Transactions conducted through this foreign exchange market are made at market rates
negotiated with FX intermediaries or the relevant counterparty if using a compensation account. Colombian residents, including Avianca and our other Colombian direct and indirect subsidiaries, are entitled to maintain foreign currency accounts
abroad, which can be used for making and receiving payments in foreign currency transactions. Such accounts can either be (i) compensation accounts (cuentas de compensación), which may be used to conduct transactions to be
mandatorily made through the foreign exchange market, among others, and which must comply with certain reporting requirements before the Colombian Central Bank and, in certain cases, the Colombian tax authorities or (ii) so-called free
market accounts, which may be used to effect any transaction on the free market but cannot be used to conduct transactions of mandatory channel through the exchange market.

Registration of the ADR Program and Investment in our ADSs by non-residents of Colombia

The International Investment Statute of Colombia as provided by Decree 2080 of 2000, as amended, regulates the manner in which foreign
investors may participate in the Colombian securities markets and undertake other types of investments, prescribes registration with the Colombian Central Bank of certain foreign exchange transactions and specifies procedures under which certain
types of foreign investments are to be authorized and administered.

The International Investment Statute provides specific procedures for
the registration of ADR programs as a form of foreign portfolio investment, which is required for the preferred shares to be offered in the form of ADSs. Under these regulations, failure to register foreign exchange transactions relating to
investments in Colombia with the Colombian Central Bank on a timely basis may prevent the investor from obtaining remittance payments, including for the payment of dividends, and constitute an exchange control violation and/or result in a fine.

Each individual investor who deposits preferred shares into the ADR facility for the purpose of acquiring ADSs will be required, as a
condition to acceptance by a custodian of such deposit, to provide or cause to be provided certain information to enable it to comply with the registration requirements under the foreign investment regulations relating to foreign exchange. A holder
of ADSs who withdraws preferred shares from the ADS deposit facility under certain circumstances may be required to comply directly with certain requirements under the foreign investment regulations. Under these regulations, the failure of a
non-resident investor to report or register foreign exchange transactions relating to investments in Colombia with the Central Bank on a timely basis may prevent the investor from obtaining remittance payments, including for the payment of
dividends, constitute an exchange control violation and/or result in a fine.

Under Colombian law, foreign investors receive the same
treatment as Colombian citizens with respect to the ownership and voting of our ADSs and preferred shares.

Exchange Rates

The Central Bank and the Ministerio de Hacienda y Crédito Publico (Colombian Ministry of Finance and Public Credit, or MHCP)
have, in recent years, adopted a set of measures intended to tighten monetary policy and control the fluctuation of the Colombian peso against the U.S. dollar. These measures include, among others, the following:



| |  |  | a 50.0% non-interest bearing deposit requirement at the Central Bank, applicable to short-term portfolio investments in assets other than shares or convertible bonds or collective investment funds that only invest in
shares or convertible bonds (together with certain exemptions thereto), which deposit was rescinded in 2008;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | restrictions on the repatriation of foreign direct investments; and
| | - |  | -------------------------------------------------------------------



| |  |  | interest-free deposits with the Central Bank applicable to the proceeds resulting from imports financings.
| | - |  | ----------------------------------------------------------------------------------------------------------

The Colombian government and the Central Bank have considerable power to determine governmental policies and actions that relate to the
Colombian economy and, consequently, to affect the operations and financial performance of businesses. The Colombian government and the Central Bank may seek to implement additional measures aimed at controlling further fluctuation of the Colombian
peso against other currencies and fostering domestic price stability.



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During 2010, the Colombian peso appreciated against the U.S. dollar by 6.4%. During 2011, the
Colombian peso depreciated against the dollar by 1.5%. During 2012, the Colombian peso appreciated against the U.S. dollar by 9.0%. During 2013, the Colombian peso depreciated against the U.S. dollar by 9.0%. During 2014, the Colombian peso
depreciated against the U.S. dollar by 24.2%. We cannot assure you that the Colombian Peso will not appreciate or depreciate relative to other currencies in the future. See Item 3. Key InformationPart D. Risk FactorsRisks Relating
to Colombia, Peru, Venezuela, Central America and Other Countries in which We OperateOur performance is heavily dependent on economic and political conditions in Colombia and Item 3. Key InformationPart D. Risk
FactorsRisks Relating to Colombia, Peru, Venezuela, Central America and Other Countries in which We OperateGovernment policies and actions, and judicial decisions, in Colombia, Peru, Venezuela, Ecuador or Central America could
significantly affect the local economy and, as a result, our results of operations and financial condition. On March 31, 2015, the exchange rate for U.S. dollars was COP 2,576.1 to US$1.00.

The Federal Reserve Bank of New York does not report a rate for Pesos. The Colombian Central Bank establishes the parameters that must be
observed in order to calculate the Representative Market Rate (Tasa Representativa del Mercado); then, the Colombian Financial Superintendency proceeds to compute and certify the Representative Market Rate based on the weighted averages of
the buy/sell foreign exchange rates quoted daily by certain financial institutions for the purchase and sale of foreign currency.

Colombia has a free market for foreign exchange, and the Colombian government allows the Colombian peso to float freely against the U.S.
dollar. There can be no assurance that the Colombian government will maintain its current policies with regard to the Colombian peso or that the Colombian peso will not depreciate or appreciate significantly in the future.

The following tables set forth, for the periods indicated, the low, high, average and period-end exchange rates expressed in Colombian pesos
per U.S. dollar as certified by the SFC. The rates shown below are in nominal Colombian pesos and have not been restated in constant currency units. No representation is made that the Colombian peso amounts referred to in this annual report could
have been or could be converted into U.S. dollars at any particular rate or at all.



|                                                |  |          |          |  |     |  |          |            |  |  |            |  |  |  |          | 
|----------------------------------------------- |  | -------- | -------- |  | --- |  | -------- | ---------- |  |  | ---------- |  |  |  | -------- | 
|Period                                          |  | High     |          |  | Low |  |          | Average(1) |  |  | Period-End | 
|                                                |  | (in COP) |         
|Year ended December 31, 2009                    |  |          | 2,596.37 |  |     |  | 1,825.68 |            |  |  | 2,156.29   |  |  |  | 2,044.23 | 
|Year ended December 31, 2010                    |  |          | 2,044.23 |  |     |  | 1,786.20 |            |  |  | 1,897.89   |  |  |  | 1,913.98 | 
|Year ended December 31, 2011                    |  |          | 1,972.76 |  |     |  | 1,748.41 |            |  |  | 1,847.14   |  |  |  | 1,942.70 | 
|Year ended December 31, 2012                    |  |          | 1,942.70 |  |     |  | 1,754.89 |            |  |  | 1,797.70   |  |  |  | 1,768.23 | 
|Year ended December 31, 2013                    |  |          | 1,952.11 |  |     |  | 1,758.45 |            |  |  | 1,869.17   |  |  |  | 1,926.83 | 
|Year ended December 31, 2014                    |  |          | 2,446.35 |  |     |  | 1,846.12 |            |  |  | 2,001.11   |  |  |  | 2,392.46 | 
|Year ended December 31, 2015 (through March 31) |  |          | 2,677.97 |  |     |  | 2,361.54 |            |  |  | 2,468.49   |  |  |  | 2,576.05 | 



Source:
Colombian Central Bank



|(1) | Represents the average of the rates on each day in the period.
|--- | --------------------------------------------------------------



|                    |  |          |          |  |     |  |          |            |  |  |            |  |  |  |          | 
|------------------- |  | -------- | -------- |  | --- |  | -------- | ---------- |  |  | ---------- |  |  |  | -------- | 
|Quarter             |  | High     |          |  | Low |  |          | Average(1) |  |  | Period-End | 
|                    |  | (in COP) |         
|Second Quarter 2013 |  |          | 1,942.97 |  |     |  | 1,813.11 |            |  |  | 1,863.19   |  |  |  | 1,929.00 | 
|Third Quarter 2013  |  |          | 1,952.11 |  |     |  | 1,868.90 |            |  |  | 1,907.88   |  |  |  | 1,914.65 | 
|Fourth Quarter 2013 |  |          | 1,948.48 |  |     |  | 1,879.46 |            |  |  | 1,913.19   |  |  |  | 1,926.83 | 
|First Quarter 2014  |  |          | 2,054.90 |  |     |  | 1,924.79 |            |  |  | 2,004.05   |  |  |  | 1,965.32 | 
|Second Quarter 2014 |  |          | 1,969.45 |  |     |  | 1,877.18 |            |  |  | 1,940.57   |  |  |  | 1,881.19 | 
|Third Quarter 2014  |  |          | 2,028.48 |  |     |  | 1,846.12 |            |  |  | 1,909.13   |  |  |  | 2,028.48 | 
|Fourth Quarter 2014 |  |          | 2,446.35 |  |     |  | 2,021.49 |            |  |  | 2,173.65   |  |  |  | 2,392.46 | 
|First Quarter 2015  |  |          | 2,677.97 |  |     |  | 2,361.54 |            |  |  | 2,469.33   |  |  |  | 2,576.05 | 



Source:
Colombian Central Bank



|(1) | Represents the average of the rates on each day in the period.
|--- | --------------------------------------------------------------



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|              |  |          |          |  |     |  |          |            |  |  |            |  |  |  |          | 
|------------- |  | -------- | -------- |  | --- |  | -------- | ---------- |  |  | ---------- |  |  |  | -------- | 
|Month         |  | High     |          |  | Low |  |          | Average(1) |  |  | Period-End | 
|              |  | (in COP) |         
|October 2014  |  |          | 2,074.40 |  |     |  | 2,021.49 |            |  |  | 2,048.57   |  |  |  | 2,050.52 | 
|November 2014 |  |          | 2,206.19 |  |     |  | 2,061.92 |            |  |  | 2,128.68   |  |  |  | 2,206.19 | 
|December 2014 |  |          | 2,446.35 |  |     |  | 2,206.19 |            |  |  | 2,342.25   |  |  |  | 2,392.46 | 
|January 2015  |  |          | 2,452.11 |  |     |  | 2,361.54 |            |  |  | 2,397.26   |  |  |  | 2,441.10 | 
|February 2015 |  |          | 2,500.59 |  |     |  | 2,371.31 |            |  |  | 2,420.67   |  |  |  | 2,496.99 | 
|March 2015    |  |          | 2,677.97 |  |     |  | 2,496.99 |            |  |  | 2,585.36   |  |  |  | 2,576.05 | 



Source:
Colombian Central Bank



|(1) | Represents the average daily exchange rates for each of the last six months.
|--- | ----------------------------------------------------------------------------



|E. | Taxation
|-- | --------

Material U.S. Federal Income Tax Considerations

The following summary describes the material U.S. federal income tax consequences of the ownership and disposition of our preferred shares and
ADSs as of the date hereof. The discussion set forth below is applicable only to U.S. Holders (as defined below) that hold our preferred shares or ADSs as capital assets for U.S. federal income tax purposes. This summary does not represent a
detailed description of the U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws, including if you are:



| |  |  | a dealer in securities or currencies;
| | - |  | -------------------------------------



| |  |  | a financial institution;
| | - |  | ------------------------



| |  |  | a regulated investment company;
| | - |  | -------------------------------



| |  |  | a real estate investment trust;
| | - |  | -------------------------------



| |  |  | an insurance company;
| | - |  | ---------------------



| |  |  | a tax-exempt organization;
| | - |  | --------------------------



| |  |  | a person holding our preferred shares or ADSs as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a trader in securities that has elected the mark-to-market method of accounting for your securities;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | a person liable for alternative minimum tax;
| | - |  | --------------------------------------------



| |  |  | a person who owns or is deemed to own 10% or more of our voting stock;
| | - |  | ----------------------------------------------------------------------



| |  |  | a partnership or other pass-through entity for U.S. federal income tax purposes; or
| | - |  | -----------------------------------------------------------------------------------



| |  |  | a person whose functional currency is not the U.S. dollar.
| | - |  | ------------------------------------------------------------

As used herein,
U.S. Holder means a holder of our preferred shares or ADSs that is for U.S. federal income tax purposes:



| |  |  | an individual citizen or resident of the United States;
| | - |  | -------------------------------------------------------



| |  |  | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | a trust if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid
election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as
amended (the Code), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be replaced, revoked or modified so as to result in U.S. federal income tax consequences different from those
discussed below. In addition, this summary is based, in part, upon representations made by the depositary to us and assumes that the deposit agreement, and all other related agreements, will be performed in accordance with their terms.

If a partnership holds our preferred shares or ADSs, the tax treatment of a partner will generally depend on the status of the partner and the
activities of the partnership. If you are a partner of a partnership holding our preferred shares or ADSs, you should consult your tax advisors.

This summary does not contain a detailed description of all the U.S. federal income tax consequences to you in light of your particular
circumstances and does not address the Medicare tax on net investment income, or the effects of any state, local or non-U.S. tax laws. If you are considering the purchase, ownership or disposition of our preferred shares or ADSs, you should consult
your own tax advisors concerning the U.S. federal income tax consequences to you in light of your particular situation as well as any consequences arising under the laws of any other taxing jurisdiction.

ADSs

If you hold
ADSs, for U.S. federal income tax purposes, you generally will be treated as the owner of the underlying preferred shares that are represented by such ADSs. Accordingly, deposits or withdrawals of preferred shares for ADSs will not be subject to
U.S. federal income tax.

Taxation of Dividends

The gross amount of distributions on the preferred shares or ADSs (including amounts withheld to reflect foreign withholding taxes) will be
taxable as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such income (including any withheld taxes) will be includable in your gross income as ordinary
income on the day it is actually or constructively received by you, in the case of the preferred shares, or by the depositary, in the case of the ADSs. Such dividends will not be eligible for the dividends-received deduction allowed to corporations
under the Code.

With respect to non-corporate U.S. investors, certain dividends received from a qualified foreign corporation may be
subject to reduced rates of taxation. A foreign corporation generally is treated as a qualified foreign corporation with respect to dividends paid by that corporation on shares (or ADSs backed by such shares) that are readily tradable on an
established securities market in the United States. U.S. Treasury Department guidance indicates that our ADSs, which are listed on the NYSE, are readily tradable on an established securities market in the United States. There can be no assurance,
however, that our ADSs will be considered readily tradable on an established securities market in later years. Moreover, we do not believe that dividends that we pay on our preferred shares that are not backed by ADSs will meet the conditions
required for these reduced tax rates. Non-corporate holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as investment income
pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition, the rate reduction will not apply to dividends if the recipient of a
dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met. You should consult your own tax advisors regarding the
application of these rules to your particular circumstances.

The amount of any dividend paid in Pesos will equal the U.S. dollar value of
the pesos received calculated by reference to the exchange rate in effect on the date the dividend is received by you, in the case of preferred shares, or by the depositary, in the case of ADSs, regardless of whether the Pesos are converted into
U.S. dollars. If the Pesos received as a dividend are converted into U.S. dollars on the date they are received, you generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the Pesos received
as a dividend are not converted into U.S. dollars on the date of receipt, you will have a basis in the Pesos equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the
Pesos will be treated as U.S.-source ordinary income or loss.

Subject to certain conditions and limitations, foreign withholding taxes on
dividends may be treated as foreign taxes eligible for credit against your U.S. federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid to holders of the preferred shares or ADSs will be treated as income
from sources outside the United States and will generally constitute passive category income. Furthermore, in certain circumstances, if you (i) have held preferred shares or ADSs for less than a specified minimum period during which you are not
protected from risk of loss, or (ii) are obligated to make payments related to the dividends, you will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on the preferred shares or ADSs. The rules governing the
foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances.





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To the extent that the amount of any distribution exceeds our current and accumulated earnings
and profits for a taxable year, as determined under U.S. federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the preferred shares or ADSs (thereby
increasing the amount of gain, or decreasing the amount of loss, to be recognized by you on a subsequent disposition of the preferred shares or ADSs), and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or
exchange (as discussed below under Taxation of Capital Gains). We do not intend to keep earnings and profits in accordance with U.S. federal income tax principles. Therefore, you should expect that a distribution will generally be
treated as a dividend (as discussed above).

Passive Foreign Investment Company

We do not believe that we are, for U.S. federal income tax purposes, a passive foreign investment company (a PFIC), and we expect
to operate in such a manner so as not to become a PFIC. If, however, we are or become a PFIC, you could be subject to additional U.S. federal income taxes on gain recognized with respect to the preferred shares or ADSs and on certain distributions,
plus an interest charge on certain taxes treated as having been deferred under the PFIC rules. Non-corporate U.S. Holders will not be eligible for reduced rates of taxation on any dividends received from us if we are a PFIC in the taxable year in
which such dividends are paid or in the preceding taxable year.

Taxation of Capital Gains

For U.S. federal income tax purposes, you will recognize taxable gain or loss on any sale or exchange of preferred shares or ADSs in an amount
equal to the difference between the amount realized for the preferred shares or ADSs and your tax basis in the preferred shares or ADSs. Such gain or loss will generally be capital gain or loss. Capital gains of non-corporate holders (including
individuals) derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss recognized by you will generally be treated
as U.S.-source gain or loss. Consequently, you may not be able to use the foreign tax credit arising from any foreign tax imposed on the disposition of the preferred shares or ADSs unless such credit can be applied (subject to applicable
limitations) against tax due on other income treated as derived from foreign sources.

Certain U.S. Holders are required to report
information relating to preferred shares or ADSs, subject to certain exceptions (including an exception for preferred shares or ADSs held in accounts maintained by certain financial institutions), by attaching a complete Internal Revenue Service
Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each year in which they hold preferred shares or ADSs. You are urged to consult your own tax advisors regarding information reporting requirements relating to your
ownership of the preferred shares or ADSs.

Information Reporting and Backup Withholding

In general, information reporting will apply to dividends in respect of our preferred shares or ADSs and the proceeds from the sale, exchange
or redemption of our preferred shares or ADSs that are paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient. A backup withholding tax may apply to such payments if you fail to
provide a taxpayer identification number or certification of other exempt status or fail to report in full dividend and interest income.

Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability
provided the required information is timely furnished to the Internal Revenue Service.

Panama

The following is a discussion of the material Panamanian tax considerations to holders of our preferred shares or ADSs under Panamanian tax
law, and is based upon the tax laws and regulations in force and effect as of the date hereof, which may be subject to change.

General principles

Panamas income tax regime is based on territoriality principles, which define taxable income only as that revenue which is generated from
a source within the Republic of Panama, or for services rendered outside of Panama, but which, by their nature, are intended to directly benefit the local commercial activities of individuals or corporations which operate within its territory. Said
taxation principles have governed the Panamanian fiscal regime for decades, and have been upheld through judicial and administrative precedent.



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Taxation of dividends

Distributions by Panamanian corporations, whether in the form of cash, stock or other property, are subject to a 10% withholding tax for the
portion of the distribution that is attributable to Panamanian sourced income, as defined pursuant to the territoriality principles that govern Panamanian tax law, and to a withholding tax of 5% of the portion of the dividend that is attributable to
foreign-sourced income. Currently Panama does not impose a withholding tax on dividends distributed by entities that do not earn income from Panamanian sources. Therefore, distributions on our preferred shares or ADSs being offered would not be
subject to withholding taxes given that our company does not trigger Panamanian sourced income.

Taxation of capital gains

If the preferred shares are issued by an entity that does not directly or indirectly receive Panama source income, Panamanian
taxes on capital gains will not apply either to Panamanians or nationals of other countries in connection with the sale or disposition of the preferred shares.

If the preferred shares are issued by an entity that directly or indirectly receives Panama source income, Panamanian taxes on capital gains
will apply to Panamanians or nationals of other countries in connection with the sale or disposition of the preferred shares, at a rate of 10 per cent on the capital gains realized, payable by a 5 per cent withholding on the purchase price
by the purchaser, which can be considered as the final tax due. However, in the case of shares issued by an entity that are of economically invested assets both in Panama and offshore, the taxation of capital gains will be levied on the proportion
belonging to Panamanian economically invested assets. If the preferred shares issued by an entity that directly or indirectly receives Panama source income are registered with the SMV and are sold through an organized market, Panamanian taxes on
capital gains will not apply either to Panamanians or to nationals of other countries.

Other Panamanian taxes

There are no estate, gift or other taxes imposed by the Panamanian government that would affect a holder of our preferred shares or ADSs,
whether such holder were Panamanian or a national of another country.

Colombia

The following is a summary of the material Colombian tax considerations to holders of ADSs under Colombian tax law, and is based upon the tax
laws and regulations in force and effect as of the date hereof, which may be subject to change. This summary is not intended to be a comprehensive description of all Colombian tax considerations that may be relevant to a decision to purchase the
ADSs. Prospective purchasers should consult their own tax advisors as to Colombian tax consequences of the purchase, ownership and sale of ADSs and or underlying preferred shares, including, in particular, the application of the tax considerations
discussed below to their particular situations, as well as the application of state, local, foreign or other tax laws.

1) Legal framework

Colombian and non-Colombian individuals considered residents(1) in the country are subject
to income tax and capital gain tax in respect to both Colombian and non-Colombian source income. On the other hand, Colombian and non-Colombian individuals without residence in the country are subject to income tax and capital gain tax but only with
respect to Colombian source income.

Colombian companies are subject to income tax in respect to both, Colombian and non-Colombian source
income. Moreover, non-Colombian companies are subject to income tax and capital gain tax in the country but only with respect to Colombian source income.

Dividends will be deemed Colombian source income when distributed by a Colombian company. On the other hand, income from the sale of shares
will be deemed Colombian source if the respective company is deemed Colombian.

2) Income tax on dividend income

Dividends distributed by non-Colombian companies such as Avianca Holdings S.A. are not deemed Colombian source income. Consequently,
non-resident individuals and non-Colombian companies, such as the Depositary or any non-resident or non-Colombian company acting as shareholder, will not be subject to income tax in Colombia with respect to dividend income earned from Avianca
Holdings S.A.





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In contrast, resident individuals and Colombian companies acting as shareholders will be subject
to income tax in Colombia with respect to dividend income earned from Avianca Holdings S.A.

Resident individuals and Colombian companies
subject to income tax in Colombia, who earned non-Colombian source dividends subject to tax in the country of origin, are entitled to credit the tax paid abroad from the amount of income tax plus the income tax for equality (CREE) in case the
taxpayer is subject to this tax(2), as follows, in accordance with article 254 of the Colombian Tax Code:



| |  |  | The amount of the tax credit should be equivalent to the result of multiplying the amount of the dividends by the income tax rate at which the profits that gave rise to the dividends were subject to;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | When the entity distributing the dividends that are subject to tax in Colombia, received in turn dividends of other companies located in the same or other jurisdictions, the amount of the tax credit should be equivalent
to the result of multiplying the amount of the dividends received by the Colombian taxpayer, by the rate at which the profits that generated the dividends were subject to;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(1) | Individuals will be considered Colombian residents for tax purposes if any of the following conditions are met: (1) If the individual stays continuously or discontinuously in the country for over 183 days during a
period of 365 consecutive days including travel days, bearing in mind that if the 365 days period happens in more than one fiscal year, the individual shall be considered Colombian resident as of the second fiscal year; (2) If the individual is
fully or partially exempted from income tax or capital gains tax in the foreign country where they reside, on account of their diplomatic relation to the Colombian State or to a diplomat of the Colombian State in application of the Vienna
Conventions on Diplomatic and Consular Relations; (3) National individuals who, during the fiscal year, meet the following conditions: (a) Whose spouse, legal partner, underage children or dependent persons have a tax residence in
Colombia, (b) That 50% or more of their income is considered Colombian-source, (c) That 50% or more of their properties are administered in Colombia, (d) That 50% or more of their assets are possessed in Colombia, (e) That having
been notified by the Tax Authority, did not offer proof of their tax residence abroad, or (f) That have their tax residence in a place considered by the Colombian Government as a tax haven. Individuals that according to this rules are not
considered Colombian residents, must provide proof of their foreign residence to the Colombian Tax Authority by means of a tax residence certificate issued by the foreign Tax Authority.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | As of year 2013, (i) companies, legal entities and entities assimilated to these, subject to income tax and liable to file income tax returns, and (ii) non-Colombian companies and entities subject to income
tax and liable to file income tax returns in Colombia with respect to Colombian source income earned through branches or permanent establishments, are subject to a new tax called income tax for equality, at a rate of 9% until year 2015, and 8% as of
year 2016, applied on the highest base between the ordinary net income (which value can be different than the ordinary net income determined for income tax purposes) and the presumptive net income.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To be able to apply the tax credit referred to in paragraph a), the taxpayer must have a direct participation in the capital of the company from which it receives dividends or equity interest (excluding the shares
without voting rights).
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In the case of paragraph b), the taxpayer must have an indirect participation in the capital of the
subsidiary or subsidiaries (excluding the shares without voting rights). The direct and indirect participations must be registered as fixed assets for the taxpayer in Colombia and should have been owned for a period of not less than two years;



| |  |  | When the taxpayer receives taxable dividends subject to tax in the country of origin- the tax credit will be increased by the amount of such tax, multiplied by a proportional formula established by law;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In no case the tax credit referred to in this section may exceed the amount of the income tax plus the new income tax for equality (CREE), when applicable, generated by such dividends in Colombia, multiplied by a
proportional formula established by law;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | To be able to claim the tax credit referred to in paragraphs a), b) and d) of article 254 of the Colombian Tax Code, the taxpayer must prove the payment in each jurisdiction, providing tax payment certificates issued by
the corresponding tax authorities or with other appropriate evidence;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The rules set forth here for tax credits related to dividends paid from abroad will apply to dividends or equity interest which are paid as of January 1st, 2015, regardless of the taxable period or financial year
to which the profits that generated them correspond. Tax credits related to dividends paid from abroad before January 1st, 2015, will be treated as stated on Law 1607 of 2012.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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The income tax paid abroad may be used as a credit in the taxable year in which the payment is
made or in any of the following four taxable years. In any case, the excess of tax credit to be claimed on any of the following four taxable periods is limited to the amount of the income tax, plus the CREE, generated in Colombia on the same income
that gave rise to the tax credit, and cannot be combined with the excess of tax credits originated in other income taxed in Colombia in different taxable periods.

Notwithstanding the above, bear in mind that the amount of the tax credit for taxes paid abroad cannot exceed the amount of the basic income
tax to be paid in Colombia. Additionally, the amount of the income tax calculated after subtracting the tax credits, cannot be less than 75% of the tax determined under the presumptive income system before tax credits.

3) Income tax/capital gain tax on profit from the sale of ADRS or the underlying shares

Profits arising from the disposal of any kind of assets, which have made part of the fixed
assets(3) of the Colombian taxpayer (resident individual or company) for a term of two years or more, are considered capital gains. In contrast, profits arising from the disposal of assets that
made part of the taxpayers fixed assets for less than two years are not considered capital gains but net income.

The capital gain
or the net income resulting from the sale of ADRs or shares is constituted by the difference between the transfer price and the cost of the asset sold. Please bear in mind that the transfer price is the market value made in cash or in kind. The
market value is the one agreed by the parties, provided that does not differ considerably from the average market price for items of the same kind, at the date of disposal. It is understood that the value agreed by the parties differs considerably
from the average, when it deviates by more than 25% of the prices established in trade for goods of the same kind and quality, at the date of disposal, taking into account the nature, condition and status of assets.



|(3) | Fixed Assets are the movable or immovable tangible and intangible assets that are not sold in the ordinary course of business of the taxpayer.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------

The capital gain tax rate applicable to resident individuals and Colombian companies is 10%. On the other hand, the income tax and the income
tax for equality (CREE) rates applicable to Colombian companies are 25% and 9% respectively. Moreover, resident individuals are subject to income tax at marginal rates of 0%, 19%, 28% and 33%.

Profits from the transfer of shares listed in the Colombian stock exchange earned by the same beneficial owner, not exceeding 10% of the
outstanding shares of the respective company for a taxable year, will not be subject to income tax or capital gain tax in Colombia.

Accordingly, income resulting from the sale of ADRs or shares in Avianca Holdings SA will not be deemed Colombian source income. Consequently,
non-resident individuals and non-Colombian companies, such as the Depositary or any non-resident or non-Colombian company acting as investor or shareholder, will not be subject to income tax or capital gain tax in Colombia with respect to profits
resulting from the sale of ADRs or shares in Avianca Holdings SA.

In contrast, resident individuals and Colombian companies acting as
investors or shareholders will be subject to income tax or capital gain tax, as the case may be, with respect to profits resulting from the sale of ADRs or shares in Avianca Holdings SA. Even if the purchaser of the ADRs or the shares is a Colombian
company, the seller will not be subject to tax withholdings in Colombia.

Resident individuals and Colombian companies subject to income
tax or capital gain tax in Colombia, as the case may be, who earned non-Colombian source income subject to tax in the country of origin, are entitled to credit the tax paid abroad from the amount of income tax and capital gains tax in Colombia plus
the income tax for equality in case the taxpayer is subject to such tax, provided that the tax credit does not exceed the amount of tax payable in Colombia for the same income.

The amount of the tax credit for taxes paid abroad cannot exceed the amount of the basic income tax to be paid in Colombia. Additionally, the
amount of the income tax calculated after subtracting the tax credits, cannot be less than 75% of the tax determined under the presumptive income system before tax credits.



|F. | Dividends and Paying Agents
|-- | ---------------------------

Not applicable.



|G. | Statements by Experts
|-- | ---------------------

Not applicable



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|H. | Documents on Display
|-- | --------------------

We are subject to the information requirements of the Exchange
Act, as amended. In accordance with these requirements, we file reports, including annual reports on Form 20-F and other information with the SEC. These materials, including this annual report and the exhibits hereto, may be inspected and copied at
the SECs public reference rooms in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. In addition, our SEC filings are also available to the public through the SECs website at
www.sec.gov.

As a foreign private issuer, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the
Exchange Act. For example, we are not required to prepare and issue quarterly reports. However, we make available to our shareholders quarterly reports containing unaudited financial data for the first three quarters of each fiscal year.



|I. | Subsidiary Information
|-- | ----------------------

Not applicable.



|Item 11. | Quantitative and Qualitative Disclosures About Market Risk
|-------- | ----------------------------------------------------------

Given the nature of our
business, we are exposed mainly to changes to the price of fuel, interest rates and foreign exchange.

Fuel

Our results of operations are affected by changes in the price of jet fuel. To mitigate the price risk, we use heating oil options and futures
agreements. Market risk is estimated as a hypothetical 1.0% increase in the December 31, 2014 cost per gallon of fuel. Based on our 2014 fuel consumption and, assuming the same for 2015, such an increase would result in an increase to our fuel
expense of approximately $13.5 million in 2015, not taking into account our derivative contracts. At December 31, 2014, we had hedged approximately 35% of our projected 2015 fuel requirements.

The following table sets forth our fuel swaps and options at market value as of December 31, 2013 and December 31, 2014.



|                 |  |                        |           |  |                       |  |             |                     |  |  |                     |  |  |                     |          |  |                     |  |           |  |  |  |             |  
|---------------- |  | ---------------------- | --------- |  | --------------------- |  | ----------- | ------------------- |  |  | ------------------- |  |  | ------------------- | -------- |  | ------------------- |  | --------- |  |  |  | ----------- | -
|                 |  | Maturing before 1 Year |           |  | Maturing after 1 Year |  |             | Total               | 
|                 |  | At December 31,2013    |           |  | At December 31,2014   |  |             | At December 31,2013 |  |  | At December 31,2014 |  |  | At December 31,2013 |          |  | At December 31,2014 | 
|(in $ thousands) |  |                        |           |  |                       |  |             |                     |  |  |                     |  |  |                     |          |  |                     | 
|Options          |  |                        | 2,698.48  |  |                       |  | 4,121.45    |                     |  |  |                    |  |  |                     | 3,659.66 |  |                     |  | 2,698.48  |  |  |  | 7,781.11    |  
|Swaps            |  |                        | 12,868.27 |  |                       |  | (106,697.89 | )                   |  |  |                    |  |  |                     |         |  |                     |  | 12,868.27 |  |  |  | (106,697.89 | )

Our fuel hedging strategy remained the same in 2013 and 2014 and any difference in the number of options and
swaps is due to market price variations.

Interest

Our earnings are affected by changes in interest rates due to the impact those changes have on interest expense from variable-rate debt
instruments and on interest income generated from our cash and investment balances. If interest rates are 1% higher on average in 2015 than they were during 2014, our interest expense would increase by approximately $5.5 million, and the fair value
of our debt would decrease by approximately $132.8 million. If interest rates are 10% lower on average in 2015 than they were in 2014, our interest income from cash equivalents would decrease by approximately $0.5 million. These amounts are
determined by considering the interest rates on our variable-rate debt and cash equivalent balances at December 31, 2014.

Foreign Currencies

Our foreign exchange risk is limited as a majority of our obligations, expenses and revenues are in U.S. dollars, creating a natural hedge.
However we do have significant obligations, expenses and revenues in Colombian pesos and other currencies. During the year ended December 31, 2014, approximately 64.5% of our revenue and 64.1% of our operating expenses were denominated in, or
linked to, U.S. dollars, and approximately 29.4% of our revenues and 24.1% of our operating expenses were denominated in the



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Colombian pesos. During times when our peso-denominated revenues exceed our peso-denominated expenses, the depreciation of the Colombian peso against the U.S. dollar could have an adverse effect
on our results, because conversion of these amounts into U.S. dollars will decrease our net income. We estimate that a 1% increase or decrease in the average exchange rate of the Colombian peso to the U.S. dollar would have an effect in our annual
operating profit of approximately $3.1 million. In addition, because we conduct business in local currencies in other countries, we face the risk of variations in foreign currency exchange rates. A revaluation of the Peruvian nuevo sol, the
Costa Rican colón, the Guatemalan quetzal and/or the Euro could have an adverse effect on us, as a portion of our revenues are denominated in such currencies. See Item 3. Key InformationPart D. Risk
FactorsRisks Relating to Colombia, Peru, Venezuela, Central America and Other Countries in which We OperateWe have significant local currency cash balances in Venezuela, which we may be unable to repatriate or exchange into U.S. dollars
or any other currency.

2013 and 2014 Revenues and Expenses Breakdown by Currency



|               |  |         |      |   |                    |  |      |      |  |  |      |   |  |  |      |  
|-------------- |  | ------- | ---- | - | ------------------ |  | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|               |  | Revenue |      |   | Costs and Expenses | 
|               |  | 2013    |      |   | 2014               |  |      | 2013 |  |  | 2014 |  
|U.S. Dollar    |  |         | 68.0 | % |                    |  | 64.5 | %    |  |  | 64.2 | % |  |  | 64.1 | %
|Colombian Peso |  |         | 24.5 | % |                    |  | 29.4 | %    |  |  | 22.7 | % |  |  | 24.1 | %
|Euro           |  |         | 4.3  | % |                    |  | 4.5  | %    |  |  | 2.6  | % |  |  | 2.7  | %
|Other          |  |         | 3.1  | % |                    |  | 1.6  | %    |  |  | 10.5 | % |  |  | 9.1  | %



|Item 12. | Description of Securities Other than Equity Securities
|-------- | ------------------------------------------------------



|A. | Debt Securities
|-- | ---------------

Not applicable.



|B. | Warrants and Rights
|-- | -------------------

Not applicable



|C. | Other Securities
|-- | ----------------

Not applicable



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|D. | American Depositary Shares
|-- | --------------------------

Fees and Expenses



|                                                                                                                                                                                                |  |                                                                                                                                                  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------
|Persons depositing or
withdrawing shares or ADS holders must pay:                                                                                                                               |  | For:                                                                                                                                             
|                                                                                                                                                                                                | 
|    $5.00 (or less) per 100 ADSs (or portion of 100 ADSs)                                                                                                                                      |  |     The issuance of ADSs, including any issuance resulting from a distribution of shares or rights or other
property                            
|                                                                                                                                                                                                | 
|                                                                                                                                                                                                |  |     The cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement
terminates                                       
|                                                                                                                                                                                                | 
|    $.05 (or less) per ADS                                                                                                                                                                     |  |     Any cash distribution to ADS holders                                                                                                        
|                                                                                                                                                                                                | 
|    A fee equivalent to the fee that would be payable if securities distributed to you had been shares and
the shares had been deposited for issuance of ADSs                                  |  |     The distribution of securities distributed to holders of deposited securities which are distributed by
the depositary to ADS holders        
|                                                                                                                                                                                                | 
|    $.05 (or less) per ADSs per calendar year                                                                                                                                                  |  |     Depositary services                                                                                                                         
|                                                                                                                                                                                                | 
|    Registration or transfer fees                                                                                                                                                              |  |     The transfer and registration of shares on our share register to or from the name of the depositary upon
the deposit or withdrawal of shares
|                                                                                                                                                                                                | 
|    Expenses of the depositary                                                                                                                                                                 |  |     Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement)                                                 
|                                                                                                                                                                                                | 
|                                                                                                                                                                                                |  |     Converting foreign currency to U.S. dollars                                                                                                 
|                                                                                                                                                                                                | 
|    Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share
underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes |  |     As necessary                                                                                                                                
|                                                                                                                                                                                                | 
|    Any charges incurred by the depositary or its agents for servicing the deposited securities                                                                                                |  |     As necessary                                                                                                                                

The depositary collects its fees for delivery and surrender of ADSs directly from investors depositing shares
or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of
distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the book-entry system accounts of participants acting for
them. The depositary may collect any of its fees by deduction from any cash distribution payable to ADS holders that are obligated to pay those fees.

Payment of Taxes

You will be responsible
for any taxes or other governmental charges payable on your ADSs or on the deposited securities represented by any of your ADSs. The depositary may refuse to register any transfer of your ADSs or allow you to withdraw the deposited securities
represented by your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities represented by your ADSs to pay any taxes owed and you will remain liable for any deficiency. If the depositary sells
deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to ADS holders any proceeds, or send to ADS holders any property, remaining after it has paid the taxes.

Past Fees and Payments

From time to
time, the depositary may make payments to us to reimburse and/or share revenue from the fees collected from ADS holders, or waive fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and
maintenance of the ADS program. In performing its duties under the deposit agreement, the depositary may use brokers, dealers or other service providers that are affiliates of the depositary and that may earn or share fees or commissions. During
2014, the Company did not receive any such payments or reimbursements from the depositary.



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##### Table of Contents

PART II



|Item 13. | Defaults, Dividends Arrearages and Delinquencies
|-------- | ------------------------------------------------

None.



|Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds
|-------- | ----------------------------------------------------------------------------

None.



|Item 15. | Controls and Procedures
|-------- | -----------------------



|(a) | Disclosure controls and procedures
|--- | ----------------------------------

Under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934, as amended, as of December 31, 2014. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that as of the date of our assessment, our disclosure controls and
procedures were not effective due to material weaknesses in internal control over financial reporting as a result of the implementation of a new enterprise resource planning (ERP) system. Disclosure controls and procedures are designed to ensure
that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and
communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. In light of the material weaknesses described below, we performed additional analyses and other
procedures to ensure that our consolidated financial statements included in this Form 20-F were prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.



|(b) | Managements annual report on internal control over financial reporting
|--- | -----------------------------------------------------------------------

Management of Avianca Holdings is responsible for establishing and maintaining adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act of 1934. A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. Avianca Holdings internal control over financial reporting includes policies and procedures that:



| |  |  | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of Avianca Holdings;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS, and that receipts and expenditures of Avianca Holdings are being made only
in accordance with authorizations of management and directors of Avianca Holdings; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of Avianca Holdings assets that could have a material effect on the financial statements.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal ControlIntegrated Framework (2013 Framework). Based on this evaluation, management, with the participation of the Companys Chief Executive Officer and Chief Financial Officer, concluded that, as of
December 31, 2014, the Companys internal control over financial reporting was not effective due to the identification of material weaknesses in Avianca Holdings internal control over financial reporting, as described below.

On July 1, 2014, we implemented an ERP system and encountered several challenges during such implementation. The following are the
material weaknesses, both of which are associated with the ERP implementation:

IT General Controls

We identified a material weakness with respect to our IT general controls (ITGCs). We did not implement and maintain effective
ITGCs over the general ledger systems and other related IT systems we use to process our accounting transactions. We therefore were unable to properly implement and maintain effective controls intended to ensure that access to applications and data
were adequately restricted to appropriate internal personnel.





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##### Table of Contents

Financial Statement Close Process

As a result of the implementation of our new ERP platform, throughout the second half of 2014, we were not able to execute a timely financial
close, and we were unable to properly perform and/or accumulate certain analyses and reconciliations in a timely manner, which delayed the Companys financial closing process.

As a result, there is more than a remote likelihood that a material misstatement of our annual or interim financial statements would not be
prevented or detected on a timely basis.

Management is implementing a remediation plan to address the material weaknesses described
above, including working on an immediate remediation plan that would effectively prevent access to non-authorized personnel and, longer term, on a centralized system to manage users identity throughout the Scope SOX systems applications.
Remediation plans are currently in place and will continue being developed to ensure all processes impacted by our new ERP system are operating and effective.

We are committed to continuing to improve our internal control processes and will continue to review our financial reporting controls and
procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may identify additional measures to address these material weaknesses or determine to modify certain of the remediation procedures as
described. Our management, with the oversight of the audit committee of our board of directors, will continue to assess and take steps to enhance the overall design and capability of our control environment in the future.



|(c) | Attestation report of the independent registered public accounting firm
|--- | -----------------------------------------------------------------------

Ernst & Young Audit S.A.S., the independent registered public accounting firm who audited the Companys consolidated financial
statements included in this Form 20-F, has issued a report on the Companys internal control over financial reporting, which is included in the report of the independent registered public accounting firm included herein.



|(d) | Changes in internal control
|--- | ---------------------------

Our annual report for the year ended
December 31, 2013 did not include a report of managements assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of
the Securities and Exchange Commission for newly public companies. As a result, during the year ended December 31, 2014, there was no change to our internal control over financial reporting that was implemented in response to a prior review of
our internal control over financial reporting.

However, in connection with the implementation of our ERP system, there was a change to
the implementation of our internal control over financial reporting that has materially affected our internal control over financial reporting and resulted in the material weaknesses described above.



|Item 16. | Reserved
|-------- | --------



|Item 16A. | Audit Committee Financial Expert
|--------- | --------------------------------

Our board of directors has designated Juan Guillermo
Serna as an audit committee financial expert within the meaning of this Item 16.A. Mr. Serna is independent under applicable SEC and NYSE listing standards.



|Item 16B. | Code of Ethics
|--------- | --------------

We have adopted a code of ethics and conduct, as defined in
Item 16B of Form 20-F under the Exchange Act. Our code of ethics applies to our senior management as well as to other employees. Our code is freely available online at our website, www.avianca.com/en, under the heading Our
companyCorporate Governance. Information found on this website is not incorporated by reference into this document.



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##### Table of Contents

|Item 16C. | Principal Accountant Fees and Services
|--------- | --------------------------------------

The following table sets forth by category of
service the total fees for services performed by our principal accountants during the fiscal years ended December 31, 2014 and 2013. Ernst & Young has been our principal accountant during the fiscal years ended December 31, 2014
and 2013.



|                   |  |                    |       |  |      |  |       | 
|------------------ |  | ------------------ | ----- |  | ---- |  | ----- | 
|                   |  | 2014               |       |  | 2013 | 
|                   |  | (in US$ thousands) |      
|Audit Fees         |  |                    | 3,564 |  |      |  | 3,668 | 
|Audit-Related Fees |  |                    |      |  |      |  |      | 
|Tax Fees           |  |                    | 46    |  |      |  | 44    | 
|All Other Fees     |  |                    |      |  |      |  |      | 
|Total              |  |                    | 3,610 |  |      |  | 3,712 | 

Audit Fees

Audit fees include the audit of our consolidated annual financial statements, review of our quarterly reports, required statutory audits, and
fees for the preparation and issuance of comfort letters in connection with our offering of senior notes and ADSs.

Audit-Related Fees

There were no audit-related fees in 2014 or 2013.

Tax Fees

Tax fees include tax advisory
services, transfer pricing tax advisory and tax compliance provided by our principal accountant in 2014 and 2013. For 2014 and 2013, there were approximately $46,000 and $44,000, respectively, related to tax fees.

All Other Fees

There were no other fees
for services provided by our principal accountant in 2014 and 2013.

Pre-Approval Policies and Procedures

Our audit committee approves all audit, audit-related services and tax services provided by Ernst & Young. Any services provided by
Ernst & Young that are not specifically included within the scope of the audit must be pre-approved by the audit committee in advance of any engagement. Pursuant to Rule 2-01 of Regulation S-X, audit committees are permitted to approve
certain fees for audit-related services, tax services and other services pursuant to a de minimisexception prior to the completion of an audit engagement. In 2014 and 2013, none of the fees paid to Ernst & Young were approved
pursuant to the de minimisexception.



|Item 16D. | Exemptions from the Listing Standards for Audit Committees
|--------- | ----------------------------------------------------------

None.



|Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers
|--------- | ----------------------------------------------------------------------

None.



|Item 16F. | Change in Registrants Certifying Accountant
|--------- | --------------------------------------------

None.



|Item 16G. | Corporate Governance
|--------- | --------------------

As a foreign private issuer, we are subject to different corporate
governance requirements than a U.S. company with shares listed on the NYSE under the NYSE listing standards. With certain exceptions, foreign private issuers are permitted to follow home country practice standards.



144



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We are registered in the Colombian National Registry of Securities and Issuers, and therefore we
are required to comply with Colombian corporate governance practices for Colombian registered companies. Because we are not subject to Panamanian securities laws as we have not offered any securities in Panama and because general corporate law in
Panama does not impose any meaningful restrictions on our corporate governance, a comparison to Panamanian corporate governance practices is not applicable. Additionally, we have adopted a set of additional corporate governance guidelines as
contemplated by the Sarbanes-Oxley Act of 2002 and by our bylaws, which include the establishment of:



| |  |  | principles and duties relating to the conduct of our management, including as with respect to confidentiality and conflicts of interest;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | internal accounting controls systems;
| | - |  | -------------------------------------



| |  |  | an audit committee composed of the three independent members of our board of directors; and
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | a code of business conduct and ethics.
| | - |  | --------------------------------------

The following is a comparison between our corporate
governance policies and those of the NYSE listing standards.



|                                                                                                                                                                                                                                                                                                                                                   |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|NYSE Standards                                                                                                                                                                                                                                                                                                                                     |  | Our Corporate Governance Practices                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Director Independence. A majority of board of directors must be independent, except in the case of a controlled foreign private issuer. §303A.01 of the NYSE Listed Company Manual                                                                                                                                                               |  | Our corporate governance standards provide that the board of directors must be composed of eleven directors, and that the majority of such full-time directors must be independent, provided that an additional independent director may
be appointed (i) if required by applicable laws, or (ii) if the majority of our independent directors believes that such appointment is necessary for the protection of the rights and interests of a significant shareholder or group of shareholders.
The criteria for determining independence under our corporate governance standards has been defined in accordance with NYSE rules.
|                                                                                                                                                                                                                                                                                                                                                   | 
|Executive Sessions. Non-management directors must meet regularly in executive sessions without management. Independent directors should meet alone in an executive session at least once a year. §303A.03 of the NYSE Listed
Company Manual                                                                                                        |  | Under our bylaws and applicable laws non-management directors are not required to meet in executive sessions without management.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                   | 
|Audit committee. An audit committee satisfying the requirements of Rule 10A-3 under the Exchange Act. §303A.06 of the NYSE Listed Company Manual                                                                                                                                                                                                   |  | We believe we are in compliance with Rule 10A-3 under the Exchange Act.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                   | 
|Audit committee additional requirements. §303A.07 of the NYSE Listed Company Manual requires that an audit committee must consist of at least three members, each of whom are financially literate and at least one of whom
is a financial expert, and that the audit committee have a written charter outlining the committees responsibilities. |  | Our audit committee consists of three members, all of whom are independent and financially literate and one of whom is a financial expert. Our audit committee has a written charter.                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                   | 
|Nominating/corporate governance committee. A nominating/corporate governance committee of independent directors is required. The committee must have a charter specifying the purpose, duties and evaluation procedures of the
committee. §303A.04 of the NYSE Listed Company Manual                                                               |  | We do not have a nominating/corporate governance committee. Our board of directors has the power to establish such a committee in the future on the terms that it deems fit.                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                   | 
|Compensation committee. A compensation committee of independent directors is required. The committee must approve executive officer compensation and must have a charter specifying the purpose, duties and evaluation procedures
of the committee. §303A.05 of the NYSE Listed Company Manual                                                     |  | We have a Human Talent and Compensation Committee (Comité de Talento Humano y Compensación). See Committees of the Board of DirectorsDescription of Other CommitteesHuman Talent and Compensation
Committee. However, this committee is not composed entirely of independent directors.                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                   | 
|Code of Ethics. A code of business conduct and ethics are required, as is disclosure of any waiver for directors or executive officers. §303A.10 of the NYSE Listed Company Manual                                                                                                                                                                 |  | We have adopted a code of business conduct and ethics, as contemplated by the NYSE. Our board of directors has the obligation to verify compliance with the provisions of such code.                                                                                                                                                                                                                                                                                                                                                                                                                                               



|Item 16H. | Mine Safety Disclosure
|--------- | ----------------------

Not applicable.



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PART III



|Item 17. | Financial Statements
|-------- | --------------------

See Item 18Financial Statements.



|Item 18. | Financial Statements
|-------- | --------------------

See our Consolidated Financial Statements beginning at page F-1.



|Item 19. | Exhibits
|-------- | --------

Pursuant to the rules and regulations of the SEC, we have filed certain
agreements as exhibits to this annual report on Form 20-F. Documents filed as exhibits to this annual report:



|               |  |                                                                                                                                                                                                                                 
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Item                                                                                                                                                                                                                            
|               | 
|1.1*           |  | English translation of Certificate of Incorporation.                                                                                                                                                                            
|               | 
|1.2**          |  | English translation of Pacto Social, as amended.                                                                                                                                                                                
|               | 
|2.1*           |  | English translation of Temporary Bonus Plan adopted on March 6, 2012.                                                                                                                                                           
|               | 
|2.2*           |  | Amended and Restated Registration Rights Agreement, dated as of September 11, 2013, among the Registrant, Synergy Aerospace Corp. and Kingsland Holdings Limited.                                                               
|               | 
|2.3*           |  | Joint Action Agreement, dated as of September 11, 2013, among the Registrant, Synergy Aerospace Corp. and Kingsland Holding Limited                                                                                             
|               | 
|3.1*           |  | English translation of Irrevocable Administration Mercantile Trust Agreement, dated as of March 23, 2012, by and between Fiduciaria Bogotá S.A. and Avianca Holdings S.A. (formerly AviancaTaca Holding S.A.).                  
|               | 
|4.1*           |  | English translation of Lease Agreement No. OP-DC-CA-T2-0060-12, dated October 7, 2012, between Sociedad Concesionaria Operadora Aeroportuaria Internacional S.A.Opain S.A. and Aerovias del Continente Americano S.A.
Avianca. 
|               | 
|4.1.1*         |  | English translation of Lease Agreement No. OP-DC-CA-T1-0028-12, dated October 29, 2012, between Sociedad Concesionaria Operadora Aeroportuaria Internacional S.A.Opain S.A. and Aerovias del Continente Americano S.A.
Avianca.
|               | 
|4.1.2*         |  | English translation of Lease Agreement No. OP-DC-CA-T2-0061-12, dated October 29, 2012, between Sociedad Concesionaria Operadora Aeroportuaria Internacional S.A.Opain S.A. and Aerovias del Continente Americano S.A.
Avianca.
|               | 
|4.2*           |  | English translation of Lease Agreement, dated as of July 30, 2004, between U.A.E. Aeronautica Civil and Aerovias Nacionales de Colombia S.A. Avianca.                                                                           
|               | 
|4.2.1*         |  | English translation of Amendment No. 1 to Lease Agreement, dated as of December 12, 2005.                                                                                                                                       
|               | 
|4.2.2*         |  | English translation of Amendment No. 2 to Lease Agreement, dated as of January 5, 2009.                                                                                                                                         
|               | 
|4.2.3*         |  | English translation of Amendment No. 3 to Lease Agreement, dated as of November 7, 2012.                                                                                                                                        
|               | 
|4.2.4*         |  | English translation of Amendment No. 4 to Lease Agreement, dated as of March 1, 2013.                                                                                                                                           
|               | 
|4.3**          |  | English translation of Fuel Supply Contract, dated as of April 22, 2013, between Terpel S.A. and Aerovías del Continente Americano S.A. Avianca.                                                                                
|               | 
|4.4*          |  | A320 Purchase Agreement, dated March 19, 1998, between Atlantic Aircraft Holding Limited and Airbus Industry relating to Airbus A320-Family.                                                                                    
|               | 
|4.4.1*        |  | Amendment No. 1 dated as of September 9, 1998 to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S. (as successor to Airbus Industry).                      
|               | 
|4.4.2*        |  | Amendment No. 2 dated as of December 28, 1999, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus
S.A.S.                                                        





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|               |  |                                                                                                                                                                          
|-------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Item                                                                                                                                                                     
|               | 
|4.4.3*        |  | Amendment No. 3 dated as of December 29, 1999, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S. 
|               | 
|4.4.4*        |  | Amendment No. 4 dated as of February 15, 2000, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S. 
|               | 
|4.4.5*        |  | Amendment No. 5 dated as of April 6, 2001, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.     
|               | 
|4.4.6*        |  | Amendment No. 6 dated as of April 9, 2001, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.     
|               | 
|4.4.7*        |  | Amendment No. 7 dated as of September 6, 2001, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S. 
|               | 
|4.4.8*        |  | Amendment No. 8 dated as of August 29, 2002, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.   
|               | 
|4.4.9*        |  | Amendment No. 9 dated as of December 6, 2002, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.  
|               | 
|4.4.10*       |  | Amendment No. 10 dated as of October 30, 2003, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S. 
|               | 
|4.4.11*       |  | Amendment No. 11 dated as of November 18, 2004, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.
|               | 
|4.4.12*       |  | Amendment No. 12 dated as of November 18, 2004, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.
|               | 
|4.4.13*       |  | Amendment No. 13 dated as of November 18, 2004, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S 
|               | 
|4.4.14*       |  | Amendment No. 14 dated as of February 18, 2006, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.
|               | 
|4.4.15*       |  | Amendment No. 15 dated as of June 22, 2007, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.    
|               | 
|4.4.16*       |  | Amendment No. 16 dated as of November 22, 2007, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.
|               | 
|4.4.17*       |  | Amendment No. 17 dated as of April 14, 2008, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.   
|               | 
|4.4.18*       |  | Amendment No. 18 dated as of January 30, 2009, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S. 
|               | 
|4.4.19*       |  | Amendment No. 19 dated as of April 28, 2009, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.   
|               | 
|4.4.20*       |  | Amendment No. 20 dated as of February 10, 2010, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.
|               | 
|4.4.21*       |  | Amendment No. 21 dated as of April 29, 2011, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.   
|               | 
|4.4.22*       |  | Amendment No. 22 dated as of August 26, 2011, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.  
|               | 
|4.4.23*       |  | Amendment No. 23 dated as of October 25, 2011, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S. 
|               | 
|4.4.24*       |  | Amendment No. 24 dated as of March 29, 2012, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus
S.A.S.   





147



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##### Table of Contents

|               |  |                                                                                                                                                                                                                                                                                                                                                            
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Item                                                                                                                                                                                                                                                                                                                                                       
|               | 
|4.4.25*       |  | Amendment No. 25 dated as of March 29, 2012, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                                     
|               | 
|4.4.26*       |  | Amendment No. 26 dated as of March 29, 2012, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                                     
|               | 
|4.4.27*       |  | Amendment No. 27 dated as of November 30, 2012, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                                  
|               | 
|4.4.28        |  | Amendment No. 28 dated as of October 11, 2013, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                                   
|               | 
|4.4.29        |  | Amendment No. 29 dated as of February 28, 2014, to the A320 Purchase Agreement dated as of March 19, 1998, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                                  
|               | 
|4.5*          |  | A320 Purchase Agreement, dated April 16, 2007, between Aerovías del Continente Americano S.A. Avianca and Airbus S.A.S. relating to Airbus A320-Family.                                                                                                                                                                                                    
|               | 
|4.5.1*        |  | Amendment No. 1 dated as of June 16, 2007, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                                
|               | 
|4.5.2*        |  | Amendment No. 2 dated as of September 10, 2007, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                           
|               | 
|4.5.3*        |  | Amendment No. 3 dated as of November 27, 2007, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                            
|               | 
|4.5.4*        |  | Amendment No. 4 dated as of January 31, 2008, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                             
|               | 
|4.5.5*        |  | Amendment No. 5 dated as of July 16, 2008, to the A320 Family Purchase Agreement dated as April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                                   
|               | 
|4.5.6*        |  | Amendment No. 6 dated as of December 5, 2008, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                             
|               | 
|4.5.7*        |  | Amendment No. 7 dated as of July 6, 2009, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                                 
|               | 
|4.5.8*        |  | Amendment No. 8 dated as of October 10, 2009, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                             
|               | 
|4.5.9*        |  | Amendment No. 9 dated as of March 12, 2010, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                               
|               | 
|4.5.10*       |  | Amendment No. 10 dated as of November 22, 2010, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                           
|               | 
|4.5.11*       |  | Amendment No. 11 dated as of August 26, 2011, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                             
|               | 
|4.5.12*       |  | Amendment No. 12 dated as of October 10, 2011, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                            
|               | 
|4.5.13*       |  | Amendment No. 13 dated as of June 13, 2012, to the A320 Family Purchase Agreement dated as of April 16, 2007, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                               
|               | 
|4.6*          |  | Assignment, Assumption and Amendment Agreement dated as of May 18, 2012, entered into among Aerovías del Continente Americano S.A. Avianca, Synergy Aerospace Corp. and Airbus S.A.S. in respect of four (4) A330-200F of the
thirteen (13) A330-200 and A330-200F under the Purchase Agreement dated September 5, 2011 (the A330-200F Purchase Agreement).
|               | 
|4.6.1*        |  | Amendment No. 1, dated as of August 16, 2012, to the A330-200F Purchase Agreement dated as of May 18, 2012, as amended and restated, between the Company and Airbus S.A.S.                                                                                                                                                                                 



148



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##### Table of Contents

|               |  |                                                                                                                                                                                                                                                                                                                                                      
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Item                                                                                                                                                                                                                                                                                                                                                 
|               | 
|4.7*          |  | A320 Family and A320 NEO Family Purchase Agreement dated as of December 27, 2011 between Avianca Holdings S.A. (formerly known as AviancaTaca Holding S.A.) and Airbus S.A.S. relating to Airbus A320-Family and A320 NEO
Family.                                                                                                                    
|               | 
|4.7.1*        |  | Amendment No. 1, dated as of February 28, 2013, to the A320 Family and A320 NEO Family Purchase Agreement dated as of December 27, 2011, between Avianca Holdings S.A. and Airbus S.A.S.                                                                                                                                                             
|               | 
|4.8*          |  | Assignment, Assumption and Amendment Agreement dated as of February 28, 2013, entered into among Aerovías del Continente Americano S.A. Avianca, Avianca Holdings S.A. and Airbus S.A.S. in respect of twenty six (26) A320
Family Aircraft and A320 NEO Family under the A320 Family and A320 NEO Family Purchase Agreement dated December 27, 2011.
|               | 
|4.8.1         |  | Amendment No. 1, dated as of February 28, 2014, to the Assignment, Assumption and Amendment Agreement dated as of February 28, 2013, entered into among Aerovías del Continente Americano S.A. Avianca, Avianca Holdings S.A. and
Airbus S.A.S.                                                                                                      
|               | 
|4.8.2         |  | Assignment, Assumption and Amendment Agreement dated as of December 31, 2014, entered into among Aerovías del Continente Americano S.A. Avianca, Avianca Holdings S.A. and Airbus S.A.S. (the Second Avianca
Assignment).                                                                                                                            
|               | 
|4.8.3         |  | Amendment No. 2, dated as of March 27, 2015 to the Assignment, Assumption and Amendment Agreement dated as of February 28, 2013, entered into among Aerovías del Continente Americano S.A. Avianca, Avianca Holdings S.A. and
Airbus S.A.S.                                                                                                          
|               | 
|4.9*          |  | Assignment, Assumption and Amendment Agreement dated as of February 28, 2013, entered into among Grupo Taca Holdings Limited, Avianca Holdings S.A. and Airbus S.A.S. in respect of twenty five (25) A320 Family and A320 NEO Family
Aircraft under the A320 Family and A320 NEO Family Purchase Agreement dated December 27, 2011.                  
|               | 
|4.9.1         |  | Amendment No. 1, dated as of March 31, 2014, to the Assignment, Assumption and Amendment Agreement dated as of February 28, 2013, entered into among Grupo Taca Holdings Limited, Avianca Holdings S.A. and Airbus S.A.S.                                                                                                                            
|               | 
|4.9.2         |  | Amendment No. 2, dated as of July 31, 2014, to the Assignment, Assumption and Amendment Agreement dated as of February 28, 2013, entered into among Grupo Taca Holdings Limited, Avianca Holdings S.A. and Airbus S.A.S.                                                                                                                             
|               | 
|4.9.3         |  | Assignment, Assumption and Amendment Agreement dated as of December 31, 2014, entered into among Grupo Taca Holdings Limited, Avianca Holdings S.A. and Airbus S.A.S. (the Second Taca Assignment).                                                                                                                                                  
|               | 
|4.9.4         |  | Amendment No. 3, dated as of March 27, 2015, to the Assignment, Assumption and Amendment Agreement dated as of February 28, 2013, entered into among Grupo Taca Holdings Limited, Avianca Holdings S.A. and Airbus S.A.S.                                                                                                                            
|               | 
|4.10*         |  | Purchase Agreement No. 3075, dated October 3, 2006, as amended and supplemented, between Aerovías del Continente Americano S.A. Avianca (The Company) and The Boeing Company, relating to the purchase and sale of ten (10)
Boeing Model 787-859 aircraft.                                                                                           
|               | 
|4.10.1*       |  | Supplemental Agreement No. 1 dated as of March 28, 2007, to the Purchase Agreement No. 3075, dated October 3, 2006, as amended and supplemented, between the Company and The Boeing Company.                                                                                                                                                         
|               | 
|4.10.2*       |  | Supplemental Agreement No. 2 dated as of March 28, 2007, to the Purchase Agreement No. 3075, dated November 21, 2007, as amended and supplemented, between the Company and The Boeing Company.                                                                                                                                                       
|               | 
|4.10.3*       |  | Supplemental Agreement No. 3 dated as of September 26, 2012, to the Purchase Agreement No. 3075, dated November 21, 2007, as amended and supplemented, between the Company and The Boeing Company                                                                                                                                                    
|               | 
|4.10.4*       |  | Supplemental Agreement No. 4 dated as of January 11, 2013, to the Purchase Agreement No. 3075, dated November 21, 2007, as amended and supplemented, between the Company and The Boeing Company.                                                                                                                                                     
|               | 
|4.10.5        |  | Supplemental Agreement No. 5 dated as of April 15, 2014, to the Purchase Agreement No. 3075, dated October 3, 2006, as amended and supplemented, between the Company and The Boeing Company.                                                                                                                                                         
|               | 
|4.11*         |  | Sale and Purchase Contract dated as of January 18, 2013, between Avianca Holdings S.A. (formerly known as AviancaTaca Holding S.A.) and Avions de Transport Regional G.I.E. as amended and restated, relating to ATR 72-600
Aircraft.                                                                                                                
|               | 
|4.12*         |  | Trent 700 General Terms Agreement, dated June 15, 2007, among Rolls Royce PLC, Rolls Royce Total Care Services Limited and Aerovías del Continente Americano S.A.
Avianca.                                                                                                                                                                           



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|               |  |                                                                                                                                                                                                                                                                                                                                                                                                   
|-------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Item                                                                                                                                                                                                                                                                                                                                                                                              
|               | 
|4.12.1*       |  | Amendment No. 1 to General Terms Agreement, dated February 28, 2008.                                                                                                                                                                                                                                                                                                                              
|               | 
|4.12.2*       |  | Amendment No. 2 to General Terms Agreement, dated February 28, 2009.                                                                                                                                                                                                                                                                                                                              
|               | 
|4.12.3*       |  | Amendment No. 3 to General Terms Agreement, dated September 1, 2009.                                                                                                                                                                                                                                                                                                                              
|               | 
|4.12.4*       |  | Amendment No. 4 to General Terms Agreement, dated March 18, 2011.                                                                                                                                                                                                                                                                                                                                 
|               | 
|4.13*         |  | General Terms Agreement 700 DEG 7308, dated June 1, 2012, between Rolls-Royce PLC, Rolls-Royce Total Care Services Limited and Aerovías del Continente Americano S.A. Avianca and Tampa Cargo S.A.                                                                                                                                                                                                
|               | 
|4.13.1        |  | Amendment No. 1 to General Terms Agreement, dated May 17, 2013.                                                                                                                                                                                                                                                                                                                                   
|               | 
|4.13.2        |  | Amendment No. 2 to General Terms Agreement, dated October 23, 2014.                                                                                                                                                                                                                                                                                                                               
|               | 
|4.13.3        |  | Amendment No. 3 to General Terms Agreement, dated December 30, 2014.                                                                                                                                                                                                                                                                                                                              
|               | 
|4.14*         |  | General Terms Agreement No. CFM-03-2007, dated as of March 29, 2007, between CFM International, Inc. and Aerovías del Continente Americano S.A. Avianca.                                                                                                                                                                                                                                          
|               | 
|4.14.1*       |  | Amendment No. 1 to General Terms Agreement.                                                                                                                                                                                                                                                                                                                                                       
|               | 
|4.15*         |  | General Terms Agreement No. GE-1-1090789943, dated as of December 18, 2007, between General Electric Corporation, GE Engine Services and Atlantic Aircraft Holding, Ltd.                                                                                                                                                                                                                          
|               | 
|4.16*         |  | OnPoint Solutions Rate per Engine Flight Hour Engine Services Agreement, dated as of January 18, 2008, between GE Engine Services, Inc. and Aerovías del Continente Americano S.A. Avianca.                                                                                                                                                                                                       
|               | 
|4.17*         |  | Rate Per Flight Hour Agreement for CFM56-5B Engine Shop Maintenance Services, dated as of February 6, 2013, between CFM International, Inc. and Avianca Holdings S.A. (formerly known as AviancaTaca Holding S.A.).                                                                                                                                                                               
|               | 
|4.17.1         |  | Amendment No. 1 to Rate Per Flight Hour Agreement dated 2014.                                                                                                                                                                                                                                                                                                                                     
|               | 
|4.18*         |  | General Terms Agreement No. CFM-1-2887169891, dated as of February 6, 2013, between CFM International, Inc. and Avianca Holdings S.A. (formerly known as AviancaTaca Holding S.A.)                                                                                                                                                                                                                
|               | 
|4.19*         |  | Rate Per Flight Hour Agreement for LEAP 1-A Engine Shop Maintenance Services, dated as of February 6, 2013, between CFM International, Inc. and Avianca Holdings S.A. (formerly known as AviancaTaca Holding S.A.).                                                                                                                                                                               
|               | 
|4.20*         |  | Amended and Restated V2500® General Terms of Sale, dated as of December 18, 2008, between IAE International Aero Engines AG and Atlantic Aircraft Holdings Limited.                                                                                                                                                                                                                               
|               | 
|4.20.1*       |  | Amendment No. 1 to Amended and Restated V2500® General Terms of Sale, dated December 17, 2010.                                                                                                                                                                                                                                                                                                    
|               | 
|4.20.2*       |  | Second Amended and Restated Side Letter, dated as of December 17, 2010.                                                                                                                                                                                                                                                                                                                           
|               | 
|4.21*         |  | Amended and Restated V2500-A5 Fleet Hour Agreement, dated as of December 18, 2008, between IAE International Aero Engines AG and Atlantic Aircraft Holdings Limited.                                                                                                                                                                                                                              
|               | 
|4.22**        |  | Trent 1000 General Terms Agreement, dated June 15, 2007, among Rolls Royce PLC, Rolls Royce Total Care Services Limited and Aerovías del Continente Americano S.A. Avianca.                                                                                                                                                                                                                       
|               | 
|4.22.1**      |  | Side Letter Number One dated June 15, 2007, to the Trent 1000 General Terms Agreement, dated June 15, 2007, among Rolls Royce PLC, Rolls Royce Total Care Services Limited and Aerovías del Continente Americano S.A.
Avianca.                                                                                                                                                                    
|               | 
|4.23          |  | Assignment, Assumption and Amendment Agreement dated as of December 31, 2014, entered into among Aerovías del Continente Americano S.A. Avianca, Avianca Holdings S.A., Avianca Leasing, LLC and Airbus S.A.S. in respect of A320
Family Aircraft and A320 NEO Family under the A320 Family and A320 NEO Family Purchase Agreement dated December 27, 2011 (the First Avianca Leasing Assignment).
|               | 
|8              |  | Subsidiaries of the Registrant.                                                                                                                                                                                                                                                                                                                                                                   
|               | 
|12.1           |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                               
|               | 
|12.2           |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                               
|               | 
|13.1           |  | Certifications of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                              



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|               |  |                                                                                                     
|-------------- |  | ----------------------------------------------------------------------------------------------------
|Exhibit
Number |  | Item                                                                                                
|               | 
|13.2           |  | Certifications of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



|* | Incorporated by reference to our registration statement, as amended, on Form F-1 (File No. 333-191258), filed on September 19, 2013, as amended on September 23, 2013, October 2,
2013, October 8, 2013, October 11, 2013, October 21, 2013, October 30, 2013 and November 4, 2013.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|** | Incorporated by reference to our Form 20-F for the year ended December 31, 2013.
|-- | --------------------------------------------------------------------------------

| | Portions of the exhibit omitted pursuant to a request for confidential treatment.
|- | ---------------------------------------------------------------------------------



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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this annual report on its behalf.



Avianca Holdings S.A.By:

/s/ Gerardo GrajalesName: Gerardo Grajales Title: Chief
Financial Officer


Dated: April 30, 2015



---

##### Table of Contents

AVIANCA HOLDINGS S.A.

AND SUBSIDIARIES

Consolidated Financial Statements

As of December 31, 2014 and 2013 and

for each of the years in the threeyear period ended

December 31, 2014



F-1



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Index



|                                                        |  |  |      | 
|------------------------------------------------------- |  |  | ---- | 
|Report of Independent Registered Public Accounting Firm |  |  | F-3  | 
|Consolidated Statement of Financial Position            |  |  | F-5  | 
|Consolidated Statement of Comprehensive Income          |  |  | F-7  | 
|Consolidated Statement of Changes in Equity             |  |  | F-9  | 
|Consolidated Statement of Cash Flows                    |  |  | F-10 | 
|Notes to the Consolidated Financial Statements          |  |  | F-12 | 



F-2



---

##### Table of Contents

Report of Independent Registered Public Accounting Firm

To The Board of Directors and Shareholders of Avianca Holdings S.A.

We have audited the accompanying consolidated statements of financial position of Avianca Holdings S.A. and subsidiaries as of December 31, 2014 and 2013 and
the related consolidated statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements
referred to above present fairly, in all material respects, the consolidated financial position of Avianca Holdings S.A. and subsidiaries at December 31, 2014 and 2013, and the consolidated results of their operations and their cash flows for the
for each of the three years in the period ended December 31, 2014, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Avianca Holdings S.A. and its
subsidiaries internal control over financial reporting as of December 31, 2014, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework) and our report dated April 29, 2015 expressed a qualified opinion thereon.

/s/ Ernst & Young Audit S.A.S.

Bogota, Colombia

April 29, 2015



F-3



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##### Table of Contents

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of Avianca Holdings S.A.

We have audited Avianca Holdings S.A.s and subsidiaries internal control over financial reporting as of December 31, 2014, based on criteria
established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Avianca Holdings S.A.s and subsidiaries management
is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Managements Annual Report on Internal
Control over Financial Reporting. Our responsibility is to express an opinion on Avianca Holdings S.A.s and subsidiaries internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.

A companys internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A companys
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could
have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that
there is a reasonable possibility that a material misstatement of the companys annual or interim financial statements will not be prevented or detected on a timely basis. The following material weaknesses have been identified and included in
Managements assessment. Management has identified material weaknesses in controls related to the companys IT general controls and financial statement close process.

In our opinion, because of the effect of the material weaknesses described above on the achievement of the objectives of the control criteria, Avianca
Holdings S.A. and subsidiaries have not maintained effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements of
financial position of Avianca Holdings S.A. and subsidiaries as of December 31, 2014 and 2013 and the related consolidated statements of comprehensive income, changes in equity and cash flows for each of the three years in the period ended December
31, 2014. These material weaknesses were considered in determining the nature, timing and extent of audit tests applied in our audit of the 2014 consolidated financial statements, and this report does not affect our report dated April 29, 2015,
which expressed an unqualified opinion on those financial statements.

/s/ Ernst & Young Audit S.A.S.

Bogota, Colombia

April 29, 2015



F-4



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Consolidated Statement of Financial
Position

(In USD thousands)



|                                                                       |  |       |    |  |                       |   |           |                       |  |   |           | 
|---------------------------------------------------------------------- |  | ----- | -- |  | --------------------- | - | --------- | --------------------- |  | - | --------- | 
|                                                                       |  | Notes |    |  | As ofDecember 31,2014 |   |           | As ofDecember 31,2013 | 
|Assets                                                                 |  |       |    |  |                       |   |           |                       |  |   |           | 
|Current assets:                                                        |  |       |    |  |                       |   |           |                       |  |   |           | 
|Cash and cash equivalents                                              |  |       | 7  |  |                       | $ | 640,891   |                       |  | $ | 735,577   | 
|Restricted cash                                                        |  |       | 7  |  |                       |   | 1,987     |                       |  |   | 23,538    | 
|Availableforsale securities                                          |  |       | 6  |  |                       |   | 1,218     |                       |  |   |          | 
|Accounts receivable, net of provision for doubtful accounts            |  |       | 8  |  |                       |   | 355,168   |                       |  |   | 276,963   | 
|Accounts receivable from related parties                               |  |       | 9  |  |                       |   | 27,386    |                       |  |   | 26,425    | 
|Expendable spare parts and supplies, net of provision for obsolescence |  |       | 10 |  |                       |   | 65,614    |                       |  |   | 53,158    | 
|Prepaid expenses                                                       |  |       | 11 |  |                       |   | 56,065    |                       |  |   | 46,745    | 
|Assets held for sale                                                   |  |       | 12 |  |                       |   | 1,369     |                       |  |   | 7,448     | 
|Deposits and other assets                                              |  |       | 13 |  |                       |   | 174,128   |                       |  |   | 125,334   | 
|                                                                       |  |       |    |  |                       |   |           |                       |  |   |           | 
|Total current assets                                                   |  |       |    |  |                       |   | 1,323,826 |                       |  |   | 1,295,188 | 
|Noncurrent assets:                                                    |  |       |    |  |                       |   |           |                       |  |   |           | 
|Availableforsale securities                                          |  |       | 6  |  |                       |   | 237       |                       |  |   | 14,878    | 
|Deposits and other assets                                              |  |       | 13 |  |                       |   | 218,010   |                       |  |   | 189,176   | 
|Accounts receivable, net of provision for doubtful accounts            |  |       | 8  |  |                       |   | 42,407    |                       |  |   | 32,441    | 
|Accounts receivable from related parties                               |  |       | 9  |  |                       |   | 11,247    |                       |  |   |          | 
|Intangible assets                                                      |  |       | 15 |  |                       |   | 416,070   |                       |  |   | 363,103   | 
|Deferred tax assets                                                    |  |       | 31 |  |                       |   | 35,664    |                       |  |   | 50,893    | 
|Property and equipment, net                                            |  |       | 14 |  |                       |   | 4,128,051 |                       |  |   | 3,233,358 | 
|                                                                       |  |       |    |  |                       |   |           |                       |  |   |           | 
|Total noncurrent assets                                               |  |       |    |  |                       |   | 4,851,686 |                       |  |   | 3,883,849 | 
|                                                                       |  |       |    |  |                       |   |           |                       |  |   |           | 
|Total assets                                                           |  |       |    |  |                       | $ | 6,175,512 |                       |  | $ | 5,179,037 | 
|                                                                       |  |       |    |  |                       |   |           |                       |  |   |           | 

See accompanying notes to Consolidated Financial Statements



F-5



---

##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Consolidated Statement of Financial
Position

(In USD thousands)



|                                              |  |       |    |  |                       |   |           |                       |  |   |           | 
|--------------------------------------------- |  | ----- | -- |  | --------------------- | - | --------- | --------------------- |  | - | --------- | 
|                                              |  | Notes |    |  | As ofDecember 31,2014 |   |           | As ofDecember 31,2013 | 
|Liabilities and equity                        |  |       |    |  |                       |   |           |                       |  |   |           | 
|Current liabilities:                          |  |       |    |  |                       |   |           |                       |  |   |           | 
|Current portion of longterm debt             |  |       | 17 |  |                       | $ | 458,679   |                       |  | $ | 314,165   | 
|Accounts payable                              |  |       | 18 |  |                       |   | 547,494   |                       |  |   | 509,129   | 
|Accounts payable to related parties           |  |       | 9  |  |                       |   | 13,797    |                       |  |   | 7,553     | 
|Accrued expenses                              |  |       | 19 |  |                       |   | 138,262   |                       |  |   | 134,938   | 
|Provisions for legal claims                   |  |       | 32 |  |                       |   | 14,157    |                       |  |   | 14,984    | 
|Provisions for return conditions              |  |       | 20 |  |                       |   | 61,425    |                       |  |   | 33,033    | 
|Employee benefits                             |  |       | 21 |  |                       |   | 49,193    |                       |  |   | 52,392    | 
|Air traffic liability                         |  |       | 22 |  |                       |   | 461,118   |                       |  |   | 491,752   | 
|Other liabilities                             |  |       | 23 |  |                       |   | 127,496   |                       |  |   | 27,432    | 
|                                              |  |       |    |  |                       |   |           |                       |  |   |           | 
|Total current liabilities                     |  |       |    |  |                       |   | 1,871,621 |                       |  |   | 1,585,378 | 
|Noncurrent liabilities:                      |  |       |    |  |                       |   |           |                       |  |   |           | 
|Longterm debt                                |  |       | 17 |  |                       |   | 2,711,898 |                       |  |   | 1,951,330 | 
|Accounts payable                              |  |       | 18 |  |                       |   | 21,167    |                       |  |   | 2,735     | 
|Provisions for return conditions              |  |       | 20 |  |                       |   | 70,459    |                       |  |   | 56,065    | 
|Employee benefits                             |  |       | 21 |  |                       |   | 173,460   |                       |  |   | 276,284   | 
|Deferred tax liabilities                      |  |       | 31 |  |                       |   | 15,760    |                       |  |   | 7,940     | 
|Air traffic liability                         |  |       | 22 |  |                       |   | 85,934    |                       |  |   | 72,853    | 
|Other liabilities noncurrent                 |  |       | 23 |  |                       |   | 8,466     |                       |  |   | 11,706    | 
|                                              |  |       |    |  |                       |   |           |                       |  |   |           | 
|Total noncurrent liabilities                 |  |       |    |  |                       |   | 3,087,144 |                       |  |   | 2,378,913 | 
|                                              |  |       |    |  |                       |   |           |                       |  |   |           | 
|Total liabilities                             |  |       |    |  |                       |   | 4,958,765 |                       |  |   | 3,964,291 | 
|                                              |  |       |    |  |                       |   |           |                       |  |   |           | 
|Equity:                                       |  |       | 25 |  |                       |   |           |                       |  |   |           | 
|Common stock                                  |  |       |    |  |                       |   | 82,600    |                       |  |   | 83,225    | 
|Preferred stock                               |  |       |    |  |                       |   | 42,023    |                       |  |   | 41,398    | 
|Additional paidin capital on common stock    |  |       |    |  |                       |   | 234,567   |                       |  |   | 236,342   | 
|Additional paidin capital on preferred stock |  |       |    |  |                       |   | 469,273   |                       |  |   | 467,498   | 
|Retained earnings                             |  |       |    |  |                       |   | 355,671   |                       |  |   | 351,102   | 
|Revaluation and other reserves                |  |       |    |  |                       |   | 24,550    |                       |  |   | 28,857    | 
|                                              |  |       |    |  |                       |   |           |                       |  |   |           | 
|Total equity attributable to the Company      |  |       |    |  |                       |   | 1,208,684 |                       |  |   | 1,208,422 | 
|Noncontrolling interest                      |  |       |    |  |                       |   | 8,063     |                       |  |   | 6,324     | 
|                                              |  |       |    |  |                       |   |           |                       |  |   |           | 
|Total equity                                  |  |       |    |  |                       |   | 1,216,747 |                       |  |   | 1,214,746 | 
|                                              |  |       |    |  |                       |   |           |                       |  |   |           | 
|Total liabilities and equity                  |  |       |    |  |                       | $ | 6,175,512 |                       |  | $ | 5,179,037 | 
|                                              |  |       |    |  |                       |   |           |                       |  |   |           | 

See accompanying notes to Consolidated Financial Statements



F-6



---

##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Consolidated Statement of Comprehensive
Income

(In USD thousands, except share and per share data)



|                                           |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|------------------------------------------ |  | ----- | ----- |  | ------------------------------- | - | --------- | ---- |  | - | --------- |  |  | - | --------- | 
|                                           |  |       |       |  | For the year ended December 31, |  
|                                           |  | Notes |       |  | 2014                            |   |           | 2013 |  |   | 2012      | 
|Operating revenue:                         |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Passenger                                  |  |       | 26    |  |                                 | $ | 3,862,721 |      |  | $ | 3,862,397 |  |  | $ | 3,550,559 | 
|Cargo and other                            |  |       | 26    |  |                                 |   | 840,850   |      |  |   | 747,207   |  |  |   | 719,097   | 
|                                           |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Total operating revenue                    |  |       |       |  |                                 |   | 4,703,571 |      |  |   | 4,609,604 |  |  |   | 4,269,656 | 
|Operating expenses:                        |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Flight operations                          |  |       |       |  |                                 |   | 56,695    |      |  |   | 82,872    |  |  |   | 84,774    | 
|Aircraft fuel                              |  |       |       |  |                                 |   | 1,345,755 |      |  |   | 1,325,763 |  |  |   | 1,305,396 | 
|Ground operations                          |  |       |       |  |                                 |   | 397,625   |      |  |   | 343,812   |  |  |   | 321,552   | 
|Aircraft rentals                           |  |       |       |  |                                 |   | 299,220   |      |  |   | 273,643   |  |  |   | 255,566   | 
|Passenger services                         |  |       |       |  |                                 |   | 154,464   |      |  |   | 143,512   |  |  |   | 132,823   | 
|Maintenance and repairs                    |  |       |       |  |                                 |   | 268,894   |      |  |   | 188,659   |  |  |   | 222,705   | 
|Air traffic                                |  |       |       |  |                                 |   | 206,151   |      |  |   | 180,140   |  |  |   | 169,650   | 
|Sales and marketing                        |  |       |       |  |                                 |   | 605,674   |      |  |   | 584,468   |  |  |   | 522,645   | 
|General, administrative and other          |  |       |       |  |                                 |   | 165,172   |      |  |   | 257,273   |  |  |   | 206,666   | 
|Salaries, wages and benefits               |  |       |       |  |                                 |   | 725,793   |      |  |   | 674,951   |  |  |   | 644,901   | 
|Depreciation, amortization, and impairment |  |       | 14,15 |  |                                 |   | 198,660   |      |  |   | 169,580   |  |  |   | 122,080   | 
|                                           |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Total operating expenses                   |  |       |       |  |                                 |   | 4,424,103 |      |  |   | 4,224,673 |  |  |   | 3,988,758 | 
|                                           |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Operating profit                           |  |       |       |  |                                 |   | 279,468   |      |  |   | 384,931   |  |  |   | 280,898   | 
|Interest expense                           |  |       |       |  |                                 |   | (133,989) |      |  |   | (113,330) |  |  |   | (122,112) | 
|Interest income                            |  |       |       |  |                                 |   | 17,099    |      |  |   | 11,565    |  |  |   | 25,006    | 
|Derivative instruments                     |  |       |       |  |                                 |   | 5,924     |      |  |   | (11,402)  |  |  |   | (24,042)  | 
|Foreign exchange                           |  |       |       |  |                                 |   | 10,272    |      |  |   | 23,517    |  |  |   | (56,788)  | 
|                                           |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Profit before income tax                   |  |       |       |  |                                 |   | 178,774   |      |  |   | 295,281   |  |  |   | 102,962   | 
|Income tax expense  current               |  |       | 31    |  |                                 |   | (33,781)  |      |  |   | (40,296)  |  |  |   | (49,884)  | 
|Income tax expense  deferred              |  |       | 31    |  |                                 |   | (16,499)  |      |  |   | (6,164)   |  |  |   | (14,821)  | 
|                                           |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Total income tax expense                   |  |       |       |  |                                 |   | (50,280)  |      |  |   | (46,460)  |  |  |   | (64,705)  | 
|                                           |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 
|Net profit for the year                    |  |       |       |  |                                 | $ | 128,494   |      |  | $ | 248,821   |  |  | $ | 38,257    | 
|                                           |  |       |       |  |                                 |   |           |      |  |   |           |  |  |   |           | 

See accompanying notes to Consolidated Financial Statements.



F-7



---

##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Consolidated Statement of Comprehensive
Income

(In USD thousands, except share and per share data)



|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------------------ |  | ----- | -- |  | ------------------------------- | - | -------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                         |  |       |    |  | For the year ended December 31, |  
|                                                                         |  | Notes |    |  | 2014                            |   |          | 2013 |  |   | 2012    |  
|Net profit for the year                                                  |  |       |    |  |                                 | $ | 128,494  |      |  | $ | 248,821 |   |  | $ | 38,257  |  
|Other comprehensive income (loss):                                       |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Items that will not be reclassified to profit or loss in future periods: |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Revaluation of administrative
Property                                   |  |       | 14 |  |                                 |   | (4,307   | )    |  |   | 3,439   |   |  |   | (1,641  | )
|Actuarial gains (losses)                                                 |  |       | 21 |  |                                 |   | 16,439   |      |  |   | 66,277  |   |  |   | (55,012 | )
|Income tax                                                               |  |       | 31 |  |                                 |   | (2,239   | )    |  |   | (14,525 | ) |  |   | 10,701  |  
|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|                                                                         |  |       |    |  |                                 |   | 9,893    |      |  |   | 55,191  |   |  |   | (45,952 | )
|Items that will be reclassified to profit or loss in future periods:     |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Effective portion of changes in fair value of hedging instruments        |  |       | 25 |  |                                 |   | (113,249 | )    |  |   | 10,654  |   |  |   | 3,697   |  
|Net change in fair value of availableforsale securities                |  |       | 25 |  |                                 |   | (1,527   | )    |  |   | 2,028   |   |  |   | 3,775   |  
|Income tax                                                               |  |       | 31 |  |                                 |   | 14,819   |      |  |   | (1,852  | ) |  |   | (726    | )
|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|                                                                         |  |       |    |  |                                 |   | (99,957  | )    |  |   | 10,830  |   |  |   | 6,746   |  
|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Other comprehensive income (loss), net of income tax                     |  |       |    |  |                                 |   | (90,064  | )    |  |   | 66,021  |   |  |   | (39,206 | )
|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Total comprehensive income (loss) net of income tax                      |  |       |    |  |                                 | $ | 38,430   |      |  | $ | 314,842 |   |  | $ | (949    | )
|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Profit (loss) attributable to:                                           |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Equity holders of the parent                                             |  |       |    |  |                                 | $ | 129,270  |      |  | $ | 257,493 |   |  | $ | 35,141  |  
|Noncontrolling interest                                                 |  |       |    |  |                                 |   | (776     | )    |  |   | (8,672  | ) |  |   | 3,116   |  
|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Net profit                                                               |  |       |    |  |                                 | $ | 128,494  |      |  | $ | 248,821 |   |  | $ | 38,257  |  
|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Total comprehensive income (loss) attributable to:                       |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Equity holders of the parent                                             |  |       |    |  |                                 | $ | 39,206   |      |  | $ | 323,514 |   |  | $ | (4,065  | )
|Noncontrolling interest                                                 |  |       |    |  |                                 |   | (776     | )    |  |   | (8,672  | ) |  |   | 3,116   |  
|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Total comprehensive income (loss)                                        |  |       |    |  |                                 | $ | 38,430   |      |  | $ | 314,842 |   |  | $ | (949    | )
|                                                                         |  |       |    |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Basic and diluted earnings per share                                     |  |       | 16 |  |                                 |   |          |      |  |   |         |   |  |   |         |  
|Common stock                                                             |  |       |    |  |                                 | $ | 0.13     |      |  | $ | 0.27    |   |  | $ | 0.04    |  
|Preferred stock                                                          |  |       |    |  |                                 | $ | 0.13     |      |  | $ | 0.27    |   |  | $ | 0.04    |  

See accompanying notes to Consolidated Financial Statements.



F-8



---

##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Consolidated Statement of Changes in
Equity

(In USD thousands, except share and per share data)



|                                              |  |       |    |  |              |  |             |                 |  |   |                           |   |  |                              |             |   |                                 |   |        |                                                 |  |   |                         |   |  |             |         |   |  |   |        |   |  |   |         |   |  |   |           |   |  |   |        |   |  |   |           |  
|--------------------------------------------- |  | ----- | -- |  | ------------ |  | ----------- | --------------- |  | - | ------------------------- | - |  | ---------------------------- | ----------- | - | ------------------------------- | - | ------ | ----------------------------------------------- |  | - | ----------------------- | - |  | ----------- | ------- | - |  | - | ------ | - |  | - | ------- | - |  | - | --------- | - |  | - | ------ | - |  | - | --------- | -
|                                              |  |       |    |  | Common stock |  |             | Preferred stock |  |   | Additional paidincapital |   |  | Revaluationand otherreserves |             |   | Retainedearningsand OCIreserves |   |        | Equityattributableto equityholders ofthe parent |  |   | Noncontrollinginterest |   |  | Totalequity |        
|                                              |  | Notes |    |  | Shares       |  |             | Amount          |  |   | Shares                    |   |  | Amount                       |             |   | Commonstock                     |   |        | Preferredstock                                  |  |   |                         |   |  |            
|Balance as of January 1, 2012                 |  |       |    |  |              |  | 741,400,000 |                 |  | $ | 92,675                    |   |  |                              | 159,907,920 |   |                                 | $ | 19,988 |                                                 |  | $ | 263,178                 |   |  | $           | 279,112 |   |  | $ | 27,059 |   |  | $ | 96,167  |   |  | $ | 778,179   |   |  | $ | 12,916 |   |  | $ | 791,095   |  
|                                              |  |       |    |  |              |  |             |                 |  |   |                           |   |  |                              |             |   |                                 |   |        |                                                 |  |   |                         |   |  |             |         |   |  |   |        |   |  |   |         |   |  |   |           |   |  |   |        |   |  |   |           |  
|Net profit                                    |  |       |    |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   |       |   |  |   | 35,141  |   |  |   | 35,141    |   |  |   | 3,116  |   |  |   | 38,257    |  
|Other comprehensive income for the period     |  |       | 25 |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   | (1,641 | ) |  |   | (37,565 | ) |  |   | (39,206   | ) |  |   |       |   |  |   | (39,206   | )
|Dividends paid                                |  |       | 25 |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   |       |   |  |   | (25,590 | ) |  |   | (25,590   | ) |  |   |       |   |  |   | (25,590   | )
|Purchase of treasury stock                    |  |       | 25 |  |              |  |            |                 |  |   |                          |   |  |                              | (4,123,491  | ) |                                 |   | (515   | )                                               |  |   |                        |   |  |             | (9,051  | ) |  |   |       |   |  |   |        |   |  |   | (9,566    | ) |  |   |       |   |  |   | (9,566    | )
|Other                                         |  |       |    |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   |       |   |  |   |        |   |  |   |          |   |  |   | (2,888 | ) |  |   | (2,888    | )
|                                              |  |       |    |  |              |  |             |                 |  |   |                           |   |  |                              |             |   |                                 |   |        |                                                 |  |   |                         |   |  |             |         |   |  |   |        |   |  |   |         |   |  |   |           |   |  |   |        |   |  |   |           |  
|Balance at December 31, 2012                  |  |       |    |  |              |  | 741,400,000 |                 |  | $ | 92,675                    |   |  |                              | 155,784,429 |   |                                 | $ | 19,473 |                                                 |  | $ | 263,178                 |   |  | $           | 270,061 |   |  | $ | 25,418 |   |  | $ | 68,153  |   |  | $ | 738,958   |   |  | $ | 13,144 |   |  | $ | 752,102   |  
|Net profit                                    |  |       |    |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   |       |   |  |   | 257,493 |   |  |   | 257,493   |   |  |   | (8,672 | ) |  |   | 248,821   |  
|Other comprehensive income for the period     |  |       | 25 |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   | 3,439  |   |  |   | 62,582  |   |  |   | 66,021    |   |  |   |       |   |  |   | 66,021    |  
|Dividends paid                                |  |       | 25 |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   |       |   |  |   | (36,921 | ) |  |   | (36,921   | ) |  |   |       |   |  |   | (36,921   | )
|Purchase of treasury stock                    |  |       | 25 |  |              |  |            |                 |  |   |                          |   |  |                              | (197,141    | ) |                                 |   | (25    | )                                               |  |   |                        |   |  |             | (452    | ) |  |   |       |   |  |   |        |   |  |   | (477      | ) |  |   |       |   |  |   | (477      | )
|Preferred Stock Issuance                      |  |       |    |  |              |  |            |                 |  |   |                          |   |  |                              | 100,000,000 |   |                                 |   | 12,500 |                                                 |  |   |                        |   |  |             | 171,053 |   |  |   |       |   |  |   |        |   |  |   | 183,553   |   |  |   |       |   |  |   | 183,553   |  
|Conversion of common stock to preferred stock |  |       |    |  |              |  | (75,599,997 | )               |  |   | (9,450                    | ) |  |                              | 75,599,997  |   |                                 |   | 9,450  |                                                 |  |   | (26,836                 | ) |  |             | 26,836  |   |  |   |       |   |  |   |        |   |  |   |          |   |  |   |       |   |  |   |          |  
|Other                                         |  |       |    |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   |       |   |  |   | (205    | ) |  |   | (205      | ) |  |   | 1,852  |   |  |   | 1,647     |  
|                                              |  |       |    |  |              |  |             |                 |  |   |                           |   |  |                              |             |   |                                 |   |        |                                                 |  |   |                         |   |  |             |         |   |  |   |        |   |  |   |         |   |  |   |           |   |  |   |        |   |  |   |           |  
|Balance at December 31, 2013                  |  |       |    |  |              |  | 665,800,003 |                 |  | $ | 83,225                    |   |  |                              | 331,187,285 |   |                                 | $ | 41,398 |                                                 |  | $ | 236,342                 |   |  | $           | 467,498 |   |  | $ | 28,857 |   |  | $ | 351,102 |   |  | $ | 1,208,422 |   |  | $ | 6,324  |   |  | $ | 1,214,746 |  
|Net profit                                    |  |       |    |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   |       |   |  |   | 129,270 |   |  |   | 129,270   |   |  |   | (776   | ) |  |   | 128,494   |  
|Other comprehensive income for the period     |  |       | 25 |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   | (4,307 | ) |  |   | (85,757 | ) |  |   | (90,064   | ) |  |   |       |   |  |   | (90,064   | )
|Dividends paid                                |  |       | 25 |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   |       |   |  |   | (38,944 | ) |  |   | (38,944   | ) |  |   |       |   |  |   | (38,944   | )
|Increase in noncontrolling interest          |  |       |    |  |              |  |            |                 |  |   |                          |   |  |                              |            |   |                                 |   |       |                                                 |  |   |                        |   |  |             |        |   |  |   |       |   |  |   |        |   |  |   |          |   |  |   | 2,515  |   |  |   | 2,515     |  
|Conversion of common stock to preferred stock |  |       | 25 |  |              |  | (5,000,000  | )               |  |   | (625                      | ) |  |                              | 5,000,000   |   |                                 |   | 625    |                                                 |  |   | (1,775                  | ) |  |             | 1,775   |   |  |   |       |   |  |   |        |   |  |   |          |   |  |   |       |   |  |   |          |  
|                                              |  |       |    |  |              |  |             |                 |  |   |                           |   |  |                              |             |   |                                 |   |        |                                                 |  |   |                         |   |  |             |         |   |  |   |        |   |  |   |         |   |  |   |           |   |  |   |        |   |  |   |           |  
|Balance at December 31, 2014                  |  |       |    |  |              |  | 660,800,003 |                 |  | $ | 82,600                    |   |  |                              | 336,187,285 |   |                                 | $ | 42,023 |                                                 |  | $ | 234,567                 |   |  | $           | 469,273 |   |  | $ | 24,550 |   |  | $ | 355,671 |   |  | $ | 1,208,684 |   |  | $ | 8,063  |   |  | $ | 1,216,747 |  
|                                              |  |       |    |  |              |  |             |                 |  |   |                           |   |  |                              |             |   |                                 |   |        |                                                 |  |   |                         |   |  |             |         |   |  |   |        |   |  |   |         |   |  |   |           |   |  |   |        |   |  |   |           |  

See accompanying notes to Consolidated Financial Statements.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Consolidated Statement of Cash Flows

(In USD thousands)



|                                                                          |  |                                 |           |  |      |   |           |      |  |   |           | 
|------------------------------------------------------------------------- |  | ------------------------------- | --------- |  | ---- | - | --------- | ---- |  | - | --------- | 
|                                                                          |  | For the year ended December 31, |          
|                                                                          |  | 2014                            |           |  | 2013 |   |           | 2012 | 
|Cash flows from operating activities:                                     |  |                                 |           |  |      |   |           |      |  |   |           | 
|Net profit for the year                                                   |  | $                               | 128,494   |  |      | $ | 248,821   |      |  | $ | 38,257    | 
|Adjustments for:                                                          |  |                                 |           |  |      |   |           |      |  |   |           | 
|Depreciation, amortization and impairment                                 |  |                                 | 198,660   |  |      |   | 169,580   |      |  |   | 122,080   | 
|Sharebased payment (income) expense                                      |  |                                 | (2,540)   |  |      |   | (355)     |      |  |   | 4,032     | 
|Gain on disposal of assets                                                |  |                                 | (6,528)   |  |      |   | (2,555)   |      |  |   | (18,383)  | 
|Fair value adjustment of financial instruments                            |  |                                 | (4,616)   |  |      |   | 9,688     |      |  |   | 24,042    | 
|Interest income                                                           |  |                                 | (17,099)  |  |      |   | (11,565)  |      |  |   | (25,006)  | 
|Interest expense                                                          |  |                                 | 133,989   |  |      |   | 113,330   |      |  |   | 122,112   | 
|Deferred tax                                                              |  |                                 | 16,499    |  |      |   | 6,164     |      |  |   | 14,821    | 
|Current tax                                                               |  |                                 | 33,781    |  |      |   | 40,296    |      |  |   | 49,884    | 
|Currency translation adjustment                                           |  |                                 | (10,272)  |  |      |   | (23,517)  |      |  |   | (25,959)  | 
|Changes in:                                                               |  |                                 |           |  |      |   |           |      |  |   |           | 
|Accounts receivable                                                       |  |                                 | (151,391) |  |      |   | (43,769)  |      |  |   | (40,647)  | 
|Expendable spare parts and supplies                                       |  |                                 | (12,456)  |  |      |   | (4,362)   |      |  |   | (11,003)  | 
|Prepaid expenses                                                          |  |                                 | (9,321)   |  |      |   | 6,592     |      |  |   | (2,909)   | 
|Deposits and other assets                                                 |  |                                 | (67,849)  |  |      |   | (11,543)  |      |  |   | 62,658    | 
|Accounts payable and accrued expenses                                     |  |                                 | 73,755    |  |      |   | (23,801)  |      |  |   | (10,796)  | 
|Air traffic liability                                                     |  |                                 | (17,554)  |  |      |   | 95,820    |      |  |   | 51,042    | 
|Provision for return conditions                                           |  |                                 | 42,786    |  |      |   | 22,203    |      |  |   | (1,884)   | 
|Employee benefits                                                         |  |                                 | (27,878)  |  |      |   | (25,207)  |      |  |   | 54,648    | 
|Income tax paid                                                           |  |                                 | (43,330)  |  |      |   | (21,178)  |      |  |   | (15,763)  | 
|                                                                          |  |                                 |           |  |      |   |           |      |  |   |           | 
|Net cash provided by operating activities                                 |  |                                 | 257,130   |  |      |   | 544,642   |      |  |   | 391,226   | 
|Cash flows from investing activities:                                     |  |                                 |           |  |      |   |           |      |  |   |           | 
|Availableforsale securities                                             |  |                                 |          |  |      |   | 19,460    |      |  |   | (2,573)   | 
|Restricted cash                                                           |  |                                 | 21,551    |  |      |   | (16,991)  |      |  |   | (4,732)   | 
|Interest received                                                         |  |                                 | 13,384    |  |      |   | 10,070    |      |  |   | 21,872    | 
|Advance payments on aircraft purchase contracts                           |  |                                 | (169,284) |  |      |   | (320,289) |      |  |   | (161,337) | 
|Acquisition of property and equipment                                     |  |                                 | (130,313) |  |      |   | (264,700) |      |  |   | (370,479) | 
|(Investment in) redemption of investment in certificates of bank deposits |  |                                 | (9,248)   |  |      |   | 29,619    |      |  |   | 154,930   | 
|Acquisition of intangible assets                                          |  |                                 | (29,682)  |  |      |   | (26,728)  |      |  |   | (15,769)  | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Consolidated Statement of Cash Flows

(In USD thousands)



|                                                     |  |                                 |          |   |      |   |          |      |  |   |          |  
|---------------------------------------------------- |  | ------------------------------- | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                                     |  | For the year ended December 31, |         
|                                                     |  | 2014                            |          |   | 2013 |   |          | 2012 | 
|Net cash flow on acquisition of subsidiary           |  | $                               | (9,968   | ) |      | $ |         |      |  | $ |         |  
|Proceeds from sale of property and equipment         |  |                                 | 65,985   |   |      |   | 83,938   |      |  |   | 74,037   |  
|Proceeds from sale of investments                    |  |                                 | 686      |   |      |   | 2,362    |      |  |   | 3,246    |  
|                                                     |  |                                 |          |   |      |   |          |      |  |   |          |  
|Net cash used in investing activities                |  |                                 | (246,889 | ) |      |   | (483,259 | )    |  |   | (300,805 | )
|Cash flows from financing activities:                |  |                                 |          |   |      |   |          |      |  |   |          |  
|Proceeds from loans and borrowings                   |  |                                 | 231,510  |   |      |   | 238,639  |      |  |   | 465,074  |  
|Proceeds from issuance of bonds                      |  |                                 | 250,000  |   |      |   | 298,626  |      |  |   |         |  
|Repayments of loans and borrowings                   |  |                                 | (365,605 | ) |      |   | (292,640 | )    |  |   | (285,754 | )
|Payments of financial lease liabilities              |  |                                 |         |   |      |   | (4,410   | )    |  |   | (9,785   | )
|Dividends paid                                       |  |                                 | (38,944  | ) |      |   | (36,921  | )    |  |   | (25,590  | )
|Purchase of treasury stock                           |  |                                 |         |   |      |   | (477     | )    |  |   | (9,566   | )
|Issuance of preferred stock                          |  |                                 |         |   |      |   | 183,553  |      |  |   |         |  
|Increase in noncontrolling interest                 |  |                                 | 2,000    |   |      |   |         |      |  |   |         |  
|Interest paid                                        |  |                                 | (131,781 | ) |      |   | (98,723  | )    |  |   | (109,894 | )
|Other                                                |  |                                 |         |   |      |   | 1,647    |      |  |   | (7,741   | )
|                                                     |  |                                 |          |   |      |   |          |      |  |   |          |  
|Net cash (used in) provided by financing activities  |  |                                 | (52,820  | ) |      |   | 289,294  |      |  |   | 16,744   |  
|Net (decrease) increase in cash and cash equivalents |  |                                 | (42,579  | ) |      |   | 350,677  |      |  |   | 107,165  |  
|Net foreign exchange difference                      |  |                                 | (52,107  | ) |      |   | (18,097  | )    |  |   | 7,106    |  
|Cash and cash equivalents at beginning of year       |  |                                 | 735,577  |   |      |   | 402,997  |      |  |   | 288,726  |  
|                                                     |  |                                 |          |   |      |   |          |      |  |   |          |  
|Cash and cash equivalents at end of year             |  | $                               | 640,891  |   |      | $ | 735,577  |      |  | $ | 402,997  |  
|                                                     |  |                                 |          |   |      |   |          |      |  |   |          |  

See accompanying notes to Consolidated Financial Statements.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(1) | Reporting entity
|--- | ----------------

Avianca Holdings S.A. (the Company or Avianca
Holdings S.A.) a Panamanian corporation whose registered address is at Calle Aquilino de la Guardia No. 8 IGRA Building, Panama City, Republic of Panama, was incorporated on October 5, 2009 under the name SK Holdings Limited and
under the laws of the Commonwealth of the Bahamas. Subsequently, on March 10, 2010 the Company changed its corporate name to AviancaTaca Limited, and, on January 28, 2011 the Company changed its name to AviancaTaca Holding, S.A and
thereafter on March 3, 2011 the Company changed its registered offices to Panama. In 2011 AviancaTaca listed its shares in the Bolsa de Valores de Colombia (BVC) and was listed as PFAVTA: CB. On March 21, 2013 the Company changed its legal
name from AviancaTaca Holding S.A. to Avianca Holdings S.A. and its listing name to PFAVH: CB. On November 6, 2013, the Company listed its shares on the New York Stock Exchange (NYSE) and is listed as AVH.

The Company through its subsidiaries is provider of domestic and international, passenger and cargo air transportation, both in the domestic
markets of Colombia, Ecuador, Costa Rica, Nicaragua and Peru and international routes serving North, Central and South America, Europe, and the Caribbean. The Company has entered into a number of bilateral code share alliances with other airlines
(whereby selected seats on one carriers flights can be marketed under the brand name of the other), expanding travel choices to customers worldwide. Marketing alliances typically include: joint frequent flyer program participation;
coordination of reservations, ticketing, passenger check in and baggage handling; transfer of passenger and baggage at any point of connectivity, among others. The code share agreements include Air Canada, United Airlines, Aeromexico, Copa Airlines,
Satena, Sky Airline, OceanAir Linhas Aéreas, S.A., Iberia, Lufthansa and Turkish Airlines. Avianca and Taca International (as well as Taca affiliates) are members of Star Alliance which give customers of the Company access to the routes,
destinations and services of the Star Alliance network.

Cargo operations are carried out by our subsidiaries and affiliates, including,
Tampa Cargo S.A.S. Cargo operations are developed through different entities and commercial agreements, such as Aero Transporte de Carga Unión, S.A. de C.V. (Aerounion) in Mexico. As of December 31, 2014, the Company
indirectly held 92.72% of the nonvoting shares and 25% of the voting shares of Aerounion. In the cargo business, the Company markets itself primarily under the Avianca brand internationally. Aerounion operates under its separate brand and
management expects to continue to market its operations under this name. The Company also undertakes cargo operations through the use of hold space on passenger flights and dedicated freight aircraft. In certain of the hub airports, the Company also
performs ground operations for thirdparty airlines.

The Company operates a coalition loyalty program, including the frequent flyer
program for the airline subsidiaries of Avianca Holdings S.A. LifeMiles is designed to retain customers and increase loyalty by offering incentives to passengers traveling on the participating airline partners for their continued preference. Under
the LifeMiles program, the customer earns miles by flying through its air partners, including Star Alliance and by using the services of nonair program partners such as credit cards, hotels, car rentals and other. The miles earned can be
exchanged for flights or other partners products or services. Customers may redeem their awards and earn miles through airline members of Star Alliance, which give customers of the Company access to the routes, destinations and services of the
Star Alliance network.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



As of December 31, 2014 and 2013, Avianca Holdings S.A. had a total fleet consisting of:



|                     |  |                      |     |  |                |  |    |       |  |  |                      |  |  |                |    |  |       |  |    |  |  |  |     | 
|-------------------- |  | -------------------- | --- |  | -------------- |  | -- | ----- |  |  | -------------------- |  |  | -------------- | -- |  | ----- |  | -- |  |  |  | --- | 
|                     |  | 2014                 |     |  | 2013           | 
|Aircraft             |  | Owned/FinancialLease |     |  | OperatingLease |  |    | Total |  |  | Owned/FinancialLease |  |  | OperatingLease |    |  | Total | 
|Airbus A-318         |  |                      |    |  |                |  | 10 |       |  |  | 10                   |  |  |                |   |  |       |  | 10 |  |  |  | 10  | 
|Airbus A-319         |  |                      | 20  |  |                |  | 17 |       |  |  | 37                   |  |  |                | 14 |  |       |  | 17 |  |  |  | 31  | 
|Airbus A-320         |  |                      | 31  |  |                |  | 27 |       |  |  | 58                   |  |  |                | 31 |  |       |  | 25 |  |  |  | 56  | 
|Airbus A-321         |  |                      | 3   |  |                |  | 6  |       |  |  | 9                    |  |  |                | 1  |  |       |  | 4  |  |  |  | 5   | 
|Airbus A-330         |  |                      | 1   |  |                |  | 11 |       |  |  | 12                   |  |  |                | 1  |  |       |  | 9  |  |  |  | 10  | 
|Airbus A330F         |  |                      | 6   |  |                |  |   |       |  |  | 6                    |  |  |                | 4  |  |       |  |   |  |  |  | 4   | 
|Airbus A300F-B4F     |  |                      | 4   |  |                |  |   |       |  |  | 4                    |  |  |                |   |  |       |  |   |  |  |  |    | 
|Boeing 787           |  |                      | 3   |  |                |  | 1  |       |  |  | 4                    |  |  |                |   |  |       |  |   |  |  |  |    | 
|ATR 42               |  |                      | 4   |  |                |  | 5  |       |  |  | 9                    |  |  |                | 6  |  |       |  | 5  |  |  |  | 11  | 
|ATR 72               |  |                      | 14  |  |                |  |   |       |  |  | 14                   |  |  |                | 4  |  |       |  |   |  |  |  | 4   | 
|Boeing 767           |  |                      |    |  |                |  | 1  |       |  |  | 1                    |  |  |                |   |  |       |  |   |  |  |  |    | 
|Boeing 767F          |  |                      | 2   |  |                |  | 1  |       |  |  | 3                    |  |  |                | 2  |  |       |  | 1  |  |  |  | 3   | 
|Cessna Grand Caravan |  |                      | 9   |  |                |  |   |       |  |  | 9                    |  |  |                | 10 |  |       |  |   |  |  |  | 10  | 
|Embraer E-190        |  |                      | 10  |  |                |  | 2  |       |  |  | 12                   |  |  |                | 10 |  |       |  | 2  |  |  |  | 12  | 
|Fokker 100           |  |                      | 5   |  |                |  |   |       |  |  | 5                    |  |  |                | 5  |  |       |  |   |  |  |  | 5   | 
|Fokker 50            |  |                      |    |  |                |  |   |       |  |  |                     |  |  |                | 10 |  |       |  |   |  |  |  | 10  | 
|                     |  |                      |     |  |                |  |    |       |  |  |                      |  |  |                |    |  |       |  |    |  |  |  |     | 
|                     |  |                      | 112 |  |                |  | 81 |       |  |  | 193                  |  |  |                | 98 |  |       |  | 73 |  |  |  | 171 | 
|                     |  |                      |     |  |                |  |    |       |  |  |                      |  |  |                |    |  |       |  |    |  |  |  |     | 



|(2) | Basis of preparation
|--- | --------------------



|(a) | Statement of compliance
|--- | -----------------------

The Consolidated Financial Statements of the Company have been
prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The Consolidated Financial Statements of the Company were authorized for issue by the Board of Directors on April 29, 2015.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(b) | Basis of measurement
|--- | --------------------

The Consolidated Financial Statements have been prepared on the
historical cost basis, except certain assets and liabilities, which are measured at fair value, as set out in the specific accounting policy for such assets and liabilities.



|(c) | Functional and presentation currency
|--- | ------------------------------------

These Consolidated Financial Statements are
presented in US dollars, which is the Companys functional currency. All financial information presented has been rounded to the nearest thousands, except when otherwise indicated.



|(d) | Use of estimates and judgments
|--- | ------------------------------

The preparation of the Consolidated Financial Statements
in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the
period in which the estimates are revised and in any future periods affected.

The following are critical judgments used in applying
accounting policies that may have the most significant effect on the amounts recognized in the Consolidated Financial Statements:



| |  |  | The Company has entered into operating lease contracts with respect to 81 aircraft. The Company has determined, based on the terms and conditions of the arrangements, that the significant risks and rewards of ownership
of all these leased aircraft have not been transferred from the lessor, so it accounts for these lease contracts as operating leases.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company recognizes revenue from tickets that are expected to expire unused based on historical data and experience. Defining expected breakage requires management to make informed estimates about, among other
things, the extent to which historical experience is an indication of the future customer behavior. Annually, or more frequently as the experience data suggests, management reassesses the historical data and makes required adjustments.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company operates certain aircraft under a financing structure which involves the creation of structured entities that acquire aircraft with bank and thirdparty financing. This relates to 44 aircraft from the
A320 and A330 families. The Company has determined, based on the terms and conditions of the arrangements, that the Company controls these special purpose entities (SPE) and therefore, SPEs are consolidated by the Company and these
aircraft are shown in the Consolidated Statement of Financial Position as part of Property and Equipment with the corresponding debt shown as a liability.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The following assumptions and estimation uncertainties may have the most significant effect
on the amounts recognized in the Consolidated Financial Statements within the next financial year:



| |  |  | The Company believes that the tax positions taken are reasonable. However, tax authorities by audits proceedings may challenge the positions taken resulting in additional liabilities for taxes and interest that may
become payable in future years. Tax positions involve careful judgment on the part of management and are reviewed and adjusted to account for changes in circumstances, such as lapse of applicable statutes of limitations, conclusions of tax audits,
additional exposures derived from new legal issues or court decisions on a particular tax matter. The Company establishes provisions, based on their estimation on feasibility of a negative decision derived from an audit proceeding by the tax
authorities of the respective countries in which it operates. The amount of such provisions is based on various factors, such as experience of previous tax audits and different interpretations of tax regulations by the taxable entity and the
responsible tax authority. Actual results could differ from estimates.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Deferred tax assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required
to determine the amount of deferred tax assets that can be recognized and the tax rates used, based upon the likely timing and the level of future taxable profits together with future tax planning strategies, and the enacted tax rates in the
jurisdictions in which the entity operates.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company measures administrative land and buildings primarily in Bogota, San Jose, and San Salvador at revalued amounts with changes in fair value being recognized in other comprehensive income. The Company engaged
independent valuation specialists to determine fair value as of December 31, 2014 and 2013. The valuation techniques used by these specialists require estimates about market conditions at the time of the report.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Company assesses whether there are any indicators of impairment for all nonfinancial assets at each reporting date. Goodwill and indefinitelived intangible assets are tested for impairment annually and
at other times when such indicators exist. Impairment analysis requires the Company to estimate the value in use of the cash generating units to which goodwill is assigned.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The cost of defined benefit pension plans and other postemployment medical benefits and the present value of the pension obligation are determined using actuarial valuations. An actuarial valuation involves making
various assumptions which may differ from actual developments in the future. These include the determination of the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the valuation, the
underlying assumptions and its longterm nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In determining the appropriate discount rate for pension plans in Colombia, management refers to market yields on Colombian Government bonds,
since it is managements judgment that there is no deep local market for high quality corporate bonds.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The mortality rate is based on publicly available mortality tables in Colombia. Future
salary increases and pension increases are based on expected future inflation rates in Colombia.



| |  |  | The Company estimates the fair value of miles awarded under the LifeMiles program by applying statistical techniques. Inputs to the models include making assumptions about expected redemption rates, the mix of products
that will be available for redemption in the future and customer preferences. Breakage represents the sale of miles that are expected to expire unused based on historical data and experience. Breakage is estimated by management based on the terms
and conditions of membership and historical accumulation and redemption patterns.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Aircraft lease contracts establish certain conditions in which aircraft shall be returned to the lessor at the end of the contracts. To comply with return conditions, the Company incurs costs such as the payment to the
lessor of a rate in accordance with the use of components through the term of the lease contract, payment of maintenance deposits to the lessor, or overhaul costs of components. In certain contracts, if the asset is returned in a better maintenance
condition than the conditions at which the asset was originally delivered, the Company is entitled to receive compensation from the lessor. The Company accrues a provision to comply with return conditions at the time the asset does not meet the
return condition criteria based on the conditions of each lease contract. The recognition of return conditions require management to make estimates of the costs of return conditions and use inputs such as hours or cycles flown of major components,
estimated hours or cycles at redelivery of major components, projected overhaul costs and overhaul dates of major components. At redelivery of aircraft, any difference between the provision recorded and actual costs is recognized in the Consolidated
Statement of Comprehensive Income.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Significant accounting policies
|--- | -------------------------------

The accounting policies set out below have been applied
consistently to all periods presented in these Consolidated Financial Statements, and have been applied consistently by all the Companys entities.



|(a) | Basis of consolidation
|--- | ----------------------

Subsidiaries are entities controlled by Avianca Holdings S.A.
The financial statements of subsidiaries are included in the Consolidated Financial Statements from the date that control commences until the date that control ceases. Control is established after assessing the Companys ability to direct the
relevant activities of the investee, its exposure and rights to variable returns, and its ability to use its power to affect the amount of the investees returns. The accounting policies of subsidiaries have been aligned when necessary with the
policies adopted by the Company.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The following are the significant subsidiaries included within these financial statements:



|                                              |  |                         |  |                    |       |   |  |  |       |  
|--------------------------------------------- |  | ----------------------- |  | ------------------ | ----- | - |  |  | ----- | -
|Name of Subsidiary                            |  | Country ofIncorporation |  | OwnershipInterest% |      
|                                              |  | 2014                    |  |                    | 2013  |  
|Aerolíneas Galápagos, S.A. Aerogal            |  | Ecuador                 |  |                    | 99.62 | % |  |  | 99.62 | %
|Aerovías del Continente Americano S.A.        |  | Colombia                |  |                    | 99.98 | % |  |  | 99.98 | %
|Avianca, Inc.                                 |  | USA                     |  |                    | 100   | % |  |  | 100   | %
|Avianca Leasing, LLC                          |  | USA                     |  |                    | 0     | % |  |  | 0     | %
|Grupo Taca Holdings Limited                   |  | Bahamas                 |  |                    | 100   | % |  |  | 100   | %
|Latin Airways Corp.                           |  | Panama                  |  |                    | 100   | % |  |  | 100   | %
|LifeMiles Corp.                               |  | Panama                  |  |                    | 100   | % |  |  | 100   | %
|Líneas Aéreas Costarricenses, S.A.            |  | Costa Rica              |  |                    | 92.40 | % |  |  | 92.40 | %
|Taca International Airlines, S.A.             |  | El Salvador             |  |                    | 96.84 | % |  |  | 96.84 | %
|Tampa Cargo Logistics, Inc.                   |  | USA                     |  |                    | 100   | % |  |  | 100   | %
|Tampa Cargo S.A.S                             |  | Colombia                |  |                    | 100   | % |  |  | 100   | %
|Technical and Training Services, S.A. de C.V. |  | El Salvador             |  |                    | 99    | % |  |  | 99    | %
|Trans American Airlines S.A.                  |  | Peru                    |  |                    | 100   | % |  |  | 100   | %
|VuMarsat S.A.                                |  | Costa Rica              |  |                    | 100   | % |  |  | 100   | %

On April 19, 2013, Avianca Leasing, LLC was formed as a limited liability company in the State of
Delaware, United States. On May 10, 2013, Avianca Holdings S.A. completed a $300,000 private offering of Senior Notes under Rule 144A and Regulation S under the U.S. Securities Act of 1933, as amended. Two subsidiaries of Avianca Holdings,
Grupo Taca Holdings, Limited and Avianca Leasing, LLC, are jointly and severally liable under the Senior Notes as coissuers. Avianca Leasing, LLC will not engage in any material business activity other than purchasing, leasing or otherwise
acquiring and/or financing aircraft for use by Avianca, S.A. and its subsidiaries, the incurrence of obligations in connection therewith, including the notes, and activities incidental or ancillary thereto. Therefore, the Company determines it has
control over Avianca Leasing, LLC after assessing the Companys ability to direct the relevant activities of Avianca Leasing, LLC, its exposure and rights to variable returns, and its ability to use its power to affect the amount of the Avianca
Leasing, LLCs returns and so has consolidated the entity in accordance with IFRS 10.

On October 31, 2013, Turbo Aviation One,
Limited and Turbo Aviation Two, Limited were incorporated as private limited companies under the laws of the Republic of Ireland. Both companies are finance vehicles which will be used to acquire ATR 72 aircraft for operation by Avianca Holdings
S.A.s subsidiaries. Turbo Aviation One, Limited and Turbo Aviation Two, Limited are consolidated in the Financial Statements in accordance with IFRS 10. The Company determines it has control over both companies after assessing the
Companys ability to direct the relevant activities, its exposure and rights to variable returns, and its ability to use its power to affect the amount of its returns.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



On October 21, 2014, Avianca Holdings S.A. indirectly acquired 25% of the voting rights
as well as 92.72% of the economic rights in the Mexican airfreight carrier Aerounion.

The Consolidated Financial Statements also include
44 special purpose entities that relate primarily to the Companys aircraft leasing activities. These special purpose entities are created in order to facilitate financing of aircraft with each SPE holding a single aircraft or asset. In
addition the Consolidated Financial Statements includes 89 entities that are mainly investment vehicle, personnel employers and service providers within the Group. The Company determines it has control over these special purpose entities after
assessing the Companys ability to direct their relevant activities, its exposure and rights to variable returns, and its ability to use its power to affect the amount of the special purpose entities returns.



|(b) | Transactions eliminated on consolidation
|--- | ----------------------------------------

Intercompany balances and transactions, and
any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the Consolidated Financial Statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is
no evidence of impairment.



|(c) | Foreign currency
|--- | ----------------

Foreign currency transactions

These Consolidated Financial Statements are presented in US dollars, which is the Companys functional currency.

Transactions in foreign currencies are initially recorded in the functional currency at the respective spot rate of exchange ruling at the date
of the transaction.

Monetary assets and liabilities denominated in foreign currencies are translated to the spot rate of exchange ruling
at the reporting date. All differences are taken to profit or loss. Nonmonetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the initial transaction. Nonmonetary
items measured at a revalued amount in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

Foreign operations

Assets and liabilities of foreign operations included in the Consolidated Statement of Financial Position are translated using the closing
exchange rate on the date of the Consolidated Statement of Financial Position. The revenues and expenses of each income statement account are translated at monthly average rates; and all the resultant exchange differences are shown as a separate
component in other comprehensive income.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(d) | Business combinations
|--- | ---------------------

Business combinations are accounted for using the acquisition
method in accordance with IFRS 3 Business Combinations. The consideration for an acquisition is measured at acquisition date fair value of consideration transferred including the amount of any noncontrolling interests in the
acquiree. The purchase consideration amount under this concept was $35.4 million in 2014. Acquisition costs are expensed as incurred and included in administrative expenses.

When the Company acquires a business, it measures at fair value the financial assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred to the seller, including the amount
recognized for noncontrolling interest over the fair value of identifiable assets acquired and liabilities assumed.

After initial
recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of impairment testing, goodwill acquired is, from the acquisition date, allocated to each of the Companys cashgenerating units that are
expected to benefit from the acquisition, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.



|(e) | Revenue recognition
|--- | -------------------

In accordance with IAS 18, revenue is recognized to the extent that
it is probable that economic benefits will flow to the Company and revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and
excluding taxes or duty. The following specific recognition criteria must also be met before revenue is recognized:



| | (i) | Passenger and cargo transportation
| | --- | ----------------------------------

The Company recognizes revenue from passenger and
cargo transportation as earned when the service is rendered.

The Company is required to charge and collect certain taxes and fees on its
passenger tickets. These taxes and fees include transportation taxes, airport passenger facility charges and arrival and departure taxes. These taxes and fees are legal assessments on the customer. As the Company has a legal obligation to act as a
collection agent with respect to these taxes and fees, such amounts are not included within passenger revenue. The Company records a liability when the amounts are collected and derecognizes the liability when payments are made to the applicable
government agency or operating carrier.

A significant portion of the ticket sales are processed through major credit card companies,
resulting in accounts receivable which are generally shortterm in duration and typically collected prior to the recognition of revenue. Credit risk associated with these receivables is minimal.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Cargo is carried out in a dedicated freighter fleet and, to the extent of excess capacity, in
the bellies of passenger aircraft.



| | (ii) | Aircraft operating leases
| | ---- | -------------------------

Aircraft operating lease income is recognized as other
revenue in the Consolidated Statement of Comprehensive Income when it is earned, according to the terms of each lease agreement.



| | (iii) | Frequent flyer
| | ----- | --------------

The Company operates a frequent flyer loyalty program known as
LifeMiles which is designed to retain and increase travelers loyalty by offering incentives to travelers for their continued patronage. Under the LifeMiles program, miles are earned by flying on the Companys airlines or its
alliance partners and by using the services of program partners for such things as credit card use, hotel stays, car rentals, and other activities. Miles are also directly sold through different distribution channels. Miles earned can be exchanged
for flights or other products or services from alliance partners.

The fair value of consideration in respect of initial sale is allocated
between the miles and other components of the sale including breakage in accordance with IFRS Interpretations Committee 13 Customer loyalty programs. Revenue allocated to the reward credits is deferred within Air traffic liability (see
Note 22) until redemption. Components other than the fair value of Gross Billings are immediately recognized within Revenue. These components correspond to an initial revenue recognition element, related to the marketing attributes of
the miles sold. The amount of revenue deferred is measured by applying statistical techniques based on market approach using observable information in accordance with IFRS 13 Fair Value Measurements. Inputs to the models include assumptions based on
managements expected redemption rates and customer preferences. The amount of revenue recognized related to breakage is based on the number of miles redeemed in a period in relation to the total number expected to be redeemed.



|(f) | Air traffic liability
|--- | ---------------------

Passenger revenue is recognized when transportation is provided
rather than when a ticket is sold. Revenue from the sale of passenger tickets that have not been used, or the amount of revenue attributable to the unused portion of a ticket sold, is deferred, and the respective amount is reflected as Air
traffic liability in the Consolidated Statement of Financial Position. Air traffic liability also includes deferred revenue from loyalty program reward credits as described in note 3(e) (iii).

Fares for unused tickets that are expected to expire are recognized as revenue based on historical data and experience. The Company performs
periodic evaluations of this liability, and any resulting adjustments, which can be significant, are recorded in the Consolidated Statement of Comprehensive Income. These adjustments relate primarily to the differences arising from actual events and
circumstances such as historical fare sale activity and customer travel patterns which may result in refunds, exchanges or forfeited tickets differing significantly from estimates. The Company evaluates its estimates and assumptions and adjusts air
traffic liability and passenger revenues as necessary.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(g) | Income tax
|--- | ----------

Income tax expense comprises current and deferred taxes and is accounted for
in accordance with IAS 12 Income Taxes.



| | (i) | Current income tax
| | --- | ------------------

Current income tax assets and liabilities for the current period are
measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the
Company operates and generates taxable income.

Current income tax relating to items recognized directly in equity or in other
comprehensive income is recognized in the Consolidated Statement of Changes in Equity or Consolidated Statement of Comprehensive Income, respectively. Management periodically evaluates positions taken in the tax returns with respect to situations in
which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.



| | (ii) | Deferred income tax
| | ---- | -------------------

Deferred tax is recognized for temporary differences between the
tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax assets are recognized to the
extent that is probable that the temporary differences, the carry forward of unused tax credits and any unused tax losses can be utilized, except:



| |  |  | Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In respect of taxable temporary differences associated with investments in subsidiaries, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences
will not reverse in the foreseeable future.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, using tax laws enacted or substantively enacted at the reporting date.

The carrying amount of
deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax
assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Deferred tax relating to items recognized outside profit or loss is recognized in correlation
to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they relate to taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but the Company intends to settle current tax liabilities and assets
on a net basis or their tax assets and liabilities will be realized simultaneously.



|(h) | Property and equipment
|--- | ----------------------



| | (i) | Recognition and measurement
| | --- | ---------------------------

Flight equipment, property and other equipment are measured
at cost less accumulated depreciation and accumulated impairment losses in accordance with IAS 16 Property, Plant and Equipment.

Property, operating equipment, and improvements that are being built or developed for future use by the Company are recorded at cost as
underconstruction assets. When underconstruction assets are ready for use, the accumulated cost is reclassified to the respective property and equipment category.

An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or disposal. Gain
and losses on disposal of an item of flight equipment, property and equipment are determined by comparing the proceeds from disposal with the carrying amount.



| | (ii) | Subsequent costs
| | ---- | ----------------

The costs incurred for major maintenance of an aircrafts
fuselage and engines are capitalized and depreciated over the shorter period to the next scheduled maintenance or return of the asset. The depreciation rate is determined according to the assets expected useful life based on projected cycles
and flight hours. Routine maintenance expenses of aircraft and engines are charged to income as incurred.



| | (iii) | Depreciation
| | ----- | ------------

Depreciation is calculated over the depreciable amount, which is the cost
of an asset, or other amount substituted for cost, less its residual value.

Depreciation is recognized in the Consolidated Statement of
Comprehensive Income on a straightline basis over the estimated useful lives of flight equipment, property and other equipment, since this method most closely reflects the expected pattern of consumption of the future economic benefits
embodied in the asset.

Rotable spare parts for flight equipment are depreciated on the straightline method, using rates that
allocate the cost of these assets over the estimated useful life of the related aircraft. Land is not depreciated.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



During 2013, due to higher usage of the Airbus A320 family aircraft, the Company reviewed its
estimated useful life and residual value of the fleet adjusting such estimates from 30 to 25 years and from 15% to 20%, respectively. In accordance with IAS 8, changes in estimates are applied prospectively. As of December 31, 2013, the effect
of this change in estimates amounted to $7,706.

Estimated useful lives are as follows:



|                                |  |                                                                                      
|------------------------------- |  | -------------------------------------------------------------------------------------
|                                |  | Estimated useful life (years)                                                        
|Flight equipment:               |  |                                                                                      
|Short and mediumhaul aircraft  |  | 10  30                                                                              
|Longhaul aircraft              |  | 30                                                                                   
|Aircraft components and engines |  | Useful life of fleet associated with component or engines                            
|Aircraft major repairs          |  | 4  12                                                                               
|Leasehold improvements          |  | Lesser of remaining lease term and estimated useful life of the leasehold improvement
|Property                        |  | 20                                                                                   
|Administrative buildings        |  | 50                                                                                   
|Vehicles                        |  | 4  10                                                                               
|Machinery and equipment         |  | 4  10                                                                               

Residual values, amortization methods and useful lives of the assets are reviewed and adjusted, if appropriate,
at each reporting date.

The carrying value of flight equipment, property and other equipment is reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable and the carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.

The Company receives credits from manufacturers on acquisition of certain aircraft and engines that may be used for the payment of maintenance
services, training, acquisition of spare parts and others. These credits are recorded as a reduction the cost of acquisition of the related aircraft and engines and against other accounts receivable. These amounts are then charged to expense or
recorded as an asset, when the credits are used to purchase additional goods or services. These credits are recorded within other liabilities in the Consolidated Statement of Financial Position when awarded by manufacturers.



| | (iv) | Revaluation and other reserves
| | ---- | ------------------------------

Administrative property in Bogota, El Salvador, and San
Jose is recorded at fair value less accumulated depreciation on buildings and impairment losses recognized at the date of revaluation. Valuations are performed with sufficient frequency to ensure that the fair value of a revalued asset does not
differ materially from its carrying amount. A revaluation



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



reserve is recorded in other comprehensive income and credited to the asset revaluation reserve in equity. However, to the extent that it reverses a revaluation deficit of the same asset
previously recognized in profit or loss, the increase is recognized in profit and loss. A revaluation deficit is recognized in the income statement, except to the extent that it offsets an existing surplus on the same asset recognized in the asset
revaluation reserve. Upon disposal, any revaluation reserve relating to the particular asset being sold is transferred to retained earnings.



|(i) | Leased assets
|--- | -------------

Leases in terms of which the Company assumes substantially all the risks
and rewards of ownership are classified as finance leases in accordance with IAS 17 Leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum
lease payments.

Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a constant
rate of interest on the remaining balance of the liability. Finance charges are recognized in interest (expense) income in the Consolidated Statement of Comprehensive Income.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Company will obtain
ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease term.

Operating lease payments are recognized as an operating expense in the Consolidated Statement of Comprehensive Income on a straightline
basis over the lease term.

Gains or losses related to saleleaseback transactions classified as an operating lease after the sale are
accounted for as follows:



| | (i) | They are immediately recognized as other (expense) income when it is clear that the transaction is established at fair value;
| | --- | -----------------------------------------------------------------------------------------------------------------------------



| | (ii) | If the sale price is below fair value, any profit or loss is immediately recognized as other (expense) income, however, if the loss is compensated by future lease payments at below market price, it is deferred and
amortized in proportion to the lease payments over the contractual lease term;
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | In the event of the sale price is higher than the fair value of the asset, the value exceeding the fair value is deferred and amortized during the period when the asset is expected to be used. The amortization of the
gain is recorded as a reduction in lease expenses.
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If the saleleaseback transactions result in financial lease, any
excess proceeds over the carrying amount shall be deferred and amortized over the lease term. During the years ended December 31, 2014 and 2013, the Company recognized a net gain of $602 and $3,694 related to saleandleaseback
transactions, which are recognized in the Statement of Comprehensive Income. All saleandleaseback transactions resulted in operating leasebacks.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(j) | Borrowing costs
|--- | ---------------

Borrowing costs directly attributable to the acquisition, construction
or production of a qualifying asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective assets in accordance with IAS 23 Borrowing Costs. All
other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.



|(k) | Intangible assets
|--- | -----------------

Intangible assets acquired separately are initially measured at cost
in accordance with IAS 38 Intangible Assets. The cost of intangible assets acquired in a business combination is their fair value as at the date of acquisition. Internally generated intangible assets, excluding capitalized development
costs, are not capitalized and the related expenditure is reflected in the Consolidated Statement of Comprehensive Income in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortized over their useful economic lives and assessed for impairment whenever there is an indication
that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or in the
expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense on
intangible assets with finite lives is recognized in the Consolidated Statement of Comprehensive Income within depreciation and amortization.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the
cashgenerating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.

Gains and losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognized in the Consolidated Statement of Comprehensive Income when the asset is derecognized.

The Companys intangible assets include the following:



| | (i) | Software
| | --- | --------

Acquired computer software licenses are capitalized on the basis of cost
incurred to acquire, implement and bring the software into use. Costs associated with maintaining computer software programs are expensed as incurred. In case of development or improvement to systems that will generate probable future economic
benefits, the Company capitalizes software development costs, including directly attributable expenditures on materials, labor, and other direct costs.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Acquired software cost is amortized on a straight line basis over its useful life, with a
maximum of five years.

Licenses and software rights acquired by the Company have finite useful lives and are amortized on a
straightline basis over the term of the contract. Amortization expense is recognized in the Consolidated Statement of Comprehensive Income.



| | (ii) | Routes and trademarks
| | ---- | ---------------------

Routes and trademarks are carried at cost, less any accumulated
amortization and impairment. The useful life of intangible assets associated with routes and trademark rights are based on Managements assumptions of estimated future economic benefits. The intangible assets are amortized over their useful
lives of between two and thirteen years. Certain routes and trademarks have indefinite useful lives and therefore are not amortized, but tested for impairment at least at the end of each reporting period. The assessment of indefinite life is
reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.



| | (iii) | Contractbased intangible assets
| | ----- | --------------------------------

The useful life of intangible assets associated
with contract rights and obligations is based on the term of the contract and are carried at cost, less accumulated amortization and related impairment.



|(l) | Financial instruments  initial recognition and subsequent measurement
|--- | ----------------------------------------------------------------------



| | (i) | Financial assets
| | --- | ----------------

Financial assets within the scope of IAS 39 Financial
Instruments: Recognition and Measurement are classified into one of the following categories upon initial recognition: (a) financial assets at fair value through profit or loss, (b) loans and receivables,
(c) heldtomaturity investments, (d) availableforsale financial assets.

Purchases or sales of financial
assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognized on the trade date, i.e., the date that the Company commits to purchase or sell the asset.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Subsequent measurement

For purposes of subsequent measurement financial assets are classified in four categories:



| |  |  | Financial assets at fair value through profit or loss
| | - |  | -----------------------------------------------------



| |  |  | Loans and receivables
| | - |  | ---------------------



| |  |  | Heldtomaturity investments
| | - |  | ----------------------------



| |  |  | Available for sale financial assets
| | - |  | -----------------------------------

Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon
initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. This category includes derivative financial instruments
entered into by the Company that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Derivatives, including those designated as hedging instruments in hedge relationships are also classified as fair value through
profit or loss except for the effective portion of cash flow hedges, which is recognized in OCI and later reclassified to profit or loss when the hedge item affects profit or loss. Financial assets at fair value through profit or loss are measured
at fair value and changes therein, which take place into account any dividend income, are recognized in the Consolidated Statement of Comprehensive Income as financial income or financial costs.

The Company does not hold or issue derivative instruments for trading purposes, however, certain derivative contracts are not designated as
hedges for accounting purposes. Such derivative instruments are designated as financial instruments at fair value through profit or loss.

Loans and receivables

Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market.
Such assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition receivables are measured at amortized cost using the effective interest rate method, less a provision for
impairment, if any.

Loans and receivables comprise cash and cash equivalents, deposits and trade and other receivables.

Heldtomaturity financial assets

If the Company has the positive intent and ability to hold debt securities to maturity, then such financial assets are classified as
heldtomaturity. Heldtomaturity financial assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, heldtomaturity financial assets are
measured at amortized cost using the effective interest method, less any impairment losses.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Availableforsale financial assets

Availableforsale financial assets are nonderivative financial assets that are designated as availableforsale and
that are not classified in any of the previous categories. The Companys investments in equity securities and certain debt securities are classified as availableforsale financial assets. Subsequent to initial recognition, such
assets are measured at fair value and changes therein, other than impairment losses, are recognized in other comprehensive income and included within equity. When an investment is derecognized, the cumulative gain or loss in other comprehensive
income is transferred to the Consolidated Statement of Comprehensive Income.



| | (ii) | Impairment of financial assets
| | ---- | ------------------------------

Financial assets carried at amortized cost

For financial assets carried at amortized cost, the Company first assesses whether objective evidence of impairment exists either individually
for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Company determines that no objective evidence of impairment exists for an individually assessed financial
asset, the asset is grouped with other financial assets with similar credit risk characteristics and collectively assessed for impairment. Assets that are individually assessed for impairment are not included in a collective assessment of
impairment.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the difference
between the assets carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the
financial assets original effective interest rate. If a loan has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate (EIR).

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognized in the
Consolidated Statement of Comprehensive Income. Interest income continues to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future cash flows for purpose of measuring the impairment loss. The
interest income is recorded as part of financial income in the Consolidated Statement of Comprehensive Income.

If, in a subsequent year,
the amount of the estimated impairment loss decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed with the amount of the reversal recognized in the Consolidated Statement
of Comprehensive Income.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Availableforsale financial assets

Impairment losses on availableforsale financial assets are recognized by reclassifying the losses accumulated in the fair value
reserve in equity to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortization, and the current fair value, less any
impairment loss recognized previously. Changes in cumulative impairment losses attributable to application of the effective interest method are reflected as a component of interest income.

If, in a subsequent period, the fair value of an impaired availableforsale debt security increases and the increase can be related
objectively to an event occurring after the impairment loss was recognized, then the impairment loss is reversed, with the amount of the reversal recognized in the Consolidated Statement of Comprehensive Income. However, any subsequent recovery in
the fair value of an impaired availableforsale equity security is recognized in other comprehensive income.

Derecognition

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognized
when:



| |  |  | The rights to receive cash flows from the asset have expired.
| | - |  | -------------------------------------------------------------



| |  |  | The Company has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a
passthrough arrangement; and either (a) the Company has transferred substantially all the risks and rewards of the asset, or (b) the Company has neither transferred nor retained substantially all the risks and rewards of
the asset, but has transferred control of the asset.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

When the Company has transferred its rights to receive cash flows from
an asset or has entered into a passthrough arrangement, and it has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of it, the asset is recognized to the extent of the
Companys continuing involvement in it.

In that case, an associated liability is also recognized. The transferred asset and the
associated liability are measured on a basis that reflects the rights and obligations which have been retained.

Continuing involvement
that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Company could be required to be repay.



| | (iii) | Financial liabilities
| | ----- | ---------------------

Financial liabilities within the scope of IAS 39 are measured at
amortized cost using the effective interest method, except for liabilities classified as financial liabilities at fair value through profit or loss, loan commitments, and financial guarantee contracts. The Company determines the classification of
its financial liabilities at initial recognition.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



All financial liabilities are recognized initially at fair value including directly
attributable transaction costs.

The Companys financial liabilities include trade and other payables, bank overdrafts, loans and
borrowings, financial guarantee contracts, derivative financial instruments and finance lease obligations.

Subsequent measurement

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated
upon initial recognition as at fair value through profit or loss. This category includes derivative financial instruments entered into by the Company that are not designated as hedging instruments in hedge relationships. Separated embedded
derivatives are also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on
liabilities held for trading are recognized in the Consolidated Statement of Comprehensive Income.

The Company has not designated any
financial liabilities upon initial recognition as at fair value through profit or loss.

Loans and borrowings carried at amortized cost

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective
interest rate method. Gains and losses are recognized in the Consolidated Statement of Comprehensive Income when the liabilities are derecognized as well as through the EIR amortization process.

Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the
EIR. The EIR amortization is included in interest expense in the Consolidated Statement of Comprehensive Income.

Derecognition

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and
the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the Consolidated Statement of Comprehensive Income.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



| | (i) | Offsetting of financial assets and financial liabilities
| | --- | --------------------------------------------------------

Financial assets and
financial liabilities are offset and the net amount reported in the Consolidated Statement of Financial Position if, and only if, there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a
net basis, or to realize the assets and settle the liabilities simultaneously.



| | (ii) | Fair value of financial instruments
| | ---- | -----------------------------------

The fair value of financial instruments that are
traded in active markets at each reporting date is determined by reference to quoted market prices or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques
may include using recent arms length market transactions; reference to the current fair value of another instrument that is substantially the same; a discounted cash flow analysis or other valuation models.

An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 30.



|(m) | Derivative financial instruments and hedge accounting
|--- | -----------------------------------------------------

The Company uses derivative
financial instruments such as forward currency contracts, interest rate contracts and forward commodity contracts to hedge its foreign currency risks, interest rate risks and commodity price risks, respectively. Such derivative financial instruments
are initially recognized at fair value on the date on which a derivative contract is entered into. Subsequent to initial recognition, derivatives are carried at fair value as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.

Commodity contracts that are entered into and continue to be held for the purpose of the
receipt or delivery of a nonfinancial item in accordance with the Companys expected purchase, sale or usage requirements are held at cost.

Any gains or losses arising from changes in the fair value of derivatives are taken directly into the Consolidated Statement of Comprehensive
Income, except for the effective portion of derivatives assigned as cash flow hedges, which is recognized in other comprehensive income.

Cash flow hedges

At the
inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in the hedging instruments fair value in offsetting the exposure
to changes in the hedged items cash flows



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows and are assessed on an ongoing basis to determine that they actually
have been highly effective throughout the financial reporting periods for which they were designated.

Cash flow hedges which meet the
strict criteria for hedge accounting are accounted for as follows:

The effective portion of the gain or loss on the hedging instrument is
recognized directly as other comprehensive income in the equity, while any ineffective portion of cash flow hedge related to operating and financing activities is recognized immediately in the Consolidated Statement of Comprehensive Income.

Amounts recognized as other comprehensive income are transferred to the Consolidated Statement of Comprehensive Income when the hedged
transaction affects earnings, such as when the hedged financial income or financial expense is recognized or when a forecast sale occurs. Where the hedged item is the cost of a nonfinancial asset or nonfinancial liability, the amounts
recognized as other comprehensive income are transferred to the initial carrying amount of the nonfinancial asset or liability.

If
the forecast transaction or firm commitment is no longer expected to occur, the cumulative gain or loss previously recognized in equity is transferred to the Consolidated Statement of Comprehensive Income. If the hedging instrument expires or is
sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any cumulative gain or loss previously recognized in other comprehensive income remains in other comprehensive income until the forecast
transaction or firm commitment affects profit or loss.

The Company uses forward currency contracts and cross currency swaps as hedges of
its exposure to foreign currency risk in forecasted transactions and firm commitments, as well as forward commodity contracts for its exposure to volatility in the commodity prices. Refer to Note 28 for more details.

Current versus noncurrent classification

Derivative instruments that are not designated as effective hedging instruments are classified as current or noncurrent or separated into
a current and noncurrent portion based on an assessment of the facts and circumstances (i.e., the underlying contracted cash flows).

Where the Company will hold a derivative as an economic hedge (and does not apply hedge accounting) for a period beyond 12 months after the
reporting date, the derivative is classified as noncurrent (or separated into current and noncurrent portions) consistent with the classification of the underlying item.

Embedded derivatives are separated from the host contract and accounted for separately if the economic characteristics and risks of the host
contract and the embedded derivative are not closely related, a separate instrument with the same terms as the embedded derivative would meet the definition of a derivative, and the combined instrument is not measured at fair value through profit or
loss.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Derivative instruments that are designated as, and are effective hedging instruments, are
classified consistently with the classification of the underlying hedged item. The derivative instrument is separated into a current portion and a noncurrent portion only if a reliable allocation can be made.



|(n) | Expendable spare parts and supplies
|--- | -----------------------------------

Expendable spare parts relating to flight equipment
are measured at the lower of average cost and net realizable value. Net realizable value is the estimated base stock cost reduced by the allowance for obsolescence.



|(o) | Impairment of nonfinancial assets
|--- | ----------------------------------

The Company assesses in accordance with IAS 36
Impairment of Assets at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assets
recoverable amount. An assets recoverable amount is the higher of an assets or cashgenerating units (CGU) fair value less costs to sell and its value in use and is determined for an individual asset, unless the
asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to
its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a
pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs to sell, recent market transactions are taken into account, if available. If no
such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples, or other available fair value indicators.

Impairment losses of continuing operations, including impairment on inventories, are recognized in the Consolidated Statement of Comprehensive
Income in those expense categories consistent with the nature of the impaired asset, except for a property previously revalued where the revaluation was taken to other comprehensive income. In this case, the impairment is also recognized in other
comprehensive income up to the amount of any previous revaluation.

For assets excluding goodwill, an assessment is made at each reporting
date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the assets or cashgenerating units recoverable
amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the assets recoverable amount since the last impairment loss was recognized. The reversal is limited so that the
carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is
recognized in the income statement unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The following criteria are also applied in assessing impairment of specific assets:

Goodwill is tested for impairment annually as of the year end and when circumstances indicate that the carrying value of the cash generating
unit to which it pertains may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each cashgenerating unit (or group of cashgenerating units) to which the goodwill relates. Where the recoverable
amount of the cash generating unit is less than their carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed in future periods.

Management has considered the impact of greater than forecasted variations in relevant assumptions in assessing the CGUs recoverable
amount. As a result of the analysis performed a reasonably possible change in key assumptions would not cause the CGUs carrying amount to exceed its recoverable amount.



|(p) | Cash and cash equivalents
|--- | -------------------------

Cash and cash equivalents in the statement of financial
position comprise cash at banks and on hand and shortterm deposits with original maturity of three months or less, which are subject to an insignificant risk of change in value.

For the purpose of the Consolidated Statement Cash Flows, cash and cash equivalents consist of cash and shortterm deposits as defined
above, net of outstanding bank overdrafts, if any.



|(q) | Maintenance deposits
|--- | --------------------

Maintenance deposits correspond to deposits paid to lessors based
on cycles, flight hours, or fixed monthly amounts, depending on the specific nature of each provision. Rates used for the calculation and monthly amounts are specified in each lease agreement. Certain maintenance deposits paid to aircraft lessors
are recorded within Deposits and other assets to the extent that such amounts are expected to be used to fund future maintenance activities. Deposits that are not probable of being used to fund future maintenance activities are expensed
as incurred.

The maintenance deposits refer to payments made by the Company to leasing companies to be used in future aircraft and engine
maintenance work. Management performs regular reviews of the recovery of maintenance deposits and believes that the values reflected in the Consolidated Statement of Financial Position are recoverable. These deposits are used to pay for maintenance
performed, and might be reimbursed to the Company after termination of the contracts. Certain lease agreements establish that the existing deposits, in excess of maintenance costs are not refundable. Such excess occurs when the amounts used in
future maintenance services are lower than the amounts deposited. Any excess amounts expected to be retained by the lessor upon the lease contract termination date, which are not considered material, are recognized as additional aircraft lease
expense. Payments related to maintenance that the Company does not expect to perform are recognized when paid as additional rental expense. Some of the aircraft lease agreements do not require maintenance deposits.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(r) | Security deposits for aircraft and engines
|--- | ------------------------------------------

The Company must pay security deposits for
certain aircraft and engine lease agreements. Reimbursable aircraft deposits are stated at cost.

Deposits that have fixed or determinable
payments that are not quoted in an active market are classified as loans and receivables. Such assets are measured at amortized cost using the effective interest method, less any impairment. Interest income is recognized by applying the
effective interest rate.

Deposits for guarantee and collateral for lease agreements

Deposits for guarantee and collateral are represented by amounts deposited with lessors, as required at the inception of the lease agreements.
The deposits are typically denominated in U.S. Dollars, do not bear interest and are reimbursable to the Company upon termination of the agreements.



|(s) | Provisions
|--- | ----------

A provision is recognized if, as a result of a past event, the Company has a
present legal or constructive obligation that can be estimated reliably, and it is more likely than not that an outflow of economic benefits will be required to settle the obligation in accordance with IAS 37 Provisions, Contingent Liabilities
and Contingent Assets.

Provisions are set up for all legal claims related to lawsuits for which it is probable that an outflow of
funds will be required to settle the legal claims obligation and a reasonable estimate can be made. The assessment of probability of loss includes assessing the available evidence, the hierarchy of laws, available case law, the most recent court
decision and their relevance in the legal system, as well as the assessment of legal counsel.

If the effect of the time value of money is
material, provisions are discounted using a current pretax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a
financial cost.

For certain operating leases, the Company is contractually obligated to return aircraft in a defined condition. The
Company accrues for restitution costs related to aircraft held under operating leases at the time the asset does not meet the return conditions criteria and throughout the remaining duration of the lease. Restitution costs are based on the net
present value of the estimated average costs of returning the aircraft and are recognized in the Consolidated Statement of Comprehensive Income in Maintenance and repairs. These costs are reviewed annually and adjusted as appropriate.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(t) | Employee benefits
|--- | -----------------

The Company sponsors defined benefit pension plans, which require
contributions to be made to separately administered funds. The Company has also agreed to provide certain additional postemployment benefits to senior employees in Colombia. These benefits are unfunded. The cost of providing benefits under the
defined benefit plans is determined separately for each plan using the projected unit credit cost method. Actuarial gains and losses for defined benefit plans are recognized in full in the period in which they occur in other comprehensive income.

The defined benefit asset or liability comprises the present value of the defined benefit obligation (using a discount rate based on
Colombian Government bonds), and less the fair value of plan assets out of which the obligations are to be settled. Plan assets are held by the Social Security Institute and private pension funds are not available to the creditors of the Company,
nor can they be paid directly to the Company. Fair value is based on market price information and in the case of quoted securities on the published bid price. The value of any defined benefit asset recognized is restricted and the present value of
any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.

Under IAS 19
(issued in June 2011 and amended in November 2013), the Company determines the net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at
the beginning of the annual period to the net defined benefit liability (asset) at the beginning of the annual period. It takes into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and
benefit payments. The net interest on the net defined benefit liability (asset) comprises:



| |  |  | interest income on plan assets.
| | - |  | -------------------------------



| |  |  | interest cost on the defined benefit obligation; and
| | - |  | ----------------------------------------------------



| |  |  | interest on the effect of the asset ceiling
| | - |  | -------------------------------------------

Additionally the Company offers the following
employee benefits:



| | (i) | Defined contribution plans
| | --- | --------------------------

Obligations for contributions to defined contribution
pension plans are recognized as an expense in the Consolidated Statement of Comprehensive Income when they are due.



| | (ii) | Termination benefits
| | ---- | --------------------

Termination benefits are recognized as an expense at the earlier
of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognizes any related restructuring costs.



|(u) | Share based payments
|--- | --------------------

Since March 2012, the Company has operated a share based payments
plan (the Share Plan) whereby eligible participants receive cash payments if certain market and nonmarket vesting conditions are met. The Company accounts for the Share Plan as a cashsettled share based payment in accordance
with the provisions of IFRS 2 Sharebased payments, whereby the Company accrues a liability at the end of each reporting period based on the estimated fair value of the awards expected to be redeemed, as determined using the
TurnbullWakeman pricing model.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(v) | Prepaid expenses
|--- | ----------------



| | (i) | Prepaid commissions
| | --- | -------------------

Commissions paid for tickets sold are recorded as prepaid expenses
and expensed when the tickets are used.



| | (ii) | Prepaid rent
| | ---- | ------------

Prepaid rent for aircraft corresponds to prepaid contractual amounts that
will be applied to future lease payments over a term of less than one year.



|(w) | Interest income and interest expense
|--- | ------------------------------------

Interest income comprises interest income on funds
invested (including availableforsale financial assets), changes in the fair value of financial assets at fair value through the Consolidated Statement of Comprehensive Income and gains on interest rate hedging instruments that are
recognized in the Consolidated Statement of Comprehensive Income. Interest income is recognized as accrued in the Consolidated Statement of Comprehensive Income, using the effective interest rate method.

Interest expense comprises interest expense on borrowings, unwinding of the discount on provisions, changes in the fair value of financial
assets at fair value through the Consolidated Statement of Comprehensive Income, and losses on interest rate hedging instruments that are recognized in the Consolidated Statement of Comprehensive Income. Borrowing costs that are not directly
attributable to the acquisition, construction or production of a qualifying asset are recognized in the Consolidated Statement of Comprehensive Income using the effective interest method.



|(4) | New and amended standards and interpretations
|--- | ---------------------------------------------

The Company applied for the first time
certain standards and amendments, which are effective for annual periods beginning on or after January 1, 2014. The nature and the impact of each new standard or amendment is described below:

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27)

These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under IFRS
10 Consolidated Financial Statements and must be applied retrospectively, subject to certain transition relief. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. These
amendments have no impact to the Company, since none of the entities in the Company qualifies to be an investment entity under IFRS 10.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Offsetting Financial Assets and Financial LiabilitiesAmendments
to IAS 32

These amendments clarify the meaning of currently has a legally enforceable right to setoff and the
criteria for nonsimultaneous settlement mechanisms of clearing houses to qualify for offsetting. These amendments have no impact on the Company.

Novation of Derivatives and Continuation of Hedge Accounting  Amendments to IAS 39

These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets
certain criteria. These amendments have no impact to the Company as the Company has not novated its derivatives during the current or prior periods.

IFRIC 21 Levies

IFRIC 21 is applicable to all levies imposed by governments under legislation, other than outflows that are within the scope of other standards
(e.g., IAS 12 Income Taxes) and fines or other penalties for breaches of legislation.

The interpretation clarifies that an entity
recognizes a liability for a levy no earlier than when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment
occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, no liability is recognized before the specified minimum threshold is reached. This interpretation had no
impact on the Company as it has applied recognition principles under IAS 37 Provisions, Contingent Liabilities and Contingent Assets consistent with the requirements of IFRIC 21 in prior years.

Annual Improvements 20102012 Cycle

In the 20102012 annual improvements cycle, the IASB issued seven amendments to six standards, which included an amendment to IFRS 13 Fair
Value Measurement. The amendment to IFRS 13 is effective immediately and, thus, for periods beginning at January 1, 2014, and it clarifies in the Basis for Conclusions that shortterm receivables and payables with no stated interest rates
can be measured at invoice amounts when the effect of discounting is immaterial. This amendment to IFRS 13 has no impact on the Company.

Annual Improvements 20112013 Cycle

In the 20112013 annual improvements cycle, the IASB issued four amendments to four standards, which included an amendment to IFRS 1
Firsttime Adoption of International Financial Reporting Standards. The amendment to IFRS 1 is effective immediately and, thus, for periods beginning at January 1, 2014, and clarifies in the Basis for Conclusions that an entity may choose
to apply either a current standard or a new standard that is not yet mandatory, but permits early application, provided either standard is applied consistently throughout the periods presented in the entitys first IFRS financial statements.
This amendment to IFRS 1 has no impact on the Company, since the Company is an existing IFRS preparer.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Standards issued but not yet effective

IFRS 9 Financial Instruments

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments. The IASB has previously published versions of IFRS 9 that
introduced new classification and measurement requirements (in 2009 and 2010) and a new hedge accounting model (in 2013). The July 2014 publication represents the final version of the Standard, replaces earlier versions of IFRS 9 and completes the
IASBs project to replace IAS 39 Financial Instruments: Recognition and measurement. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Retrospective application is required, but
comparative information is not compulsory. Early application of previous versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before February 1, 2015. The Company is currently assessing the impact of IFRS
9 and plans to adopt the new standard on the required effective date.

IFRS 14 Regulatory Deferral

IFRS 14 allows an IFRS firsttime adopter, whose activities are subject to rateregulation, to continue to account, with some limited
changes, in accordance with its previous GAAP, for regulatory deferral account balances both on initial adoption of IFRS and in subsequent financial statement. IFRS 14 is effective for annual periods beginning on or after January 1, 2016. Since
the Company is an existing IFRS preparer, this standard would have no impact on Company financials statements.

IFRS 15 Revenue from
Contracts with Customers

IFRS 15 specifies how to recognize revenue, requiring to provide users of financial statements with more
informative, relevant disclosures. The standard provides a single, principles based, five step model to be applied to revenue arising from contracts with customers. Under IFRS 15 revenue is recognized at an amount that reflects the consideration to
which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognizing revenue. The new revenue standard is applicable to all
entities and will supersede all current revenue recognition requirements under IFRS. The standard was issued in May 2014. Either a full or modified retrospective application is required for annual periods beginning on or after January 1, 2017
with early adoption permitted. The Company is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date.

Amendments to IFRS 11 Joint Arrangements: Accounting for Acquisitions of Interests

The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the
activity of the joint operation constitutes a business must apply the relevant IFRS 3 principles for business combinations accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the
acquisition of an additional interest in the same joint operation while joint control is retained. In addition, a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including
the reporting entity, are under common control of the same ultimate controlling party. The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint
operation and are prospectively effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact on Company financial statements.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation
and Amortization

The amendments clarify the principle in IAS 16 and IAS 38 that revenue reflects a pattern of economic benefits
that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenuebased method cannot be used to depreciate property, plant and
equipment and may only be used in very limited circumstances to amortize intangible assets. On May 12, 2014, the IASB published the final amendments to IAS 16 and IAS 38. The amendments are effective prospectively for annual periods beginning
on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact to the Company given that the Company has not used a revenuebased method to depreciate its noncurrent assets.

Amendments to IAS 16 and IAS 41 Agriculture: Bearer Plants

The amendments change the accounting requirements for biological assets that meet the definition of bearer plants. The amendments are
retrospectively effective for annual periods beginning on or after January 1, 2016, with early adoption permitted. These amendments are not expected to have any impact to the Company as the Company does not have any bearer plants.

Amendments to IAS 27: Equity Method in Separate Financial Statements

The amendments reinstate the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an
entitys separate financial statements. Entities already applying IFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively. Firsttime IFRS adopters electing to
use the equity method in its separate financial statements will be required to apply this method from the date of transition to IFRS. The amendments are effective for annual periods beginning on or after January 1, 2016, with early adoption
permitted. These amendments will not have any impact on the Companys consolidated financial statements.

Amendments to IAS 28
and IFRS 10: Sale or contribution of assets between an investor and its associate or joint venture

The amendments address the
conflict between IFRS 10 and IAS 28 in dealing with the loss of control of a subsidiary that is sold or contributed to an associate or joint venture. The amendments clarify that the gain or loss resulting from the sale or contribution of assets that
constitute a business, as defined in IFRS 3 Business Combinations, between an investor and its associate or joint venture, is recognized in full. Any gain or loss resulting from the sale or contribution of assets that do not constitute a business,
however, is recognized only to the extent of unrelated investors interests in the associate or joint venture. These amendments are effective for annual periods beginning on or after January 1, 2016, with early application permitted. These
amendments will be applied prospectively in accounting the loss of control in any subsidiary, associate or joint venture of the Company.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Amendments to IAS 1: Disclosures initiative

The amendments clarify materiality requirements. In addition, the amendments introduce a clarification that the list of line items to be
presented in the statement of financial position and statement of profit and loss and other comprehensive income can be disaggregated and aggregated as relevant and additional guidance on subtotals in these statements and clarify that an
entitys share of OCI of equityaccounted associates and joint ventures should be presented in aggregate as single line items based on whether or not it will subsequently be reclassified to profit or loss. Finally, the amendments add
additional examples of possible ways of ordering the notes to clarify that understandability and comparability should be considered when determining the order of the notes. These amendments are effective for annual periods beginning on or after
January 1, 2016, with earlier application permitted. Application of the amendments need not be disclosed. The Company is currently assessing the impact of IAS 1 and plans to adopt the new standards on the required effective date.

Recoverable Amount Disclosures for NonFinancial AssetsAmendments to IAS 36

These amendments remove the unintended consequences of IFRS 13 Fair Value Measurement on the disclosures required under IAS 36 Impairment of
Assets. In addition, these amendments require disclosure of the recoverable amounts for the assets or cashgenerating units (CGUs) for which an impairment loss has been recognized or reversed during the period. The Company has not recognized or
reversed impairment loss as of December 31, 2014. Accordingly, these amendments will be considered for future disclosures but have no impact on the Companys financial position or results of operations.

Amendments to IAS 19 Defined Benefit Plans: Employee Contributions

IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the
contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to
recognize such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is effective for annual periods beginning on or after
July 2014. This amendment was not relevant to the Company, since none of the entities within the Company has defined benefit plans with contributions from employees or third parties.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Annual Improvements 20122014 Cycle

Amendments to IAS 19: Discount rate, regional market issue

In the 20122014 annual improvements cycle, the IASB issued four amendments to four standards, which included an amendment to IAS 19
Employee benefits. This annual improvement clarifies that the high quality corporate bonds used in estimating the discount rate for postemployment benefits should be denominated in the same currency as the benefits to be paid, thus, the depth
of the market for high quality corporate bonds should be assessed at currency level. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. The annual improvement is effective for annual
periods beginning on or after January 1, 2016 and must be applied prospectively. The Company is currently assessing the impact of the amendment and plans to adopt the new standards on the required effective date.

Amendments to IFRS 7: Servicing contracts

The annual improvements to IFRS 7 add additional guidance to clarify whether a servicing contract is continuing involvement in a transferred
asset for the purpose of determining the disclosures required. The amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim financial statements, unless such disclosures provide a significant update to the
information reported in the most recent annual report. The annual improvement is retrospectively effective for annual periods beginning on or after January 1, 2016. It is not expected that these amendments will have an impact on the
Companys consolidated financial statements.

Amendments to IFRS 5: Changes in methods of disposal.

The amendment clarifies that the cases in which an entity reclassifies an asset from held for sale to held for distribution or vice versa not
be considered a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in IFRS 5. The annual improvement is effective for annual periods beginning on or
after January 1, 2016 and must be applied prospectively. It is not expected that these amendments will have an impact on the Companys consolidated financial statements.

The Company has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.



|(5) | Segment information
|--- | -------------------

The Company reports information by segments as established in IFRS
8 Operating Segments. The Company has determined that it has one operating segment: air transportation.

The Companys
revenues by geographic area for the years ended December 31, 2014, 2013 and 2012 are as follows:



|                                  |  |              |           |  |      |   |           |      |  |   |           | 
|--------------------------------- |  | ------------ | --------- |  | ---- | - | --------- | ---- |  | - | --------- | 
|                                  |  | December 31, |          
|                                  |  | 2014         |           |  | 2013 |   |           | 2012 | 
|North America                     |  | $            | 673,824   |  |      | $ | 650,374   |      |  | $ | 596,783   | 
|Central America and the Caribbean |  |              | 528,683   |  |      |   | 619,851   |      |  |   | 613,942   | 
|Colombia                          |  |              | 2,129,000 |  |      |   | 1,841,984 |      |  |   | 1,765,642 | 
|South America (exColombia)       |  |              | 1,042,368 |  |      |   | 1,167,728 |      |  |   | 1,075,801 | 
|Other                             |  |              | 329,696   |  |      |   | 329,667   |      |  |   | 217,488   | 
|                                  |  |              |           |  |      |   |           |      |  |   |           | 
|Total operating revenue           |  | $            | 4,703,571 |  |      | $ | 4,609,604 |      |  | $ | 4,269,656 | 
|                                  |  |              |           |  |      |   |           |      |  |   |           | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The Company allocates revenues by geographic area based on the point of origin of the flight.
Noncurrent assets are composed primarily of aircraft and aeronautical equipment, which are used throughout different countries and are therefore not assignable to any particular geographic area.



|(6) | Financial risk management
|--- | -------------------------

The Company has exposure to different risks from its use of
financial instruments, namely credit risk, liquidity risk, and market risk.

This note presents information about the Companys
exposure to each of the above risks, the Companys objectives, policies and processes for measuring and managing risk, and the Companys management of capital. Further quantitative disclosures are included throughout these Consolidated
Financial Statements.



|(a) | Risk management framework
|--- | -------------------------

The Board of Directors has overall responsibility for the
establishment and oversight of the Companys risk management framework. The Board has established mechanisms for developing and monitoring the Companys risk management policies. The Companys risk management policies are established
to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions
and the Companys activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.



|(b) | Credit risk
|--- | -----------

Credit risk is the risk of financial loss to the Company if a customer or
counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companys receivables from customers and investment in securities. The Company is also exposed to credit risk from its financing
activities, including deposits with banks and financial institutions, and foreign exchange transactions.

The Company minimizes
counterparty credit risk in derivative instruments by entering into transactions with counterparties with which the Company has signed International Swaps and Derivatives Association Master Agreements. Given their high credit ratings,
management does not expect any counterparty to fail to meet its contractual obligations.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The carrying amount of financial assets represents the maximum credit exposure. The maximum
exposure to credit risk at the end of the reporting period is as follows:



|                                                            |  |       |    |  |                  |   |           |                  |  |   |           | 
|----------------------------------------------------------- |  | ----- | -- |  | ---------------- | - | --------- | ---------------- |  | - | --------- | 
|                                                            |  | Notes |    |  | December 31,2014 |   |           | December 31,2013 | 
|Availableforsale securities                               |  |       |    |  |                  | $ | 1,455     |                  |  | $ | 14,878    | 
|Accounts receivable, net of provision for doubtful accounts |  |       | 8  |  |                  |   | 397,575   |                  |  |   | 309,404   | 
|Cash and cash equivalents                                   |  |       | 7  |  |                  |   | 640,891   |                  |  |   | 735,577   | 
|Current restricted cash                                     |  |       | 7  |  |                  |   | 1,987     |                  |  |   | 23,538    | 
|Noncurrent restricted cash                                 |  |       | 13 |  |                  |   | 21,025    |                  |  |   | 42,951    | 
|Fair value of derivative instrumentsassets                 |  |       | 13 |  |                  |   | 4,204     |                  |  |   | 16,598    | 
|                                                            |  |       |    |  |                  |   |           |                  |  |   |           | 
|Total                                                       |  |       |    |  |                  | $ | 1,067,137 |                  |  | $ | 1,142,946 | 
|                                                            |  |       |    |  |                  |   |           |                  |  |   |           | 



|(c) | Receivables, net
|--- | ----------------

The Companys exposure to credit risk is influenced by the
individual characteristics of each customer. The demographics of the Companys customer base, including the default risk of the industry and country in which customers operate, has less of an influence on credit risk.

Additionally, the Company is not exposed to significant concentrations of credit risk since most accounts receivable arise from sales of
airline tickets to individuals through travel agencies in various countries, including virtual agencies and other airlines. These receivables are short term in nature and are generally settled shortly after the sales are made through major credit
card companies.

Cargorelated receivables present a higher credit risk than passenger sales given the nature of processing payment
for these sales. The Company is continuing its implementation of measures to reduce this credit risk for example by reducing the payment terms and affiliating cargo agencies to the IATA Cargo Account Settlement Systems (CASS). CASS is
designed to simplify the billing and settling of accounts between airlines and freight forwarders. It operates through an advanced global webenabled ebilling solution.

There are no significant concentrations of credit risk at the Consolidated Statement of Financial Position date. The maximum exposure to credit
risk is represented by the carrying amount of each financial asset.



|(d) | Liquidity risk
|--- | --------------

Liquidity risk is the risk that the Company will not be able to meet its
financial obligations as they fall due. The Companys approach to managing liquidity risk is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed
conditions, without incurring unacceptable losses or risking damage to the Companys reputation.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The following are the contractual maturities of nonderivative financial liabilities,
including estimated interest payments. Amounts under the Years columns represent the contractual undiscounted cash flows of each liability.

As of December 31, 2014



|                       |  |                |           |  |                       |   |           |     |  |   |           |  |  |       |         |  |      |   |         |                    |  |   |         |  |  |   |           | 
|---------------------- |  | -------------- | --------- |  | --------------------- | - | --------- | --- |  | - | --------- |  |  | ----- | ------- |  | ---- | - | ------- | ------------------ |  | - | ------- |  |  | - | --------- | 
|                       |  | Years          |          
|                       |  | Carryingamount |           |  | Contractualcash flows |   |           | One |  |   | Two       |  |  | Three |         |  | Four |   |         | Five andthereafter | 
|Shortterm borrowings  |  | $              | 133,009   |  |                       | $ | 134,676   |     |  | $ | 134,676   |  |  | $     |        |  |      | $ |        |                    |  | $ |        |  |  | $ |          | 
|Longterm
Debt         |  |                | 2,311,833 |  |                       |   | 2,675,714 |     |  |   | 363,968   |  |  |       | 329,531 |  |      |   | 307,189 |                    |  |   | 300,955 |  |  |   | 1,374,071 | 
|Bonds                  |  |                | 725,735   |  |                       |   | 1,027,219 |     |  |   | 95,277    |  |  |       | 92,157  |  |      |   | 92,409  |                    |  |   | 88,907  |  |  |   | 658,469   | 
|                       |  |                |           |  |                       |   |           |     |  |   |           |  |  |       |         |  |      |   |         |                    |  |   |         |  |  |   |           | 
|Total debt             |  |                | 3,170,577 |  |                       |   | 3,837,609 |     |  |   | 593,921   |  |  |       | 421,688 |  |      |   | 399,598 |                    |  |   | 389,862 |  |  |   | 2,032,540 | 
|Accounts payable       |  |                | 568,661   |  |                       |   | 568,661   |     |  |   | 547,494   |  |  |       | 21,167  |  |      |   |        |                    |  |   |        |  |  |   |          | 
|                       |  |                |           |  |                       |   |           |     |  |   |           |  |  |       |         |  |      |   |         |                    |  |   |         |  |  |   |           | 
|Contractual maturities |  | $              | 3,739,238 |  |                       | $ | 4,406,270 |     |  | $ | 1,141,415 |  |  | $     | 442,855 |  |      | $ | 399,598 |                    |  | $ | 389,862 |  |  | $ | 2,032,540 | 
|                       |  |                |           |  |                       |   |           |     |  |   |           |  |  |       |         |  |      |   |         |                    |  |   |         |  |  |   |           | 

As of December 31, 2013



|                          |  |                |           |  |                       |   |           |     |  |   |         |  |  |       |         |  |      |   |         |                    |  |   |         |  |  |   |           | 
|------------------------- |  | -------------- | --------- |  | --------------------- | - | --------- | --- |  | - | ------- |  |  | ----- | ------- |  | ---- | - | ------- | ------------------ |  | - | ------- |  |  | - | --------- | 
|                          |  | Years          |          
|                          |  | Carryingamount |           |  | Contractualcash flows |   |           | One |  |   | Two     |  |  | Three |         |  | Four |   |         | Five andthereafter | 
|Shortterm borrowings     |  | $              | 38,169    |  |                       | $ | 38,613    |     |  | $ | 38,613  |  |  | $     |        |  |      | $ |        |                    |  | $ |        |  |  | $ |          | 
|Longterm debt            |  |                | 1,663,827 |  |                       |   | 1,909,313 |     |  |   | 284,713 |  |  |       | 269,263 |  |      |   | 234,563 |                    |  |   | 213,430 |  |  |   | 907,344   | 
|Bonds                     |  |                | 558,120   |  |                       |   | 793,450   |     |  |   | 84,250  |  |  |       | 83,597  |  |      |   | 80,316  |                    |  |   | 81,752  |  |  |   | 463,535   | 
|Finance lease liabilities |  |                | 5,379     |  |                       |   | 6,363     |     |  |   | 5,775   |  |  |       | 588     |  |      |   |        |                    |  |   |        |  |  |   |          | 
|                          |  |                |           |  |                       |   |           |     |  |   |         |  |  |       |         |  |      |   |         |                    |  |   |         |  |  |   |           | 
|Total debt                |  |                | 2,265,495 |  |                       |   | 2,747,739 |     |  |   | 413,351 |  |  |       | 353,448 |  |      |   | 314,879 |                    |  |   | 295,182 |  |  |   | 1,370,879 | 
|Accounts payable          |  |                | 511,864   |  |                       |   | 511,864   |     |  |   | 509,129 |  |  |       | 156     |  |      |   | 759     |                    |  |   | 910     |  |  |   | 910       | 
|                          |  |                |           |  |                       |   |           |     |  |   |         |  |  |       |         |  |      |   |         |                    |  |   |         |  |  |   |           | 
|Contractual maturities    |  | $              | 2,777,359 |  |                       | $ | 3,259,603 |     |  | $ | 922,480 |  |  | $     | 353,604 |  |      | $ | 315,638 |                    |  | $ | 296,092 |  |  | $ | 1,371,789 | 
|                          |  |                |           |  |                       |   |           |     |  |   |         |  |  |       |         |  |      |   |         |                    |  |   |         |  |  |   |           | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Sensitivity analysis

As of December 31, 2014 and 2013 an average increase 1% in interest rates on longterm debt would be expected to decrease the
Companys income by $5,459 and $4,597 respectively.

Interest rates for interestbearing financial obligations are as follows:



|                                    |  |                              |  |       |           | 
|----------------------------------- |  | ---------------------------- |  | ----- | --------- | 
|                                    |  | December 31, 2014            | 
|                                    |  | Weightedaverageinterest rate |  | Total |          
|Shortterm borrowings               |  | 2.65%                        |  | $     | 133,009   | 
|Longterm debt and financial leases |  | 3.06%                        |  |       | 2,311,833 | 
|Bonds  Colombia                    |  | 9.69%                        |  |       | 177,641   | 
|Bonds  Luxembourg                  |  | 7.95%                        |  |       | 548,094   | 
|                                    |  |                              |  |       |           | 
|Total                               |  |                              |  | $     | 3,170,577 | 
|                                    |  |                              |  |       |           | 
|                                    | 
|                                    |  | December 31, 2013            | 
|                                    |  | Weightedaverageinterest rate |  | Total |          
|Shortterm borrowings               |  | 2.66%                        |  | $     | 38,169    | 
|Longterm debt and financial leases |  | 3.25%                        |  |       | 1,669,206 | 
|Bonds  Colombia                    |  | 8.10%                        |  |       | 259,494   | 
|Bonds  Luxembourg                  |  | 8.38%                        |  |       | 298,626   | 
|                                    |  |                              |  |       |           | 
|Total                               |  |                              |  | $     | 2,265,495 | 
|                                    |  |                              |  |       |           | 



|(e) | Market risk
|--- | -----------

Market risk is the risk that changes in market prices, such as foreign
currency rates, interest rates and equity prices will affect the Companys income or value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable
parameters, while optimizing the return.

The Company enters into derivative contracts, and also incurs financial liabilities, in order to
manage market risk. The market risk associated with commodityprice and interestrate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(f) | Commodity risk
|--- | --------------

The Company maintains a commoditypricerisk management
strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by commodityprice volatility. The operations of the Company require a significant volume of jet fuel purchases. Price fluctuations of
oil, which are directly related with price fluctuations of jet fuel, cause market values of jet fuel to differ from its cost and cause the actual purchase price of jet fuel to differ from the anticipated price.

All such transactions are carried out within the guidelines set by the Risk Management Committee.

The Company enters into derivative financial instruments using heating oil and jet fuel to reduce the exposure to jet fuel price risks. Such
financial instruments are deemed to be highly effective hedge because changes in their fair value are closely correlated with variations in jet fuel prices. The Company determines fair value of the contracts based on the notional future curves as
observed in the market; gain or loss of hedge instruments are recognized directly in net equity, through other comprehensive income (OCI), based on Hedge Accounting procedures.

Sensitivity analysis

A
change in 1% in jet fuel prices would have increased/decreased profit or loss for the year by $13,458 (2013: $13,258). This calculation assumes that the change occurred at the reporting date and had been applied to risk exposures existing at that
date. This analysis assumes that all other variables remain constant and considers the effect of changes in jet fuel price and underlying hedging contracts. The analysis is performed on the same basis for 2013.



|(g) | Foreign currency risk
|--- | ---------------------

Foreign currency risk is originated when the Company performs
transactions and maintains monetary assets and liabilities in currencies that are different from the functional currency of the Company.

The functional currency used by the Company is the US dollar in terms of setting prices for its services. The Company sells most of its
services in prices equivalent to the US dollar and a large part of its expenses are denominated in US dollars or are indexed to the US dollar, particularly fuel costs, maintenance costs, aircraft leases, aircraft lease payments, insurance and
aircraft components and accessories. Remuneration expenses are denominated in local currencies.

The Company maintains its cargo and
passenger fares in US dollars. Even though sales in domestic markets are made in local currencies, prices are indexed to the US dollar.

The gain or loss in foreign currency is derived primarily from the appreciation or depreciation of the Colombian Peso against the US Dollar,
which is the Companys functional currency and the changes in the foreign exchange mechanisms enacted by the Venezuelan government. For the years ended December 31, 2014 and 2013, the Company recognized a net gain of $10,272 and $23,517,
respectively.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The Supplementary Foreign Currency Administration System (SICAD) is Venezuela ́s
parallel exchange rate system to the Foreign Exchange Administration Commission (CADIVI) system, which supplies companies, organizations, and individuals with the dollar at the official rate. SICAD applies for legal entities domiciled in Venezuela
to obtain foreign currency through special bids, aimed at covering import needs of the real local economy sectors. The Venezuelan government has issued a series of statements with respect to various exchange rates that might be applicable to future
cash remittances. In the first semester of 2014, it was resolved that remittances abroad would be approved at the rate from SICAD and that the CADIVI rate of US$1:VEF4.3 was annulled. The most recent SICAD auction process from December 31,
2014, resulted in an exchange rate of US$1:VEF12.00. Additionally, another new system known as SICAD II was introduced. The most recent SICAD II auction process resulted in an exchange rate of US$1: VEF 49.90.

The Company submits monthly requests to the Venezuelan authorities for the remittance in US dollars of the cash generated in local currency by
Venezuelan subsidiaries. The Company still has a significant outstanding cash balances in Bolivares, and approvals have been obtained for only a portion of the amounts requested for remittance. As of December 31, 2014, the government has
offered the Company a proposal that includes the amounts to be paid over the 2013 outstanding balance. However, the intended payments as a result of the proposed timetable have not been fully accomplished. A summary of our monetary assets holdings
in Venezuela as of December 31, 2014 and 2013 is shown below, together with remittance status:



|                                      |  |                   |                    |  |      |  |      |     |  |   |         |    
|------------------------------------- |  | ----------------- | ------------------ |  | ---- |  | ---- | --- |  | - | ------- | ---
|                                      |  | December 31, 2014 |                   
|                                      |  | Bolivares         |                    |  | Rate |  |      | US$ | 
|2013 submitted but remittance pending |  |                   | VEF 1,573,501      |  |      |  | 6.3  |     |  | $ | 249,762 |    
|2014 submitted but remittance pending |  |                   | 370,174            |  |      |  | 12.0 |     |  |   | 30,847  |    
|Other amounts                         |  |                   |                   |  |      |  | 12.0 |     |  |   | 613     |    
|                                      |  |                   |                    |  |      |  |      |     |  |   |         |    
|Total                                 |  |                   | VEF 1,943,675      |  |      |  |      |     |  | $ | 281,222 | (1)
|                                      |  |                   |                    |  |      |  |      |     |  |   |         |    
|                                      | 
|                                      |  | December 31, 2013 |                   
|                                      |  | Bolivares         |                    |  | Rate |  |      | US$ | 
|2012 submitted but remittance pending |  |                   | VEF         83,446 |  |      |  | 4.3  |     |  | $ | 19,406  |    
|2013 submitted but remittance pending |  |                   | 1,746,132          |  |      |  | 6.3  |     |  |   | 277,164 |    
|December 2013  not yet submitted     |  |                   | 82,264             |  |      |  | 6.3  |     |  |   | 13,058  |    
|Other amounts                         |  |                   | 102,478            |  |      |  | 6.3  |     |  |   | 16,266  |    
|                                      |  |                   |                    |  |      |  |      |     |  |   |         |    
|Total                                 |  |                   | VEF 2,014,320      |  |      |  |      |     |  | $ | 325,894 | (1)
|                                      |  |                   |                    |  |      |  |      |     |  |   |         |    



|(1) | Includes cash and cash equivalents and available-for-sale securities.
|--- | ---------------------------------------------------------------------

The Company has
availableforsale instruments in Venezuela which are bonds that will be paid in Bolivares when they mature even though they are denominated in US Dollars. These bonds will mature at the official exchange rate which remains at US$1:VEF6.3
after which the Company will only be able to request conversion of these funds at SICAD II. Accordingly, for the year ended December 31, 2014, an expense of $11,896 and a net fair value loss recognized in other comprehensive income of $1,527
have been recorded. As of December 31, 2014 the balance of these available for sale securities amount to $1,218 recorded within current assets, and $237 within noncurrent assets.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



During the twelve months ended December 31, 2014, the Company recorded total losses due
to exchange rate changes in Venezuela amounting to $36,977.

For the year ended December 31, 2013, the Company incurred in losses of
$46,015 related to devaluation in Venezuela, after the government announced that it would change the CADIVI exchange rate from US$1: VEF4.3 to US$1: VEF6.3 for requests submitted in 2013.

The summary quantitative data about the Companys exposure to currency risk as reported to the Management of the Company based on its risk
management policy was as follows:



|                                                            |  |                   |            |   |                |   |          |                     |  |   |                  |   |  |                |        |   |       |   |         |       |  |   |         |   |  |   |            |  
|----------------------------------------------------------- |  | ----------------- | ---------- | - | -------------- | - | -------- | ------------------- |  | - | ---------------- | - |  | -------------- | ------ | - | ----- | - | ------- | ----- |  | - | ------- | - |  | - | ---------- | -
|                                                            |  | December 31, 2014 |           
|                                                            |  | USD               |            |   | ColombianPesos |   |          | VenezuelanBolivares |  |   | ArgentineanPesos |   |  | BrazilianReals |        |   | Other |   |         | Total | 
|Cash and cash equivalents                                   |  | $                 | 253,874    |   |                | $ | 43,792   |                     |  | $ | 279,767          |   |  | $              | 20,493 |   |       | $ | 8,532   |       |  | $ | 34,433  |   |  | $ | 640,891    |  
|Available for sale securities                               |  |                   |           |   |                |   |         |                     |  |   | 1,455            |   |  |                |       |   |       |   |        |       |  |   |        |   |  |   | 1,455      |  
|Accounts receivable, net of provision for doubtful accounts |  |                   | 170,323    |   |                |   | 118,631  |                     |  |   | 2,461            |   |  |                | 7,033  |   |       |   | 30,573  |       |  |   | 68,554  |   |  |   | 397,575    |  
|Secured debt and bonds                                      |  |                   | (2,165,627 | ) |                |   | (226,089 | )                   |  |   |                 |   |  |                |       |   |       |   |        |       |  |   | (21,809 | ) |  |   | (2,413,525 | )
|Unsecured debt                                              |  |                   | (742,266   | ) |                |   | (14,786  | )                   |  |   |                 |   |  |                |       |   |       |   |        |       |  |   |        |   |  |   | (757,052   | )
|Accounts payable                                            |  |                   | (271,403   | ) |                |   | (193,424 | )                   |  |   | (5,164           | ) |  |                | (6,128 | ) |       |   | (16,600 | )     |  |   | (75,942 | ) |  |   | (568,661   | )
|                                                            |  |                   |            |   |                |   |          |                     |  |   |                  |   |  |                |        |   |       |   |         |       |  |   |         |   |  |   |            |  
|Net financial position exposure                             |  | $                 | (2,755,099 | ) |                | $ | (271,876 | )                   |  | $ | 278,519          |   |  | $              | 21,398 |   |       | $ | 22,505  |       |  | $ | 5,236   |   |  | $ | (2,699,317 | )
|                                                            |  |                   |            |   |                |   |          |                     |  |   |                  |   |  |                |        |   |       |   |         |       |  |   |         |   |  |   |            |  
|Sensitivity analysis                                        |  |                   |            |   |                |   |          |                     |  |   |                  |   |  |                |        |   |       |   |         |       |  |   |         |   |  |   |            |  
|Change of 1% in exchange rate                               |  |                   |            |   |                |   |          |                     |  |   |                  |   |  |                |        |   |       |   |         |       |  |   |         |   |  |   |            |  
|Effect on profit of the year                                |  |                   |            |   |                | $ | (2,719   | )                   |  | $ | 2,785            |   |  | $              | 214    |   |       | $ | 225     |       |  |   |         |   |  |   |            |  
|                                                            | 
|                                                            |  | December 31, 2013 |           
|                                                            |  | USD               |            |   | ColombianPesos |   |          | VenezuelanBolivares |  |   | ArgentineanPesos |   |  | BrazilianReals |        |   | Other |   |         | Total | 
|Cash and cash equivalents                                   |  | $                 | 293,040    |   |                | $ | 93,104   |                     |  | $ | 311,016          |   |  | $              | 15,016 |   |       | $ | 8,292   |       |  | $ | 15,109  |   |  | $ | 735,577    |  
|Available for sale securities                               |  |                   |           |   |                |   |         |                     |  |   | 14,878           |   |  |                |       |   |       |   |        |       |  |   |        |   |  |   | 14,878     |  
|Accounts receivable, net of provision for doubtful accounts |  |                   | 85,330     |   |                |   | 77,816   |                     |  |   | 9,657            |   |  |                | 6,750  |   |       |   | 32,914  |       |  |   | 96,937  |   |  |   | 309,404    |  
|Secured debt and bonds                                      |  |                   | (1,519,912 | ) |                |   | (276,827 | )                   |  |   |                 |   |  |                |       |   |       |   |        |       |  |   | (28,685 | ) |  |   | (1,825,424 | )
|Unsecured debt                                              |  |                   | (434,654   | ) |                |   | (5,417   | )                   |  |   |                 |   |  |                |       |   |       |   |        |       |  |   |        |   |  |   | (440,071   | )
|Accounts payable                                            |  |                   | (239,966   | ) |                |   | (182,424 | )                   |  |   | (13,440          | ) |  |                | (9,377 | ) |       |   | (7,003  | )     |  |   | (59,654 | ) |  |   | (511,864   | )
|                                                            |  |                   |            |   |                |   |          |                     |  |   |                  |   |  |                |        |   |       |   |         |       |  |   |         |   |  |   |            |  
|Net financial position exposure                             |  | $                 | (1,816,162 | ) |                | $ | (293,748 | )                   |  | $ | 322,111          |   |  | $              | 12,389 |   |       | $ | 34,203  |       |  | $ | 23,707  |   |  | $ | (1,717,500 | )
|                                                            |  |                   |            |   |                |   |          |                     |  |   |                  |   |  |                |        |   |       |   |         |       |  |   |         |   |  |   |            |  
|Sensitivity analysis                                        |  |                   |            |   |                |   |          |                     |  |   |                  |   |  |                |        |   |       |   |         |       |  |   |         |   |  |   |            |  
|Change of 1% in exchange rate                               |  |                   |            |   |                |   |          |                     |  |   |                  |   |  |                |        |   |       |   |         |       |  |   |         |   |  |   |            |  
|Effect on profit of the year                                |  |                   |            |   |                | $ | (2,915   | )                   |  | $ | 3,221            |   |  | $              | 124    |   |       | $ | 342     |       |  |   |         |   |  |   |            |  

The Company manages its exposure to foreign currency risk through hedging selected balances using forward
exchange contracts and cross currency swaps.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Sensitivity analysis

The calculation assumes that the change occurred at the reporting date and had been applied to risk exposures existing at that date. This
analysis assumes that all other variables remain constant and considers the effect of changes in the exchange rate, which is the rate that could materially affect the Companys Consolidated Statement of Comprehensive Income.



|(h) | Interest rate risk
|--- | ------------------

The Company incurs interest rate risk mainly on financial
obligations with banks and aircraft lessors. Interest rate risk is managed through a mix of fixed and floating rates on loans and lease agreements, combined with interest rate swaps.

The Company assesses interest rate risk by monitoring and identifying changes in interest rate exposures that may adversely impact expected
future cash flows and by evaluating hedging opportunities. The Company maintains risk management control systems to monitor interest rate risk attributable to both the Companys outstanding or forecasted debt obligations.

At the reporting date the interest rate profile of the Companys interestbearing financial instruments is:



|                                    |  |                  |            |   |                  |   |            |  
|----------------------------------- |  | ---------------- | ---------- | - | ---------------- | - | ---------- | -
|Carrying amount  asset/(liability) |  | December 31,2014 |            |   | December 31,2013 |  
|Fixed rate instruments              |  |                  |            |   |                  |   |            |  
|Financial assets                    |  | $                | 77,667     |   |                  | $ | 203,332    |  
|Financial liabilities               |  |                  | (2,454,570 | ) |                  |   | (1,584,127 | )
|Interest rate swaps                 |  |                  | (5,893     | ) |                  |   | (13,824    | )
|                                    |  |                  |            |   |                  |   |            |  
|Total                               |  | $                | (2,382,796 | ) |                  | $ | (1,394,619 | )
|                                    |  |                  |            |   |                  |   |            |  
|Floating rate instruments           |  |                  |            |   |                  |   |            |  
|Financial assets                    |  |                  | 352,149    |   |                  |   | 103,020    |  
|Financial liabilities               |  |                  | (716,007   | ) |                  |   | (681,368   | )
|                                    |  |                  |            |   |                  |   |            |  
|Total                               |  | $                | (363,858   | ) |                  | $ | (578,348   | )
|                                    |  |                  |            |   |                  |   |            |  

The interest rate risk is originated mainly from long term aircraft lease payments. These long term loan
payments at floating interest rates expose the Company to cash flow risk. Interest rate risk is managed through a mix of fixed and floating rates on loans and lease agreements, combined with interest rate swaps and options.

At December 31, 2014, the interest rates vary from 0.00% to 11.40% (December 31, 2013: 0.00% to 9.86%) and the main floating rate
instruments are linked to LIBOR plus a spread according to the terms of each contract.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Capital management

The Companys capital management policy is to maintain a sound capital base in order to safeguard the Companys ability to continue
as a going concern, and in doing so, face its current and longterm obligations, provide returns for its shareholders, and maintain an optimal capital structure to reduce the cost of capital. The Company monitors capital on the basis of the
debttocapital ratio. Debt is calculated as net debt, which consists of total borrowings (including current and noncurrent borrowings as shown in the Consolidated Statement of Financial Position) less cash, cash equivalents and
restricted cash. Total capital is calculated as the sum of total equity attributable to the Company as shown in the Consolidated Statement of Financial Position plus total net debt.

Following is a summary of the debttocapital ratio of the Company:



|                                                    |  |                  |           |   |                  |   |           |  
|--------------------------------------------------- |  | ---------------- | --------- | - | ---------------- | - | --------- | -
|                                                    |  | December 31,2014 |           |   | December 31,2013 |  
|Debt                                                |  | $                | 3,170,577 |   |                  | $ | 2,265,495 |  
|Less: cash and cash equivalents and restricted cash |  |                  | (642,878  | ) |                  |   | (759,115  | )
|                                                    |  |                  |           |   |                  |   |           |  
|Total net debt                                      |  |                  | 2,527,699 |   |                  |   | 1,506,380 |  
|Total equity attributable to the Company            |  |                  | 1,208,684 |   |                  |   | 1,208,422 |  
|                                                    |  |                  |           |   |                  |   |           |  
|Total Capital                                       |  | $                | 3,736,383 |   |                  | $ | 2,714,802 |  
|                                                    |  |                  |           |   |                  |   |           |  
|Net debttocapital ratio                           |  |                  | 68        | % |                  |   | 55        | %

There were no changes in the Companys approach to capital management during the year.



|(7) | Cash and cash equivalents and restricted cash
|--- | ---------------------------------------------

Cash and cash equivalents and restricted
cash as of December 31, 2014 and 2013 are as follows:



|                                              |  |                  |         |  |                  |   |         | 
|--------------------------------------------- |  | ---------------- | ------- |  | ---------------- | - | ------- | 
|                                              |  | December 31,2014 |         |  | December 31,2013 |  
|Cash on hand and bank deposits                |  | $                | 627,040 |  |                  | $ | 696,113 | 
|Demand and term deposits                      |  |                  | 13,851  |  |                  |   | 39,464  | 
|                                              |  |                  |         |  |                  |   |         | 
|Cash and cash equivalents                     |  |                  | 640,891 |  |                  |   | 735,577 | 
|Restricted cash                               |  |                  | 1,987   |  |                  |   | 23,538  | 
|                                              |  |                  |         |  |                  |   |         | 
|Cash and cash equivalents and restricted cash |  | $                | 642,878 |  |                  | $ | 759,115 | 
|                                              |  |                  |         |  |                  |   |         | 

As of December 31, 2014 and 2013 cash equivalents amounted to $13,851 and $39,464, respectively. The use
of the term deposits depends on the cash requirements of the Company and such deposits bear annual interest rates ranging between 0.07% and 7.71% as of December 31, 2014, and between 0.70% and 8.31% as of December 31, 2013.

As of December 31, 2014 and 2013 the cash or bank balance with carrying amount of $1,987 and $23,538, respectively, has been pledged as
collateral for certain current borrowings. In the event the Company defaults under the loan agreement, the bank has the right to receive the cash balance.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(8) | Accounts receivables, net of provision for doubtful accounts
|--- | ------------------------------------------------------------

Receivables as of
December 31, 2014 and 2013 are as follows:



|                                     |  |                  |         |   |                  |   |         |  
|------------------------------------ |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                     |  | December 31,2014 |         |   | December 31,2013 |  
|Trade                                |  | $                | 254,846 |   |                  | $ | 216,160 |  
|Indirect tax credits                 |  |                  | 143,374 |   |                  |   | 65,360  |  
|Manufacturer credits                 |  |                  | 2,207   |   |                  |   | 7,193   |  
|Employee advances (1)                |  |                  | 5,011   |   |                  |   | 7,218   |  
|Other                                |  |                  | 5,459   |   |                  |   | 27,582  |  
|                                     |  |                  |         |   |                  |   |         |  
|                                     |  | $                | 410,897 |   |                  | $ | 323,513 |  
|Less provision for doubtful accounts |  |                  | (13,322 | ) |                  |   | (14,109 | )
|                                     |  |                  |         |   |                  |   |         |  
|Total                                |  | $                | 397,575 |   |                  | $ | 309,404 |  
|                                     |  |                  |         |   |                  |   |         |  
|Net current                          |  | $                | 355,168 |   |                  | $ | 276,963 |  
|Net noncurrent                      |  |                  | 42,407  |   |                  |   | 32,441  |  
|                                     |  |                  |         |   |                  |   |         |  
|Total                                |  | $                | 397,575 |   |                  | $ | 309,404 |  
|                                     |  |                  |         |   |                  |   |         |  



|(1) | Employee advances mainly relate to per diem allowances provided to crew prior to traveling.
|--- | -------------------------------------------------------------------------------------------

Changes during the year in the allowance for doubtful accounts are as follows:



|                                 |  |                  |        |   |                  |   |        |  
|-------------------------------- |  | ---------------- | ------ | - | ---------------- | - | ------ | -
|                                 |  | December 31,2014 |        |   | December 31,2013 |  
|Balance at beginning of year     |  | $                | 14,109 |   |                  | $ | 13,282 |  
|Bad debt expense                 |  |                  | 8,409  |   |                  |   | 7,119  |  
|Writeoffs against the allowance |  |                  | (9,196 | ) |                  |   | (6,292 | )
|                                 |  |                  |        |   |                  |   |        |  
|Balance at end of year           |  | $                | 13,322 |   |                  | $ | 14,109 |  
|                                 |  |                  |        |   |                  |   |        |  



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The aging of accounts receivables at the end of the reporting period that were not impaired
is as follows:



|                                |  |                  |         |   |                  |   |         |  
|------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                |  | December 31,2014 |         |   | December 31,2013 |  
|Neither past due nor impaired   |  | $                | 318,498 |   |                  | $ | 228,269 |  
|Past due 130 days              |  |                  | 30,779  |   |                  |   | 62,355  |  
|Past due 3190 days             |  |                  | 28,273  |   |                  |   | 17,150  |  
|Past due 91 days                |  |                  | 33,347  |   |                  |   | 15,739  |  
|                                |  |                  |         |   |                  |   |         |  
|Total                           |  | $                | 410,897 |   |                  | $ | 323,513 |  
|Provision for doubtful accounts |  |                  | (13,322 | ) |                  |   | (14,109 | )
|                                |  |                  |         |   |                  |   |         |  
|Net accounts receivable         |  | $                | 397,575 |   |                  | $ | 309,404 |  
|                                |  |                  |         |   |                  |   |         |  



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(9) | Balances and transactions with related parties
|--- | ----------------------------------------------

The following is a summary of related
party transactions for the years ended December 31, 2014, 2013 and 2012:



|                                    |  |             |             |  |                   |   |        |                   |  |   |                   |  |  |             |        |  |             |   |        |          |  |   |          |  |  |          |       |  |          |   |        |  |  |   |        |  |  |   |        |  |  |   |        | 
|----------------------------------- |  | ----------- | ----------- |  | ----------------- | - | ------ | ----------------- |  | - | ----------------- |  |  | ----------- | ------ |  | ----------- | - | ------ | -------- |  | - | -------- |  |  | -------- | ----- |  | -------- | - | ------ |  |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|Company                             |  | Country     |             |  | December 31, 2014 |   |        | December 31, 2013 |  |   | December 31, 2012 | 
|                                    |  | Receivables |             |  | Payables          |   |        | Revenues          |  |   | Expenses          |  |  | Receivables |        |  | Payables    |   |        | Revenues |  |   | Expenses |  |  | Revenues |       |  | Expenses |  
|Synergy Aerospace Corp.             |  |             | Panama      |  |                   | $ | 1,324  |                   |  | $ | 1,272             |  |  | $           | 96     |  |             | $ |       |          |  | $ | 601      |  |  | $        | 1,262 |  |          | $ | 122    |  |  | $ |       |  |  | $ |       |  |  | $ |       | 
|SP SYN Participações S.A.           |  |             | Brazil      |  |                   |   | 22,754 |                   |  |   |                  |  |  |             | 1,226  |  |             |   |       |          |  |   | 22,829   |  |  |          |      |  |          |   | 1,209  |  |  |   |       |  |  |   | 3,664  |  |  |   |       | 
|OceanAir Linhas Aéreas, S.A.        |  |             | Brazil      |  |                   |   | 13,209 |                   |  |   | 8,611             |  |  |             | 25,027 |  |             |   | 2,843  |          |  |   | 1,494    |  |  |          | 1,618 |  |          |   | 10,614 |  |  |   | 5,235  |  |  |   | 19,411 |  |  |   | 2,138  | 
|Corp Hotelera Internac., S.A.       |  |             | El Salvador |  |                   |   |       |                   |  |   | 245               |  |  |             |       |  |             |   | 502    |          |  |   |         |  |  |          | 181   |  |          |   |       |  |  |   | 352    |  |  |   |       |  |  |   |       | 
|Empresariales S.A.S.                |  |             | Colombia    |  |                   |   | 5      |                   |  |   | 401               |  |  |             | 6      |  |             |   | 11,589 |          |  |   | 1        |  |  |          | 1,486 |  |          |   | 7      |  |  |   | 11,951 |  |  |   | 12     |  |  |   | 12,952 | 
|Aeromantenimiento, S.A.             |  |             | El Salvador |  |                   |   | 211    |                   |  |   | 1,451             |  |  |             | 6      |  |             |   | 9,533  |          |  |   | 229      |  |  |          | 574   |  |          |   | 7      |  |  |   | 2,684  |  |  |   | 40     |  |  |   | 6,836  | 
|Transportadora del Meta S.A.S.      |  |             | Colombia    |  |                   |   | 73     |                   |  |   | 1,464             |  |  |             |       |  |             |   | 8,841  |          |  |   | 24       |  |  |          | 1,946 |  |          |   | 3      |  |  |   | 10,457 |  |  |   | 26     |  |  |   | 10,874 | 
|Aerovias Beta Corp.                 |  |             | Panama      |  |                   |   | 977    |                   |  |   |                  |  |  |             |       |  |             |   |       |          |  |   | 1,164    |  |  |          | 2     |  |          |   |       |  |  |   |       |  |  |   |       |  |  |   |       | 
|Other                               |  |             |             |  |                   |   | 80     |                   |  |   | 353               |  |  |             | 32     |  |             |   | 1,608  |          |  |   | 83       |  |  |          | 484   |  |          |   | 74     |  |  |   | 1,964  |  |  |   | 45     |  |  |   | 656    | 
|                                    |  |             |             |  |                   |   |        |                   |  |   |                   |  |  |             |        |  |             |   |        |          |  |   |          |  |  |          |       |  |          |   |        |  |  |   |        |  |  |   |        |  |  |   |        | 
|Subtotal                            |  |             |             |  |                   | $ | 38,633 |                   |  | $ | 13,797            |  |  | $           | 26,393 |  |             | $ | 34,916 |          |  | $ | 26,425   |  |  | $        | 7,553 |  |          | $ | 12,036 |  |  | $ | 32,643 |  |  | $ | 23,198 |  |  | $ | 33,456 | 
|                                    |  |             |             |  |                   |   |        |                   |  |   |                   |  |  |             |        |  |             |   |        |          |  |   |          |  |  |          |       |  |          |   |        |  |  |   |        |  |  |   |        |  |  |   |        | 
|                                    |  |             |             |  |                   |   |        |                   |  |  
|                                    |  |             |             |  | Receivables       |   |        | Payables          |  |   |                   |  |  |             |        |  | Receivables |   |        | Payables |  |   |          |  |  |          |       |  |          |  
|Shortterm                          |  |             |             |  |                   | $ | 27,386 |                   |  | $ | 13,797            |  |  |             |        |  |             |   |        |          |  | $ | 26,425   |  |  | $        | 7,553 |  |          |   |        |  |  |   |        |  |  |   |        | 
|Longterm                           |  |             |             |  |                   |   | 11,247 |                   |  |   |                  |  |  |             |        |  |             |   |        |          |  |   |         |  |  |          |      |  |          |   |        |  |  |   |        |  |  |   |        | 
|                                    |  |             |             |  |                   |   |        |                   |  |   |                   |  |  |             |        |  |             |   |        |          |  |   |          |  |  |          |       |  |          |   |        |  |  |   |        |  |  |   |        |  |  |   |        | 
|Total balances with related parties |  |             |             |  |                   | $ | 38,633 |                   |  | $ | 13,797            |  |  |             |        |  |             |   |        |          |  | $ | 26,425   |  |  | $        | 7,553 |  |          |   |        |  |  |   |        |  |  |   |        | 
|                                    |  |             |             |  |                   |   |        |                   |  |   |                   |  |  |             |        |  |             |   |        |          |  |   |          |  |  |          |       |  |          |   |        |  |  |   |        |  |  |   |        |  |  |   |        | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The receivables balance with SP SYN Participações S.A. as of December 31,
2014 amounting to $22,754, corresponding to $22,644 of principal and $110 of accrued interests, fell due on December 31, 2014. On March 24, 2015, the Company reached a payment agreement with the debtor and guarantors whereby Synergy
Aerospace Corp commits to pay the balance and accrued interest. The renegotiated debt will bear an interest equal to 90 days LIBOR plus 550 basis points as of payment date and will be cancelled according to the following payment schedule:



|      |  |   |        | 
|----- |  | - | ------ | 
|Year  |  |   |       
|2015  |  | $ | 11,507 | 
|2016  |  |   | 11,247 | 
|      |  |   |        | 
|Total |  | $ | 22,754 | 
|      |  |   |        | 

Receivable balances as of December 31, 2014 from OceanAir Linhas Aéreas, S.A., include an amount of
$6,536 past due which corresponds to payments from aircraft leases and other services. On March 24, 2015 the Company reached an agreement over these amounts with Synergy Aerospace Corp. to take over OceanAir Linhas Aéreas, S.A. debt. The
renegotiated debt will bear an interest rate equal to 90 days LIBOR plus 550 basis points and matures within 2015.

The Company has not
recognized any expense or provision for doubtful accounts since it is expected that the balances will be recovered completely.

All related
parties are companies controlled by the same ultimate shareholder that controls Avianca Holdings S.A. The following is a description of the nature of services provided by and to related parties. These transactions include:



|                          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Related party             |  | Nature of Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Synergy Aerospace Corp.   |  | The receivables amount corresponds to aircraft engine reserves and maintenance contracts. The payable amount originates in payments executed by Synergy Aerospace Corp. on behalf of Latin Airways Corp.                                                                                                                                                                                                                                                                                         
|                          | 
|SP SYN Participações S.A. |  | Avianca, S.A. (Avianca) and SP SYN Participações S.A. (SP SYN) signed a novation of the receivables from OceanAir Linhas Aéreas, S.A. (OceanAir) whereby SP SYN would be the
new debtor. Avianca agreed to sign purchase agreement assignments and take delivery of certain aircraft which were originally purchased by Synergy Group. This agreement originates in certain obligations signed on December 30, 2010 and amended
subsequently on December 30, 2011 and on February 28, 2012.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|                                                                 |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|---------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Related party                                                    |  | Nature of Services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                 | 
|OceanAir Linhas Aéreas, S.A.                                     |  | The Company provides to and receives from OceanAir logistic services, marketing and advertising, maintenance services, and training services. The Company has entered into a licensing agreement with OceanAir for the use of the
Avianca trademark in Brazil. Additionally, the Company leases aircraft to OceanAir (see Note 33). On November 4, 2014, Tampa Cargo S.A.S., entered into a Block Space Agreement with OceanAir Linhas Aéreas, S.A., acquiring priority rights
and a minimum guaranteed cargo capacity on certain flights of the carrier.
|                                                                 | 
|Empresariales S.A.S.                                             |  | Transportation services for Avianca, S.A.s employees.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                 | 
|Aeromantenimiento, S.A.                                          |  | Aircraft maintenance company which provides aircraft overhaul services to the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                 | 
|Transportadora del Meta S.A.S.                                   |  | Provides road transportation services for cargo / courier deliveries to Avianca, S.A.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                 | 
|Corporación Hotelera Internacional S.A.
Hotelera Los Pozos, S.A. |  | Accommodation services for crew and employees of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                 | 
|Aerovias Beta Corp.                                              |  | The accounts receivables balance relates to amount owed to Latin Airways Corp. arising from the Aerovias Beta Corp. spinoff, which gave rise to Latin Airways Corp.                                                                                                                                                                                                                                                                                                                                                                                      

Key management personnel compensation expense

Key management personnel compensation expense recognized within Salaries, wages, and benefits in the Consolidated Statement of
Comprehensive Income for the years ended December 31, 2014, 2013 and 2012 amounts to $31,365, $31,456 and $25,259, respectively.



|(10) | Expendable spare parts and supplies, net of provision for obsolescence
|---- | ----------------------------------------------------------------------

Expendable spare
parts and supplies as of December 31, 2014 and 2013 are as follows:



|                       |  |                  |        |  |                  |   |        | 
|---------------------- |  | ---------------- | ------ |  | ---------------- | - | ------ | 
|                       |  | December 31,2014 |        |  | December 31,2013 |  
|Expendable spare parts |  | $                | 56,376 |  |                  | $ | 45,160 | 
|Supplies               |  |                  | 9,238  |  |                  |   | 7,998  | 
|                       |  |                  |        |  |                  |   |        | 
|Total                  |  | $                | 65,614 |  |                  | $ | 53,158 | 
|                       |  |                  |        |  |                  |   |        | 

For the years ended December 31, 2014 and 2013 expendable spare parts and supplies in the amount of
$65,649 and $48,774, respectively, were recognized as maintenance expense.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(11) | Prepaid expenses
|---- | ----------------

These primarily relate to advance commission payments to travel
agencies for future services, prepayments for aircraft rentals and prepaid insurance. As of December 31, 2014 and 2013 prepaid balances are as follows:



|                                              |  |                  |        |  |                  |   |        | 
|--------------------------------------------- |  | ---------------- | ------ |  | ---------------- | - | ------ | 
|                                              |  | December 31,2014 |        |  | December 31,2013 |  
|Prepaid commissions                           |  | $                | 12,712 |  |                  | $ | 13,476 | 
|Advance payments on operating aircraft leases |  |                  | 12,401 |  |                  |   | 12,219 | 
|Premiums for insurance policies               |  |                  | 1,545  |  |                  |   | 2,236  | 
|Other                                         |  |                  | 29,407 |  |                  |   | 18,814 | 
|                                              |  |                  |        |  |                  |   |        | 
|Total                                         |  | $                | 56,065 |  |                  | $ | 46,745 | 
|                                              |  |                  |        |  |                  |   |        | 



|(12) | Assets held for sale
|---- | --------------------

Assets held for sale consist of fixed assets for which management
has committed to a plan to sell, the completion of the sale is highly probable, and the sale is expected to take place over the next 12 months. As of December 31, 2014 and 2013 the assets held for sale are as follows:



|                              |  |                  |       |  |                  |   |       | 
|----------------------------- |  | ---------------- | ----- |  | ---------------- | - | ----- | 
|                              |  | December 31,2014 |       |  | December 31,2013 |  
|Aircraft and flight equipment |  | $                | 1,117 |  |                  | $ | 1,256 | 
|Land and buildings            |  |                  |      |  |                  |   | 5,547 | 
|Machinery and other equipment |  |                  | 252   |  |                  |   | 645   | 
|                              |  |                  |       |  |                  |   |       | 
|Total                         |  | $                | 1,369 |  |                  | $ | 7,448 | 
|                              |  |                  |       |  |                  |   |       | 



|(13) | Deposits and other assets
|---- | -------------------------

Deposits and other assets as of December 31, 2014 and
2013 are as follows:



|                                     |  |                  |         |  |                  |   |         | 
|------------------------------------ |  | ---------------- | ------- |  | ---------------- | - | ------- | 
|                                     |  | December 31,2014 |         |  | December 31,2013 |  
|Short term:                          |  |                  |         |  |                  |   |         | 
|Deposits with lessors                |  | $                | 79,098  |  |                  | $ | 59,434  | 
|Short term investments               |  |                  | 41,631  |  |                  |   | 44,326  | 
|Margin call deposits                 |  |                  | 37,718  |  |                  |   | 4,976   | 
|Guarantee deposits                   |  |                  | 9,777   |  |                  |   |        | 
|Others                               |  |                  | 1,700   |  |                  |   |        | 
|                                     |  |                  |         |  |                  |   |         | 
|Subtotal                             |  |                  | 169,924 |  |                  |   | 108,736 | 
|Fair value of derivative instruments |  |                  | 4,204   |  |                  |   | 16,598  | 
|                                     |  |                  |         |  |                  |   |         | 
|Total                                |  |                  | 174,128 |  |                  | $ | 125,334 | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|                                   |  |   |         |  |  |   |         | 
|---------------------------------- |  | - | ------- |  |  | - | ------- | 
|Long term:                         |  |   |         |  |  |   |         | 
|Deposits with lessors              |  | $ | 144,949 |  |  | $ | 113,253 | 
|Long term investments  restricted |  |   | 11,943  |  |  |   |        | 
|Guarantee deposits                 |  |   | 13,207  |  |  |   | 13,951  | 
|Restricted cash                    |  |   | 21,025  |  |  |   | 42,951  | 
|Others                             |  |   | 26,886  |  |  |   | 19,021  | 
|                                   |  |   |         |  |  |   |         | 
|Total                              |  | $ | 218,010 |  |  | $ | 189,176 | 
|                                   |  |   |         |  |  |   |         | 

Deposits with lessors refer mainly to maintenance deposits in connection with leased aircraft. These deposits
are applied to future maintenance event costs, and are calculated on the basis of a performance measure, such as flight hours or cycles. They are specifically intended to guarantee maintenance events on leased aircraft.

Maintenance deposits paid do not transfer the obligation to maintain aircraft or the costs associated with maintenance activities.

Maintenance deposits are reimbursable to the Company upon completion of the maintenance event in an amount equal to the lesser of (1) the
amount of the maintenance deposits held by the lessor associated with the specific maintenance event or (2) the qualifying costs related to the specific maintenance event. During the 12 months ended December 31, 2014 the Company has paid
lessors $80,829 (December 31, 2013: $37,841) in maintenance deposits, net of reimbursements.

Guarantee deposits correspond mainly to
amounts paid to suppliers in connections with leasehold of airport facilities, among other service agreements.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(14) | Property and equipment, net
|---- | ---------------------------

Flight equipment, property and other equipment as of
December 31, 2014 and 2013 is as follows:



|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|----------------------------------------- |  | --------------- | --------- | - | ---------------------- | - | ------- | ------------------ |  | - | --------------------------- | - |  | ---------------------- | -------- | - | ----- | - | ------ | ----- |  | - | ------- | - |  | - | --------- | -
|                                          |  | Flightequipment |           |   | Capitalizedmaintenance |   |         | Rotable spareparts |  |   | Aircraftpredeliverypayments |   |  | Administrativeproperty |          |   | Other |   |        | Total | 
|Gross:                                    |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |  
|December 31, 2012                         |  | $               | 2,412,336 |   |                        | $ | 180,258 |                    |  | $ | 116,622                     |   |  | $                      | 283,162  |   |       | $ | 93,612 |       |  | $ | 176,687 |   |  | $ | 3,262,677 |  
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|Additions                                 |  |                 | 270,537   |   |                        |   | 75,760  |                    |  |   | 39,865                      |   |  |                        | 320,289  |   |       |   |       |       |  |   | 60,693  |   |  |   | 767,144   |  
|Transfers                                 |  |                 | 194,137   |   |                        |   |        |                    |  |   |                            |   |  |                        | (194,137 | ) |       |   |       |       |  |   |        |   |  |   |          |  
|Revaluation                               |  |                 |          |   |                        |   |        |                    |  |   |                            |   |  |                        |         |   |       |   | 3,439  |       |  |   |        |   |  |   | 3,439     |  
|Disposals                                 |  |                 | (63,800   | ) |                        |   | (46,263 | )                  |  |   | (17,397                     | ) |  |                        |         |   |       |   | (1,337 | )     |  |   | (7,667  | ) |  |   | (136,464  | )
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|December 31, 2013                         |  | $               | 2,813,210 |   |                        | $ | 209,755 |                    |  | $ | 139,090                     |   |  | $                      | 409,314  |   |       | $ | 95,714 |       |  | $ | 229,713 |   |  | $ | 3,896,796 |  
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|Additions                                 |  |                 | 763,349   |   |                        |   | 87,341  |                    |  |   | 46,517                      |   |  |                        | 169,284  |   |       |   |       |       |  |   | 71,773  |   |  |   | 1,138,264 |  
|Acquisitions through Business Combination |  |                 | 3,851     |   |                        |   |        |                    |  |   | 59                          |   |  |                        |         |   |       |   |       |       |  |   | 445     |   |  |   | 4,355     |  
|Transfers                                 |  |                 | 314,127   |   |                        |   |        |                    |  |   |                            |   |  |                        | (314,127 | ) |       |   |       |       |  |   |        |   |  |   |          |  
|Revaluation                               |  |                 |          |   |                        |   |        |                    |  |   |                            |   |  |                        |         |   |       |   | (4,307 | )     |  |   |        |   |  |   | (4,307    | )
|Disposals                                 |  |                 | (43,886   | ) |                        |   | (18,919 | )                  |  |   | (7,989                      | ) |  |                        |         |   |       |   | (3,971 | )     |  |   | (53,469 | ) |  |   | (128,234  | )
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|December 31, 2014                         |  | $               | 3,850,651 |   |                        | $ | 278,177 |                    |  | $ | 177,677                     |   |  | $                      | 264,471  |   |       | $ | 87,436 |       |  | $ | 248,462 |   |  | $ | 4,906,874 |  
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|Accumulated depreciation:                 |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |      
|December 31, 2012                         |  | $               | 331,699   |   |                        | $ | 123,197 |                    |  | $ | 14,234                      |   |  | $                      |         |   |       | $ | 6,072  |       |  | $ | 87,929  |   |  | $ | 563,131   |  
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|Additions                                 |  |                 | 88,260    |   |                        |   | 49,437  |                    |  |   | 5,174                       |   |  |                        |         |   |       |   | 1,032  |       |  |   | 15,970  |   |  |   | 159,873   |  
|Disposals                                 |  |                 | (23,925   | ) |                        |   | (19,896 | )                  |  |   | (2,732                      | ) |  |                        |         |   |       |   |       |       |  |   | (13,013 | ) |  |   | (59,566   | )
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|December 31, 2013                         |  | $               | 396,034   |   |                        | $ | 152,738 |                    |  | $ | 16,676                      |   |  | $                      |         |   |       | $ | 7,104  |       |  | $ | 90,886  |   |  | $ | 663,438   |  
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|Additions                                 |  |                 | 102,278   |   |                        |   | 56,142  |                    |  |   | 9,641                       |   |  |                        |         |   |       |   | 1,890  |       |  |   | 15,226  |   |  |   | 185,177   |  
|Disposals                                 |  |                 | (21,063   | ) |                        |   | (18,609 | )                  |  |   | (2,935                      | ) |  |                        |         |   |       |   |       |       |  |   | (27,185 | ) |  |   | (69,792   | )
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|December 31, 2014                         |  | $               | 477,249   |   |                        | $ | 190,271 |                    |  | $ | 23,382                      |   |  | $                      |         |   |       | $ | 8,994  |       |  | $ | 78,927  |   |  | $ | 778,823   |  
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|Net balances:                             |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |      
|December 31, 2012                         |  | $               | 2,080,637 |   |                        | $ | 57,061  |                    |  | $ | 102,388                     |   |  | $                      | 283,162  |   |       | $ | 87,540 |       |  | $ | 88,758  |   |  | $ | 2,699,546 |  
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|December 31, 2013                         |  | $               | 2,417,176 |   |                        | $ | 57,017  |                    |  | $ | 122,414                     |   |  | $                      | 409,314  |   |       | $ | 88,610 |       |  | $ | 138,827 |   |  | $ | 3,233,358 |  
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  
|December 31, 2014                         |  | $               | 3,373,402 |   |                        | $ | 87,906  |                    |  | $ | 154,295                     |   |  | $                      | 264,471  |   |       | $ | 78,442 |       |  | $ | 169,535 |   |  | $ | 4,128,051 |  
|                                          |  |                 |           |   |                        |   |         |                    |  |   |                             |   |  |                        |          |   |       |   |        |       |  |   |         |   |  |   |           |  



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



As of December 31, 2014 and 2013, certain aircraft with a net carrying value of
$2,665,561 and $2,303,384, respectively, have been pledged to secure longterm debt.

As of December 31, 2014 and 2013, the net
carrying amount of leased property and equipment under financial leases was $157 and $2,226, respectively.

As of December 31, 2014
and 2013, the Company capitalized borrowing costs amounting to $9,249 and $12,171, respectively.

During 2014 a total amount of $20,224 has
been recognized as property and equipment in the course of construction. As of December 31, 2014, the Company had future commitments related to the completion of the construction of administrative property in the amount of $21,809.

Administrative property

The Company uses the revaluation model to measure its land and buildings which are composed of administrative properties. Management determined
that this constitutes one class of asset under IAS 16, based on the nature, characteristics and risks of the property. The fair values of the properties were determined by using market comparable methods. This means that valuations performed by the
appraisals are based on active market prices, adjusted for difference in the nature, location or condition of the specific property. The Company engaged accredited independent appraisals, to determine the fair value of its land and buildings. Land
and buildings were revaluated at December 31, 2014 and 2013.

If land and buildings were measured using the cost model, the carrying
amounts would be as follows:



|                         |  |                  |        |   |                  |   |        |  
|------------------------ |  | ---------------- | ------ | - | ---------------- | - | ------ | -
|                         |  | December 31,2014 |        |   | December 31,2013 |  
|Cost                     |  | $                | 68,515 |   |                  | $ | 68,470 |  
|Accumulated depreciation |  |                  | (3,899 | ) |                  |   | (4,430 | )
|                         |  |                  |        |   |                  |   |        |  
|Net carrying amount      |  | $                | 64,616 |   |                  | $ | 64,040 |  
|                         |  |                  |        |   |                  |   |        |  



|(15) | Intangible assets
|---- | -----------------

Intangible assets as of December 31, 2014 and 2013 are follows:



|                        |  |                  |         |  |                  |   |         | 
|----------------------- |  | ---------------- | ------- |  | ---------------- | - | ------- | 
|                        |  | December 31,2014 |         |  | December 31,2013 |  
|Routes                  |  | $                | 43,115  |  |                  | $ | 22,223  | 
|Trademarks              |  |                  | 3,960   |  |                  |   | 22      | 
|Software and webpages   |  |                  | 58,656  |  |                  |   | 39,429  | 
|Other intangible rights |  |                  | 2,305   |  |                  |   | 2,762   | 
|                        |  |                  |         |  |                  |   |         | 
|Subtotal                |  |                  | 108,036 |  |                  |   | 64,436  | 
|Goodwill                |  |                  | 308,034 |  |                  |   | 298,667 | 
|                        |  |                  |         |  |                  |   |         | 
|Total Intangible Assets |  | $                | 416,070 |  |                  | $ | 363,103 | 
|                        |  |                  |         |  |                  |   |         | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Goodwill acquired through business combinations and intangibles with indefinite lives has
been allocated to four Cash Generating Units (CGU):



| |  |  | Aerolíneas Galápagos Aerogal, S.A. (Aerogal)
| | - |  | ----------------------------------------------



| |  |  | Grupo Taca Holdings Limited
| | - |  | ---------------------------



| |  |  | Tampa Cargo S.A.S.
| | - |  | ------------------



| |  |  | Aero Transporte de Carga Unión, S.A. de C.V. (Aerounion)
| | - |  | ----------------------------------------------------------

The carrying
amount of goodwill and intangibles allocated to each of the CGUs:



|           |  |         |        |  |                            |   |        |                   |  |   |           |  |  |      |         |  |      |   |        |      |  |   |        |  |  |   |        |  |  |   |   | 
|---------- |  | ------- | ------ |  | -------------------------- | - | ------ | ----------------- |  | - | --------- |  |  | ---- | ------- |  | ---- | - | ------ | ---- |  | - | ------ |  |  | - | ------ |  |  | - | - | 
|           |  | Aerogal |        |  | Grupo TacaHoldings Limited |   |        | Tampa CargoS.A.S. |  |   | Aerounion | 
|           |  | 2014    |        |  | 2013                       |   |        | 2014              |  |   | 2013      |  |  | 2014 |         |  | 2013 |   |        | 2014 |  |   | 2013   | 
|Goodwill   |  | $       | 32,979 |  |                            | $ | 32,979 |                   |  | $ | 234,779   |  |  | $    | 234,779 |  |      | $ | 30,909 |      |  | $ | 30,909 |  |  | $ | 9,367  |  |  | $ |  | 
|Routes     |  |         | 19,652 |  |                            |   | 22,223 |                   |  |   |          |  |  |      |        |  |      |   |       |      |  |   |       |  |  |   | 23,463 |  |  |   |  | 
|Trademarks |  |         |       |  |                            |   |       |                   |  |   |          |  |  |      |        |  |      |   |       |      |  |   |       |  |  |   | 3,938  |  |  |   |  | 

The Company performed its annual impairment test in December 2014 and 2013. The Company considers the
relationship between the value in use of the CGU and its book value, among other factors, when reviewing for indicators of impairment on the goodwill or any of its intangible assets. As of December 31, 2014 and 2013, the Company did not
identify potential impairment of goodwill or intangible assets.

Aerogal CGU

The recoverable amount of Aerogal CGU, $251,863 as of December 31, 2014, has been determined based on a value in use calculation using
cash flow projections from financial budgets approved by senior management covering a fiveyear period. The projected cash flows have been updated to reflect the estimated demand for services and costs to operate. The pretax discount rate
applied to cash flow projections is 7.98% and cash flows beyond the fiveyear period are extrapolated using a 3.0% growth rate that is the same as the longterm average growth rate for the country where the Company has its base of
operation. It was concluded that no impairment charge is necessary as the value in use exceeds book value.

Grupo Taca Holdings Limited
CGU

The recoverable amount of Grupo Taca Holdings Limited CGU, $1,982,582 as of December 31, 2014, has been determined based on a
value in use calculation using cash flow projections from financial budgets approved by senior management covering a fiveyear period. The projected cash flows have been updated to reflect the estimated demand for services and costs to operate.
The pretax discount rate applied to cash flow projections is 7.98% and cash flows beyond the fiveyear period are extrapolated using a 1.5% growth rate that is the same as the longterm average growth rate for Latin America. It was
concluded that no impairment charge is necessary as the value in use exceeds book value.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Tampa Cargo S.A.S. CGU

The recoverable amount of Tampa Cargo S.A.S. CGU, $1,253,763 as of December 31, 2014, has been determined based on a value in use
calculation using cash flow projections from financial budgets approved by senior management covering a fiveyear period. The projected cash flows have been updated to reflect the estimated demand for services and costs to operate. The
pretax discount rate applied to cash flow projections is 7.98% and cash flows beyond the fiveyear period are extrapolated using a 3.90% growth rate that is the same as the longterm average growth rate for Colombia where the Company
has its base of operation. It was concluded that no impairment charge is necessary as the value in use exceeds book value.

Aerounion
CGU

The recoverable amount of Aerounion CGU, $9,367 as of December 31, 2014, has been determined based on the business value in
use, based on cash flow projections for the acquired business approved by Management.

Assumptions

The calculation of value in use for the CGUs is most sensitive to the following assumptions:



| |  |  | Jet fuel price per gallon
| | - |  | -------------------------



| |  |  | Discount rates
| | - |  | --------------



| |  |  | Revenue growth
| | - |  | --------------



| |  |  | CAPEX expenditure
| | - |  | -----------------



| |  |  | Growth rates used to extrapolate cash flows beyond the forecast period
| | - |  | ----------------------------------------------------------------------



| |  |  | Working capital
| | - |  | ---------------

Jet fuel price per gallon  Estimates are obtained from published data
relating to the specific commodity. Forecast figures are used if data is publicly available, otherwise past actual price movements are used as an indicator of future price movements.

Discount rates  Discount rates represent the current market assessment of the risks of the holding Company of each CGU, taking into
consideration the time value of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate calculation is based on the specific circumstances of the Company and is derived from
its weighted average cost of capital (WACC). The WACC takes into account both debt and equity. The beta factors are evaluated annually based on publicly available market data.

Revenue growth  Management evaluates its estimates on passenger growth or cargo growth. Management expects the Company to have a stable
growth over the forecast period.

CAPEX expenditure  Management estimates investment in CAPEX including aircraft, maintenance, and
sale of assets, among others to estimate debt free cash flows.

Growth rate estimates  Rates are based on published forecasts for the
regions or countries where the CGUs operate.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Working capital  Management evaluates the working capital needs of each CGU in
accordance with its needs for investments to continue operations.

The following is a rollforward of intangibles assets from December, 2014
and 2013:



|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|----------------------------------------------- |  | -------- | ------- | - | ------ | - | ------ | ----------- |  | - | ------------------ | - |  | ------ | ------- | - | ----- | - | ------ | - |  | - | ------- | -
|                                                |  | Goodwill |         |   | Routes |   |        | Trade-marks |  |   | Software& Webpages |   |  | Others |         |   | Total |  
|Cost:                                           |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |      
|Balance at December 31, 2012                    |  | $        | 301,814 |   |        | $ | 29,018 |             |  | $ | 809                |   |  | $      | 28,482  |   |       | $ | 328    |   |  | $ | 360,451 |  
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Other Acquisitions/ Internally developed        |  |          |        |   |        |   |       |             |  |   |                   |   |  |        | 24,801  |   |       |   | 3,101  |   |  |   | 27,902  |  
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Balance at December 31, 2013                    |  |          | 301,814 |   |        |   | 29,018 |             |  |   | 809                |   |  |        | 53,283  |   |       |   | 3,429  |   |  |   | 388,353 |  
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Acquisitions through Business Combination       |  |          | 9,367   |   |        |   | 23,463 |             |  |   | 3,938              |   |  |        |        |   |       |   |       |   |  |   | 36,768  |  
|Other Acquisitions/ Internally developed        |  |          |        |   |        |   |       |             |  |   |                   |   |  |        | 29,322  |   |       |   | 360    |   |  |   | 29,682  |  
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Balance at December 31, 2014                    |  | $        | 311,181 |   |        | $ | 52,481 |             |  | $ | 4,747              |   |  | $      | 82,605  |   |       | $ | 3,789  |   |  | $ | 454,803 |  
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Accumulated Amortization and Impairment Losses: |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Balance at December 31, 2012                    |  | $        | (3,147  | ) |        | $ | (4,775 | )           |  | $ | (787               | ) |  | $      | (6,834  | ) |       | $ |       |   |  | $ | (15,543 | )
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Amortization for the year                       |  |          |        |   |        |   | (2,020 | )           |  |   |                   |   |  |        | (7,020  | ) |       |   | (667   | ) |  |   | (9,707  | )
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Balance at December 31, 2013                    |  |          | (3,147  | ) |        |   | (6,795 | )           |  |   | (787               | ) |  |        | (13,854 | ) |       |   | (667   | ) |  |   | (25,250 | )
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Amortization for the year                       |  |          |        |   |        |   | (2,571 | )           |  |   |                   |   |  |        | (10,095 | ) |       |   | (817   | ) |  |   | (13,483 | )
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Balance at December 31, 2014                    |  | $        | (3,147  | ) |        | $ | (9,366 | )           |  | $ | (787               | ) |  | $      | (23,949 | ) |       | $ | (1,484 | ) |  | $ | (38,733 | )
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|Carrying Amounts:                               |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|At December 31, 2012                            |  | $        | 298,667 |   |        | $ | 24,243 |             |  | $ | 22                 |   |  | $      | 21,648  |   |       | $ | 328    |   |  | $ | 344,908 |  
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|At December 31, 2013                            |  | $        | 298,667 |   |        | $ | 22,223 |             |  | $ | 22                 |   |  | $      | 39,429  |   |       | $ | 2,762  |   |  | $ | 363,103 |  
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  
|At December 31, 2014                            |  | $        | 308,034 |   |        | $ | 43,115 |             |  | $ | 3,960              |   |  | $      | 58,656  |   |       | $ | 2,305  |   |  | $ | 416,070 |  
|                                                |  |          |         |   |        |   |        |             |  |   |                    |   |  |        |         |   |       |   |        |   |  |   |         |  



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(16) | Earnings per Share
|---- | ------------------

The calculation of basic earnings per share at December 31,
2014 and 2013 is as follows:



|                                                 |  |                  |         |  |                  |   |         |                  |  |   |         | 
|------------------------------------------------ |  | ---------------- | ------- |  | ---------------- | - | ------- | ---------------- |  | - | ------- | 
|                                                 |  | December 31,2014 |         |  | December 31,2013 |   |         | December 31,2012 | 
|Net profit attributable to Avianca Holdings S.A. |  | $                | 128,494 |  |                  | $ | 248,821 |                  |  | $ | 38,257  | 
|                                                 |  |                  |         |  |                  |   |         |                  |  |   |         | 
|Weighted average number of ordinary shareholders |  |                  |         |  |                  |   |         |                  |  |   |         | 
|(in thousands of shares)                         |  |                  |         |  |                  |   |         |                  |  |   |         | 
|Common stock                                     |  |                  | 665,383 |  |                  |   | 728,800 |                  |  |   | 741,400 | 
|Preferred stock                                  |  |                  | 331,604 |  |                  |   | 184,854 |                  |  |   | 158,081 | 
|Earnings per share                               |  |                  |         |  |                  |   |         |                  |  |   |         | 
|Common stock                                     |  | $                | 0.13    |  |                  | $ | 0.27    |                  |  | $ | 0.04    | 
|Preferred stock                                  |  | $                | 0.13    |  |                  | $ | 0.27    |                  |  | $ | 0.04    | 

There are no dilutive shares as the Company has no convertible preferred shares or convertible
debentures.



|(17) | Longterm debt
|---- | --------------

Loans and borrowings are measured at amortized cost, as of
December 31, 2014 and 2013 are summarized as follows:



|                                                              |  |                  |           |  |                  |   |           | 
|------------------------------------------------------------- |  | ---------------- | --------- |  | ---------------- | - | --------- | 
|                                                              |  | December 31,2014 |           |  | December 31,2013 |  
|Current:                                                      |  |                  |           |  |                  |   |           | 
|Shortterm borrowings and current portion of long  term debt |  | $                | 425,915   |  |                  | $ | 270,498   | 
|Shortterm bonds                                              |  |                  | 32,764    |  |                  |   | 38,852    | 
|Finance lease liabilities                                     |  |                  |          |  |                  |   | 4,815     | 
|                                                              |  |                  |           |  |                  |   |           | 
|                                                              |  | $                | 458,679   |  |                  | $ | 314,165   | 
|                                                              |  |                  |           |  |                  |   |           | 
|Noncurrent:                                                  |  |                  |           |  |                  |   |           | 
|Longterm debt                                                |  | $                | 2,018,927 |  |                  | $ | 1,431,498 | 
|Bonds                                                         |  |                  | 692,971   |  |                  |   | 519,268   | 
|Finance lease liabilities                                     |  |                  |          |  |                  |   | 564       | 
|                                                              |  |                  |           |  |                  |   |           | 
|                                                              |  | $                | 2,711,898 |  |                  | $ | 1,951,330 | 
|                                                              |  |                  |           |  |                  |   |           | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Terms and conditions of the Companys outstanding obligations for years ended
December 31, 2014 and 2013 are as follows:



|                      |  |            |      |           |                              |  |      |            |  |   |                |  |  |   |           | 
|--------------------- |  | ---------- | ---- | --------- | ---------------------------- |  | ---- | ---------- |  | - | -------------- |  |  | - | --------- | 
|                      |  |            |      |           | December 31, 2014            | 
|                      |  | Duethrough |      |           | Weightedaverageinterest rate |  |      | Face Value |  |   | CarryingAmount | 
|Shortterm borrowings |  |            | 2015 |           |                              |  | 2.65 | %          |  | $ | 133,009        |  |  | $ | 133,009   | 
|Longterm debt        |  |            | 2026 |           |                              |  | 3.06 | %          |  |   | 3,298,991      |  |  |   | 2,311,833 | 
|BondsColombia        |  |            | 2019 |           |                              |  | 9.69 | %          |  |   | 177,641        |  |  |   | 177,641   | 
|Bonds Luxembourg     |  |            | 2020 |           |                              |  | 7.95 | %          |  |   | 550,000        |  |  |   | 548,094   | 
|                      |  |            |      |           |                              |  |      |            |  |   |                |  |  |   |           | 
|Total                 |  |            | $    | 4,159,641 |                              |  | $    | 3,170,577  | 
|                      |  |            |      |           |                              |  |      |            |  |   |                |  |  |   |           | 



|                              |  |            |      |           |                              |  |      |            |  |   |                |  |  |   |           | 
|----------------------------- |  | ---------- | ---- | --------- | ---------------------------- |  | ---- | ---------- |  | - | -------------- |  |  | - | --------- | 
|                              |  |            |      |           | December 31, 2013            | 
|                              |  | Duethrough |      |           | Weightedaverageinterest rate |  |      | Face Value |  |   | CarryingAmount | 
|Shortterm borrowings         |  |            | 2014 |           |                              |  | 2.66 | %          |  | $ | 38,169         |  |  | $ | 38,169    | 
|Longterm debt                |  |            | 2025 |           |                              |  | 3.16 | %          |  |   | 2,409,588      |  |  |   | 1,663,827 | 
|BondsColombia                |  |            | 2019 |           |                              |  | 8.10 | %          |  |   | 259,494        |  |  |   | 259,494   | 
|BondsLuxembourg              |  |            | 2020 |           |                              |  | 8.38 | %          |  |   | 300,000        |  |  |   | 298,626   | 
|Finance lease liabilities (1) |  |            | 2015 |           |                              |  | 2.61 | %          |  |   | 22,300         |  |  |   | 5,379     | 
|                              |  |            |      |           |                              |  |      |            |  |   |                |  |  |   |           | 
|Total                         |  |            | $    | 3,029,551 |                              |  | $    | 2,265,495  | 
|                              |  |            |      |           |                              |  |      |            |  |   |                |  |  |   |           | 



|(1) | Average monthly rate.
|--- | ---------------------

The majority of interests bearing liabilities are denominated in
US dollars except for bonds and certain financing liabilities for working capital which are denominated in Colombian Pesos, and one aircraft denominated in Euros.

As of December 31, 2014 and 2013, $2,171,535 and $1,516,779, respectively, were outstanding balances of shortterm borrowings and
longterm debt with different financial institutions to finance aircraft acquisitions. Most of these borrowings are under financing arrangements guaranteed by the Export Credit Agencies. Additionally, the Company had an outstanding balance of
shortterm borrowing and longterm debt with different financial institutions amounting to $273,307 and $185,217, respectively, for working capital purposes.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



During 2013, the Company obtained loans amounting to $316,926 in order to finance the
purchase of three A330F, one A320, one A319, and two ATR 72. Also the Company obtained $16,600 from Banco de Bogota to refinance a Chapter11 payment that was due in June, 2013. The Company also obtained $38,000 from Bladex for the prepayment
of a loan with IFC, and to finance the purchase of an ATR 72 flight simulator. The Company also obtained $14,551 for general working capital purposes.

On May 10, 2013, the Company issued $300,000 of Senior Notes in an offering exempt from registration under Rule 144A and Regulation S
under the U.S. Securities Act of 1933, as amended. The Senior Notes are due in 2020 and bear interest at the rate of 8.375% per year, payable semiannually in arrears on May 10 and November 10, beginning on November 10,
2013.

During 2014 the Company obtained financing up to $846,527 in order to finance the purchase of two A330, two A321, six A319, three
B787 and eleven ATR 72. The latter includes $152,850 obtained through the issuance of guaranteed notes under a Private Placement vehicle. The Company also obtained $156,860, for general working capital purposes.

On Apr 8, 2014, the Company completed a second issuance of $250,000 of Senior Notes in an offering exempt from registration under Rule 144A and
Regulation S under the U.S. Securities Act of 1933, as amended. The Senior Notes are due in 2020 and bear interest at the rate of 8.375% per year, payable semiannually in arrears on May 10 and November 10, beginning on
May 10, 2014. The placement price for the second issuance was 104.50%.

As of December 31, 2014 and 2013, the Company and the
subsidiaries Grupo Taca Holdings Limited, and Avianca Leasing, LLC are jointly and severally liable under the Senior Notes as coissuers on $550,000 and $300,000 respectively in aggregate principal amount.

The Senior Notes are fully and unconditionally guaranteed by three of the subsidiaries: Taca International Airlines S.A., Líneas
Aéreas Costarricenses, S.A., and Trans American Airlines S.A. As of December 31, 2014 and 2013, Avianca Leasing LLCs obligations as a coissuer of the Senior Notes are unconditionally guaranteed by the subsidiary
Aerovías del Continente Americano S.A.Avianca, in an amount equal to $375,000 and $200,000, respectively. The Senior Notes and guarantees are senior unsecured obligations of the coissuers and the guarantors, respectively, and rank
equally in right of payments with all of their other respective present and future unsecured obligations that are not expressly subordinated in right of payment to the Senior Notes or the guarantees.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The Company, Avianca Leasing, LLC and Grupo Taca Holdings, Limited as coissuers, listed
the Senior Notes on the Official List of the Luxembourg Stock Exchange and for trading on the Euro MTF market of the Luxembourg Stock Exchange. As of December 31, 2014 and 2013, the Senior Notes outstanding and the corresponding balances are as
follows:



|                                                                            |  |                  |      |  |                                 |      |         |                           |  |   |         |  |  |   |         | 
|--------------------------------------------------------------------------- |  | ---------------- | ---- |  | ------------------------------- | ---- | ------- | ------------------------- |  | - | ------- |  |  | - | ------- | 
|Issuing entities                                                            |  | Originalcurrency |      |  | Total placed inoriginalcurrency |      |         | Balance as ofDecember 31, | 
|                                                                            |  |                 
|                                                                            |  |                  | 2014 |  |                                 | 2013 |        
|Avianca Holdings S.A., Avianca Leasing, LLC and Grupo Taca Holdings Limited |  |                  | USD  |  |                                 |      | 550,000 |                           |  | $ | 548,094 |  |  | $ | 298,626 | 
|                                                                            |  |                  |      |  |                                 |      |         |                           |  |   |         |  |  |   |         | 
|                                                                            |  |                  |      |  |                                 |      |         |                           |  | $ | 548,094 |  |  | $ | 298,626 | 
|                                                                            |  |                  |      |  |                                 |      |         |                           |  |   |         |  |  |   |         | 



|                          |  |                                                                                                                                                                                                                                                                                                                                                      
|------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Issuers:                  |  | Avianca Holdings S.A., Avianca Leasing, LLC, and Grupo Taca Holdings Limited                                                                                                                                                                                                                                                                         
|                          | 
|Guarantors:               |  | Líneas Aéreas Costarricenses, S.A., Trans American Airlines S.A., and Taca International Airlines, S.A. will fully and unconditionally guarantee the total Notes. Aerovías del Continente Americano 
Avianca, S.A. will unconditionally guarantee the obligations of Avianca Leasing, LLC under the Senior Notes in an amount equal to $375 million.
|                          | 
|Senior Notes outstanding: |  | $550,000 aggregate principal amount of 8.375% Senior Notes due 2020.                                                                                                                                                                                                                                                                                 
|                          | 
|Initial Issue Price:      |  | 98.706%                                                                                                                                                                                                                                                                                                                                              
|                          | 
|Initial Issue Date:       |  | May 10, 2013                                                                                                                                                                                                                                                                                                                                         
|                          | 
|Interest:                 |  | The Senior Notes will bear interest at a fixed rate of 8.375% per year, payable semiannually in arrears on May 10 and November 10 of each year, commencing on November 10, 2013. Interest will accrue from May 10, 2013.                                                                                                                             
|                          | 
|Second Issue Price:       |  | 104.50%                                                                                                                                                                                                                                                                                                                                              
|                          | 
|Second Issue Date:        |  | April 8, 2014                                                                                                                                                                                                                                                                                                                                        
|                          | 
|Maturity Date:            |  | The Senior Notes will mature on May 10, 2020.                                                                                                                                                                                                                                                                                                        



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



As of December 31, 2014 and 2013, bonds issued and the corresponding balances are as
follows:



|               |  |       |          |                   |                   |                 |                                  |  |                 |                           |  |  |                 |  |  |   |         |  |  |  |                 |  |  |   |         | 
|-------------- |  | ----- | -------- | ----------------- | ----------------- | --------------- | -------------------------------- |  | --------------- | ------------------------- |  |  | --------------- |  |  | - | ------- |  |  |  | --------------- |  |  | - | ------- | 
|Issuing
entity |  | Issue |          |                   | Original currency |                 | Total placed inoriginal currency |  |                 | Balance as ofDecember 31, | 
|               |  |       |          | 2014              |                   |                 | 2013                             | 
|               |  |       |          | Original currency |                   |                 | In USDollars                     |  |                 | Original currency         |  |  | In USDollars    | 
|Avianca        |  |       | Series A |                   |                   | Colombian Pesos |                                  |  | 75,000 million  |                           |  |  |                |  |  | $ |        |  |  |  | 75,000 million  |  |  | $ | 38,924  | 
|Avianca        |  |       | Series B |                   |                   | Colombian Pesos |                                  |  | 158,630 million |                           |  |  | 158,630 million |  |  |   | 66,304  |  |  |  | 158,630 million |  |  |   | 82,327  | 
|Avianca        |  |       | Series C |                   |                   | Colombian Pesos |                                  |  | 266,370 million |                           |  |  | 266,370 million |  |  |   | 111,337 |  |  |  | 266,370 million |  |  |   | 138,243 | 
|               |  |       |          |                   |                   |                 |                                  |  |                 |                           |  |  |                 |  |  |   |         |  |  |  |                 |  |  |   |         | 
|Total          |  |       |          |                   |                   |                 |                                  |  |                 |                           |  |  |                 |  |  | $ | 177,641 |  |  |  |                 |  |  | $ | 259,494 | 
|               |  |       |          |                   |                   |                 |                                  |  |                 |                           |  |  |                 |  |  |   |         |  |  |  |                 |  |  |   |         | 

On August 25, 2009 a bond issue was completed on the Colombian stock exchange, which is collateralized by
Credibanco and Visa credit cards ticket sales in Colombia.

The specific conditions of the 2009 bond issue in Colombia are as follows:



|                               |  |                                                                                                                                                                                               
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Representative of bondholders: |  | Helm Trust, S.A.                                                                                                                                                                              
|                               | 
|Amount of issue:               |  | $500,000 million Colombian Pesos                                                                                                                                                              
|                               | 
|Managing agent:                |  | Fiduciaria Bogota, S.A.                                                                                                                                                                       
|                               | 
|Series:                        |  | Series A: Authorized issue $100,000 million Colombian Pesos
Series B: Authorized issue $200,000 million Colombian Pesos
Series C: Authorized issue $300,000 million Colombian Pesos           
|                               | 
|Coupon:                        |  | Series A: Indexed to Colombian consumer price index
Series B: Indexed to Colombian consumer price index Series C:
Indexed to Colombian consumer price index Interest is payable at quarterend
|                               | 
|Term:                          |  | Series A: 5 years Series B: 7 years
Series C: 10 years                                                                                                                                        
|                               | 
|Repayment of capital:          |  | Series A: At the end of 5 years Series B:
50% after 6 years and 50% after 7 years Series C: 33% after 8 years, 33% after 9 years and 34% after 10 years                                       

As of December 31, 2014 and 2013, the Company had unsecured revolving lines of credit with different
financial institutions in the aggregate amounts of $196,857 and $167,952, respectively. As of December 31, 2014 and 2013, there were $171,206 and $94,017 outstanding balances respectively under these facilities. These revolving lines of credit
are preapproved by the financial institutions and the Company may withdraw funds if it has working capital requirements.





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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Future payments on finance lease liabilities for the years ended December 31, 2014 and
2013 are as follows:



|                                |  |                              |   |  |                  |   |       |                                       |  |   |                  |  |  |                  |     |  |                  |   |   |  |  |   |       | 
|------------------------------- |  | ---------------------------- | - |  | ---------------- | - | ----- | ------------------------------------- |  | - | ---------------- |  |  | ---------------- | --- |  | ---------------- | - | - |  |  | - | ----- | 
|                                |  | Future minimum leasepayments |   |  | Interest         |   |       | Present value ofminimum leasepayments | 
|                                |  | December 31,2014             |   |  | December 31,2013 |   |       | December 31,2014                      |  |   | December 31,2013 |  |  | December 31,2014 |     |  | December 31,2013 |  
|Less than one year              |  | $                            |  |  |                  | $ | 5,775 |                                       |  | $ |                 |  |  | $                | 960 |  |                  | $ |  |  |  | $ | 4,815 | 
|                                |  |                              |   |  |                  |   |       |                                       |  |   |                  |  |  |                  |     |  |                  |   |   |  |  |   |       | 
|Between one year and five years |  | $                            |  |  |                  | $ | 588   |                                       |  | $ |                 |  |  | $                | 24  |  |                  | $ |  |  |  | $ | 564   | 
|                                |  |                              |   |  |                  |   |       |                                       |  |   |                  |  |  |                  |     |  |                  |   |   |  |  |   |       | 

Future payments on longterm debt for the years ended December 31, 2014 and 2013 are as follows:



|                  |  |       |         |  |     |   |         |       |  |   |         |  |  |                    |         |  |       |   |           |  |  |   |           | 
|----------------- |  | ----- | ------- |  | --- | - | ------- | ----- |  | - | ------- |  |  | ------------------ | ------- |  | ----- | - | --------- |  |  | - | --------- | 
|                  |  | Years |        
|                  |  | One   |         |  | Two |   |         | Three |  |   | Four    |  |  | Five andthereafter |         |  | Total |  
|December 31, 2014 |  | $     | 292,906 |  |     | $ | 266,723 |       |  | $ | 252,878 |  |  | $                  | 255,062 |  |       | $ | 1,244,264 |  |  | $ | 2,311,833 | 
|                  |  |       |         |  |     |   |         |       |  |   |         |  |  |                    |         |  |       |   |           |  |  |   |           | 
|December 31, 2013 |  | $     | 232,329 |  |     | $ | 224,679 |       |  | $ | 196,741 |  |  | $                  | 181,828 |  |       | $ | 828,250   |  |  | $ | 1,663,827 | 
|                  |  |       |         |  |     |   |         |       |  |   |         |  |  |                    |         |  |       |   |           |  |  |   |           | 

Future payments on bonds for the years ended December 31, 2014 and 2013 are as follows:



|                  |  |       |        |  |     |   |        |       |  |   |        |  |  |                    |        |  |       |   |         |  |  |   |         | 
|----------------- |  | ----- | ------ |  | --- | - | ------ | ----- |  | - | ------ |  |  | ------------------ | ------ |  | ----- | - | ------- |  |  | - | ------- | 
|                  |  | Years |       
|                  |  | One   |        |  | Two |   |        | Three |  |   | Four   |  |  | Five andthereafter |        |  | Total |  
|December 31, 2014 |  | $     | 32,764 |  |     | $ | 32,764 |       |  | $ | 36,725 |  |  | $                  | 36,725 |  |       | $ | 586,757 |  |  | $ | 725,735 | 
|                  |  |       |        |  |     |   |        |       |  |   |        |  |  |                    |        |  |       |   |         |  |  |   |         | 
|December 31, 2013 |  | $     | 38,852 |  |     | $ | 41,091 |       |  | $ | 41,091 |  |  | $                  | 46,008 |  |       | $ | 391,078 |  |  | $ | 558,120 | 
|                  |  |       |        |  |     |   |        |       |  |   |        |  |  |                    |        |  |       |   |         |  |  |   |         | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



During 2014 and 2013, the Company did not comply with certain debt covenants. The breaches
did not accelerate debt. As of December 31, 2014, the Company obtained waivers adjusting its EBITDAR Coverage Ratio threshold. The most significant commitments related to financial ratios assumed by the Company and its subsidiaries are as
follows:

Avianca, S.A. and Subsidiaries

The consolidated financial statements of Avianca, S.A. and Subsidiaries must comply with the following financial covenants as of
December 31, 2014:



| | (1) | EBIDAR Coverage Ratio: Should be less than or equal to 1.4 at the end of each period; and
| | --- | -----------------------------------------------------------------------------------------



| | (2) | Leverage Ratio: Should be less than or equal to 4.5 at the end of each reporting period
| | --- | ---------------------------------------------------------------------------------------

As of
December 31, 2014, the Company did not comply with EBIDAR coverage ratio and leverage ratio. However, the Company did not require waivers from financial institutions since the breached covenants have no possible consequences on acceleration of
debt. As of December 31, 2013, the Company did comply with the applicable financial covenants.

Avianca Holdings S.A. and
Subsidiaries

The consolidated financial statements of Avianca Holdings and Subsidiaries must comply with the following financial
covenants:



| | (1) | EBITDAR Coverage Ratio: Should be not less than 1.50 to 1.00 at the end of December 31, 2014.
| | --- | ---------------------------------------------------------------------------------------------



| | (2) | EBITDAR Coverage Ratio: Should be not less than 1.70 to 1.00 at the end of December 31, 2014.
| | --- | ---------------------------------------------------------------------------------------------



| | (3) | EBITDA Margin: Should be not less than 0% at the end of December 31, 2014.
| | --- | --------------------------------------------------------------------------



| | (4) | Capitalization Ratio: Should not be greater than 0.86 to 1.00 at the end of each reporting period.
| | --- | --------------------------------------------------------------------------------------------------



| | (5) | Cash reserves held or controlled or otherwise available to the guarantor or its subsidiaries should be at least $250 million at all times until the Relevant Testing Date in respect of the period ending December 31,
2015. Relevant Testing Date means the date on which the Avianca Holdings S.A. and Subsidiaries audited financial statements prepared in accordance with IFRS are delivered to the Security Trustee, no later than 180 days of the end of the financial
period.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of December 31, 2014 and 2013 the Company complied with the financial covenants applicable at each reporting
date for Avianca Holdings S.A. and Subsidiaries.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(18) | Accounts payable
|---- | ----------------

Accounts payable as of December 31, 2014 and 2013 are as follows:



|                                      |  |                  |         |  |                  |   |         | 
|------------------------------------- |  | ---------------- | ------- |  | ---------------- | - | ------- | 
|                                      |  | December 31,2014 |         |  | December 31,2013 |  
|Trade accounts payable                |  | $                | 345,342 |  |                  | $ | 332,450 | 
|Nonincome taxes collected in advance |  |                  | 131,177 |  |                  |   | 93,308  | 
|Payroll taxes (1)                     |  |                  | 55,944  |  |                  |   | 50,784  | 
|Other payables                        |  |                  | 15,031  |  |                  |   | 32,587  | 
|                                      |  |                  |         |  |                  |   |         | 
|Current                               |  | $                | 547,494 |  |                  | $ | 509,129 | 
|                                      |  |                  |         |  |                  |   |         | 
|Trade accounts payable                |  | $                | 18,329  |  |                  | $ | 14      | 
|Payroll taxes (1)                     |  |                  | 2,838   |  |                  |   | 2,721   | 
|                                      |  |                  |         |  |                  |   |         | 
|Noncurrent                           |  | $                | 21,167  |  |                  | $ | 2,735   | 
|                                      |  |                  |         |  |                  |   |         | 



|(1) | Represent payroll taxes and contributions based on salaries and compensation paid to employees of the Company in the various jurisdictions in which it operates.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



|(19) | Accrued expenses
|---- | ----------------

Accrued expenses as of December 31, 2014 and 2013 are as follows:



|                                     |  |                  |         |  |                  |   |         | 
|------------------------------------ |  | ---------------- | ------- |  | ---------------- | - | ------- | 
|                                     |  | December 31,2014 |         |  | December 31,2013 |  
|Operating expenses                   |  | $                | 83,823  |  |                  | $ | 54,276  | 
|Vacation and other employee accruals |  |                  | 24,708  |  |                  |   | 36,390  | 
|Other accrued expenses               |  |                  | 29,731  |  |                  |   | 44,272  | 
|                                     |  |                  |         |  |                  |   |         | 
|Total                                |  | $                | 138,262 |  |                  | $ | 134,938 | 
|                                     |  |                  |         |  |                  |   |         | 



|(20) | Provisions for return conditions
|---- | --------------------------------

For certain operating leases, the Company is
contractually obligated to return the aircraft in a predefined condition. The Company accrues for restitution costs related to aircraft held under operating leases at the time the asset does not meet the return conditions criteria and throughout the
remaining duration of the lease.

Provisions for return conditions as of December 31, 2014 and 2013 are as follows:



|            |  |                  |         |  |                  |   |        | 
|----------- |  | ---------------- | ------- |  | ---------------- | - | ------ | 
|            |  | December 31,2014 |         |  | December 31,2013 |  
|Current     |  | $                | 61,425  |  |                  | $ | 33,033 | 
|Noncurrent |  |                  | 70,459  |  |                  |   | 56,065 | 
|            |  |                  |         |  |                  |   |        | 
|Total       |  | $                | 131,884 |  |                  | $ | 89,098 | 
|            |  |                  |         |  |                  |   |        | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Changes in provisions for return conditions as of December 31, 2014 and 2013 are as
follows:



|                              |  |                  |         |   |                  |   |        |  
|----------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------ | -
|                              |  | December 31,2014 |         |   | December 31,2013 |  
|Balances at beginning of year |  | $                | 89,098  |   |                  | $ | 66,895 |  
|Provisions made               |  |                  | 51,596  |   |                  |   | 29,061 |  
|Provisions used               |  |                  | (8,810  | ) |                  |   | (6,858 | )
|                              |  |                  |         |   |                  |   |        |  
|Balances at end of year       |  | $                | 131,884 |   |                  | $ | 89,098 |  
|                              |  |                  |         |   |                  |   |        |  

The amount of expected reimbursements which are presented net within provisions for the return conditions
amounts to $15,545 and $17,102 as of December 31, 2014 and 2013, respectively.



|(21) | Employee benefits
|---- | -----------------

The Company has a defined benefit plan which requires contributions
to be made to separately administered funds. The Company has also agreed to provide postemployment benefits to its retirees that consist primarily of medical benefit plans as well as certain other benefits, including scholarships, tickets,
seniority and retirement. These other benefits are unfunded.

Accounting for pensions and other postemployment benefits involves
estimating the benefit cost to be provided well into the future and attributing that cost over the time period in which each employee works for the Company. This requires the use of extensive estimates and assumptions about inflation, investment
returns, mortality rates, turnover rates, medical cost trends and discount rates, among other information. The Company has two distinct pension plans, one for pilots and the other for ground personnel. Both plans have been closed to new
participants, and therefore there are a fixed number of beneficiaries covered under these plans as of December 31, 2014 and 2013.



|                                 |  |                   |          |   |                   |   |          |  
|-------------------------------- |  | ----------------- | -------- | - | ----------------- | - | -------- | -
|                                 |  | December 31, 2014 |          |   | December 31, 2013 |  
|Fair value of plan assets        |  | $                 | (175,620 | ) |                   | $ | (160,998 | )
|Present value of the obligation  |  |                   | 398,273  |   |                   |   | 489,674  |  
|                                 |  |                   |          |   |                   |   |          |  
|Total employee benefit liability |  | $                 | 222,653  |   |                   | $ | 328,676  |  
|                                 |  |                   |          |   |                   |   |          |  

The following table summarizes the components of net benefit expense recognized in the Consolidated Statement
of Comprehensive Income and the funded status and amounts recognized in the Consolidated Statement of Financial Position for the respective plans:

Net benefit expense  year ended

December 31, 2014

(recognized in Salaries, wages and benefits)



|                                        |  |                      |        |  |                |   |       | 
|--------------------------------------- |  | -------------------- | ------ |  | -------------- | - | ----- | 
|                                        |  | Defined benefit plan |        |  | Other benefits |  
|Current service cost                    |  | $                    | 3,777  |  |                | $ | 3,281 | 
|Interest cost on net benefit obligation |  |                      | 21,078 |  |                |   | 5,046 | 
|                                        |  |                      |        |  |                |   |       | 
|Net benefit expense                     |  | $                    | 24,855 |  |                | $ | 8,327 | 
|                                        |  |                      |        |  |                |   |       | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Net benefit expense  year ended

December 31, 2013

(recognized in Salaries, wages and

benefits)



|                                        |  |                      |        |  |                |   |        | 
|--------------------------------------- |  | -------------------- | ------ |  | -------------- | - | ------ | 
|                                        |  | Defined benefit plan |        |  | Other benefits |  
|Current service cost                    |  | $                    | 417    |  |                | $ | 4,992  | 
|Interest cost on net benefit obligation |  |                      | 31,032 |  |                |   | 5,954  | 
|                                        |  |                      |        |  |                |   |        | 
|Net benefit expense                     |  | $                    | 31,449 |  |                | $ | 10,946 | 
|                                        |  |                      |        |  |                |   |        | 

Changes in the present value of defined benefit obligation as of December 31, 2014 are as follows:



|                                                                  |  |                           |          |   |                |   |         |       |  |   |          |  
|----------------------------------------------------------------- |  | ------------------------- | -------- | - | -------------- | - | ------- | ----- |  | - | -------- | -
|                                                                  |  | Defined benefitObligation |          |   | Other benefits |   |         | Total | 
|Benefit obligation as of December 31, 2013                        |  | $                         | 398,315  |   |                | $ | 91,359  |       |  | $ | 489,674  |  
|Benefit obligation acquired in business combinations              |  |                           |         |   |                |   | 455     |       |  |   | 455      |  
|Period cost                                                       |  |                           | 24,855   |   |                |   | 8,327   |       |  |   | 33,182   |  
|Benefits paid by employer                                         |  |                           | (22,666  | ) |                |   | (3,131  | )     |  |   | (25,797  | )
|Actuarial (gains) losses recognized in other comprehensive income |  |                           | (4,349   | ) |                |   | (1,406  | )     |  |   | (5,755   | )
|Exchange differences                                              |  |                           | (75,705  | ) |                |   | (17,781 | )     |  |   | (93,486  | )
|                                                                  |  |                           |          |   |                |   |         |       |  |   |          |  
|Benefit obligation as of December 31, 2014                        |  |                           | 320,450  |   |                |   | 77,823  |       |  |   | 398,273  |  
|Fair value of plan assets                                         |  |                           | (175,620 | ) |                |   |        |       |  |   | (175,620 | )
|                                                                  |  |                           |          |   |                |   |         |       |  |   |          |  
|Total employee benefit                                            |  |                           | 144,830  |   |                |   | 77,823  |       |  |   | 222,653  |  
|                                                                  |  |                           |          |   |                |   |         |       |  |   |          |  
|Current                                                           |  | $                         | 45,072   |   |                | $ | 4,121   |       |  | $ | 49,193   |  
|Noncurrent                                                       |  |                           | 99,758   |   |                |   | 73,702  |       |  |   | 173,460  |  
|                                                                  |  |                           |          |   |                |   |         |       |  |   |          |  
|Total                                                             |  | $                         | 144,830  |   |                | $ | 77,823  |       |  | $ | 222,653  |  
|                                                                  |  |                           |          |   |                |   |         |       |  |   |          |  



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Changes in the fair value of plan assets are as follows:



|                                                    |  |                      |         |  
|--------------------------------------------------- |  | -------------------- | ------- | -
|                                                    |  | Defined benefit plan |        
|Fair value of assets at December 2013               |  | $                    | 160,998 |  
|Interest income on plan assets                      |  |                      | 9,635   |  
|Return on plan assets greater/(less) than projected |  |                      | 12,189  |  
|Employer contributions                              |  |                      | 43,120  |  
|Benefits paid                                       |  |                      | (17,483 | )
|Return on plan assets adjustment                    |  |                      | (1,505  | )
|Exchange differences                                |  |                      | (31,334 | )
|                                                    |  |                      |         |  
|Fair value of plan assets at December 31, 2014      |  | $                    | 175,620 |  
|                                                    |  |                      |         |  

Changes in the present value of defined benefit obligation for the year ended December 31, 2013 are as
follows:



|                                                         |  |                           |          |   |               |   |         |       |  |   |          |  
|-------------------------------------------------------- |  | ------------------------- | -------- | - | ------------- | - | ------- | ----- |  | - | -------- | -
|                                                         |  | Defined benefitObligation |          |   | Otherbenefits |   |         | Total | 
|Benefit obligation as of December 31, 2012               |  | $                         | 497,039  |   |               | $ | 107,079 |       |  | $ | 604,118  |  
|Period cost                                              |  |                           | 31,449   |   |               |   | 10,946  |       |  |   | 42,395   |  
|Benefits paid by employer                                |  |                           | (30,049  | ) |               |   | (3,558  | )     |  |   | (33,607  | )
|Actuarial gains recognized in other comprehensive income |  |                           | (58,966  | ) |               |   | (14,365 | )     |  |   | (73,331  | )
|Exchange differences                                     |  |                           | (41,158  | ) |               |   | (8,743  | )     |  |   | (49,901  | )
|                                                         |  |                           |          |   |               |   |         |       |  |   |          |  
|Benefit obligation as of December 31, 2013               |  |                           | 398,315  |   |               |   | 91,359  |       |  |   | 489,674  |  
|Fair value of the plan assets                            |  |                           | (160,998 | ) |               |   |        |       |  |   | (160,998 | )
|                                                         |  |                           |          |   |               |   |         |       |  |   |          |  
|Total employee benefit                                   |  | $                         | 237,317  |   |               | $ | 91,359  |       |  | $ | 328,676  |  
|                                                         |  |                           |          |   |               |   |         |       |  |   |          |  
|Current                                                  |  | $                         | 48,354   |   |               | $ | 4,038   |       |  | $ | 52,392   |  
|Noncurrent                                              |  |                           | 188,963  |   |               |   | 87,321  |       |  |   | 276,284  |  
|                                                         |  |                           |          |   |               |   |         |       |  |   |          |  
|Total                                                    |  | $                         | 237,317  |   |               | $ | 91,359  |       |  | $ | 328,676  |  
|                                                         |  |                           |          |   |               |   |         |       |  |   |          |  



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Change in the fair value of plan assets are as follows:



|                                                    |  |                      |         |  
|--------------------------------------------------- |  | -------------------- | ------- | -
|                                                    |  | Defined benefit plan |        
|Fair value of assets at December 2012               |  | $                    | 146,046 |  
|Interest income on plan assets                      |  |                      | 9,153   |  
|Return on plan assets greater/(less) than projected |  |                      | (4,745  | )
|Employer contributions                              |  |                      | 46,184  |  
|Benefits paid                                       |  |                      | (21,342 | )
|Return on plan assets adjustment                    |  |                      | (2,309  | )
|Exchange differences                                |  |                      | (11,989 | )
|                                                    |  |                      |         |  
|Fair value of plan assets at December 31, 2013      |  | $                    | 160,998 |  
|                                                    |  |                      |         |  

For the year ended December 31, 2014, 2013 and 2012, actuarial gains and losses of $16,439, $66,277 and
$(55,012), respectively were recognized in other comprehensive income.



|                                                                  |  |                  |        |  |                  |   |        |                  |  |   |         |  
|----------------------------------------------------------------- |  | ---------------- | ------ |  | ---------------- | - | ------ | ---------------- |  | - | ------- | -
|                                                                  |  | December 31,2014 |        |  | December 31,2013 |   |        | December 31,2012 | 
|Actuarial gains (losses) recognized in other comprehensive income |  | $                | 5,755  |  |                  | $ | 73,331 |                  |  | $ | (66,454 | )
|Return on plan assets adjustment                                  |  |                  | 10,684 |  |                  |   | (7,054 | )                |  |   | 11,442  |  
|                                                                  |  |                  |        |  |                  |   |        |                  |  |   |         |  
|Amount recognized in other comprehensive income                   |  | $                | 16,439 |  |                  | $ | 66,277 |                  |  | $ | (55,012 | )
|                                                                  |  |                  |        |  |                  |   |        |                  |  |   |         |  

The Company expects to contribute $49,193 to its defined benefit plan and other benefits in 2015.

Plan assets correspond to net funds transferred to Caxdac, which is responsible for the administration of the pilots pension plan. The
assets held by Caxdac are segregated into separate accounts corresponding to each contributing company. Additionally the plan assets included a portion relating to pension plan of ground personnel.

The principal assumptions (inflationadjusted) that are used in determining pension and postemployment medical benefit obligations
for the Companys plans are shown below:



|                           |  |                  |      |   |                  |  |      |  
|-------------------------- |  | ---------------- | ---- | - | ---------------- |  | ---- | -
|                           |  | December 31,2014 |      |   | December 31,2013 | 
|Discount rate on all plans |  |                  | 7.00 | % |                  |  | 7.00 | %
|Future salary increase     |  |                  |      |   |                  |  |      |  
|Pilots                     |  |                  | 3.75 | % |                  |  | 3.75 | %
|Cabin crew                 |  |                  | 3.50 | % |                  |  | 3.50 | %
|Other employees            |  |                  | 4.00 | % |                  |  | 4.00 | %
|Future pension increase    |  |                  | 3.00 | % |                  |  | 3.00 | %
|Healthcare cost increase   |  |                  | 4.00 | % |                  |  | 4.00 | %
|Ticket cost increase       |  |                  | 3.00 | % |                  |  | 3.00 | %
|Education cost increase    |  |                  | 3.00 | % |                  |  | 3.00 | %



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The major categories of plan assets as a percentage of the fair value of the total plan
assets are as follows:



|                  |  |                  |    |   |                  |  |    |  
|----------------- |  | ---------------- | -- | - | ---------------- |  | -- | -
|                  |  | December 31,2014 |    |   | December 31,2013 | 
|Equity securities |  |                  | 45 | % |                  |  | 42 | %
|Debt securities   |  |                  | 51 | % |                  |  | 54 | %
|Other             |  |                  | 4  | % |                  |  | 4  | %

Equity securities comprise investments in Colombian entities with credit rating between AAA and BBB. Debt
securities include investments in Colombian Government bonds, banks and public and private Colombian entities.

Pension plans for
ground personnel

In 2008, the Company entered into a commutation agreement with Compañía Aseguradora de Vida Colseguros
S.A. (Insurance Company) in connection with the pension liability of two of the Companys pension plans.

As of December 31, 2014
and 2013, there are 7 and 12 beneficiaries, respectively, which have not been commuted.

Consequently, the Company estimates through an
actuarial calculation the pension liability of these beneficiaries.

Pension plans for flight personnel

Due to local regulations for two of the Companys pension plans, the Company has to make contributions to a fund which is externally
administrated. The amount of the annual contribution is based on the following:



| |  |  | Basic contribution for the year: equal to the expected annual pension payments.
| | - |  | -------------------------------------------------------------------------------



| |  |  | Additional contribution for the year (if necessary): equal to the necessary amount to match the actuarial liability under local accounting rules and the plan assets as of year 2023 (determined with an actuarial
calculation).
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Sensitivity Analysis

The calculation of the defined benefit obligation is sensitive to the aforementioned assumptions. The following table summarizes how the impact
on the defined benefit obligation at the end of the reporting period would have increased (decreased) as a result of a change in the respective assumptions:



|                 |  |               |         |   |               |  |         |  
|---------------- |  | ------------- | ------- | - | ------------- |  | ------- | -
|                 |  | 0.5% increase |         |   | 0.5% decrease | 
|Discount rate    |  |               | (19,503 | ) |               |  | 21,704  |  
|Pension increase |  |               | 17,844  |   |               |  | (16,257 | )
|Mortality table  |  |               | 5,399   |   |               |  |        |  
|                 |  |              
|                 |  | 1.0% increase |         |   | 1.0% decrease | 
|Medical cost     |  |               | 10,747  |   |               |  | (8,318  | )



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(22) | Air traffic liability
|---- | ---------------------

Air traffic liability as of December 31, 2014 and 2013 is as
follows:



|                       |  |                  |         |  |                  |   |         | 
|---------------------- |  | ---------------- | ------- |  | ---------------- | - | ------- | 
|                       |  | December 31,2014 |         |  | December 31,2013 |  
|Advance ticket sales   |  | $                | 396,292 |  |                  | $ | 436,732 | 
|Miles deferred revenue |  |                  | 64,826  |  |                  |   | 55,020  | 
|                       |  |                  |         |  |                  |   |         | 
|Current                |  | $                | 461,118 |  |                  | $ | 491,752 | 
|                       |  |                  |         |  |                  |   |         | 
|Miles deferred revenue |  | $                | 85,934  |  |                  | $ | 72,853  | 
|                       |  |                  |         |  |                  |   |         | 
|Noncurrent            |  | $                | 85,934  |  |                  | $ | 72,853  | 
|                       |  |                  |         |  |                  |   |         | 

On December 31, 2014 the Company reviewed its estimates and assumptions related to the redemption periods
of miles deferred revenue. As a result a noncurrent air traffic liability is presented in 2014 disclosing the amount expected to be redeemed after twelve months. Prior year figures have been reclassified for comparative purposes.



|(23) | Other liabilities
|---- | -----------------

Other liabilities as of December 31, 2014 and 2013 are as
follows:



|                       |  |       |        |  |                  |   |         |                  |  |   |        | 
|---------------------- |  | ----- | ------ |  | ---------------- | - | ------- | ---------------- |  | - | ------ | 
|                       |  | Notes |        |  | December 31,2014 |   |         | December 31,2013 | 
|Derivative instruments |  |       | 27, 28 |  |                  | $ | 116,555 |                  |  | $ | 13,830 | 
|Other                  |  |       |        |  |                  |   | 19,407  |                  |  |   | 25,308 | 
|                       |  |       |        |  |                  |   |         |                  |  |   |        | 
|Total                  |  |       |        |  |                  |   | 135,962 |                  |  |   | 39,138 | 
|                       |  |       |        |  |                  |   |         |                  |  |   |        | 
|Current                |  |       |        |  |                  |   | 127,496 |                  |  |   | 27,432 | 
|Noncurrent            |  |       |        |  |                  |   | 8,466   |                  |  |   | 11,706 | 
|                       |  |       |        |  |                  |   |         |                  |  |   |        | 
|Total                  |  |       |        |  |                  | $ | 135,962 |                  |  | $ | 39,138 | 
|                       |  |       |        |  |                  |   |         |                  |  |   |        | 



|(24) | Share based payments
|---- | --------------------

The Company authorized the implementation of an incentive plan
(the Share Plan) on January 27, 2012 whereby eligible recipients, including directors, officers, certain employees, receive a special cash payout if certain redemption conditions are met.

The Share Plan participants have the option to redeem the vested portion of their respective rights for cash, with the payment being equal to
the difference between the trading share price of the preferred shares of Avianca Holdings S.A., as reported by the Colombia Stock Exchange during the 30 calendar days immediately preceding redemption and COP$5,000.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



18,026,158 awards were issued on March 15, 2012, and will vest in equal tranches over a
4 year period, with the first tranche vesting on March 15, 2013, and subsequent tranches vesting on each subsequent anniversary date. Upon vesting, each tranche must be redeemed within 5 years and no later than March 2021.

On November 5, 2013, the Company listed its American Depositary Shares (ADS) in the New York Stock Exchange. As a consequence,
the terms of the Share Plan were modified as follows: Starting on the effective date of the sale of ADSs in the market, the value of each award, as long as the result is positive, will result from: i) calculating the difference between the average
quote of the ADSs representative of preferred shares of Avianca Holdings S.A., as reported by the New York Stock Exchange during the 30 calendar days immediately prior to each vesting date of the Share Plan and the price of $15, and ii) dividing the
latter calculation by eight, considering that each ADS represents eight preferred shares and applying the resulting amount by the exchange rate of COP$1,901.22 per $1, (the exchange rate as of November 5, 2013 or the effective date of listing
of the ADSs in the New York Stock Exchange). However, this modification does not affect Tranche 1.

Additionally, the Company issued
2,000,000 new Awards (New Awards) for the Board of Directors and C Levels on November 6, 2013. These New Awards vest in four equal tranches and expire five year after the vesting date. The value of each New Award is determined in
the same way as the modified terms of the Share Plans. On March 11, 2014, the Company revised the New Awards and reduced them to 1,840,000 units.

As of December 31, 2014, active beneficiaries have been awarded with 6,512,187 units out of 18,026,158 initially approved and issued, and
have redeemed 480,025 units, corresponding to the vesting periods March 15, 20122013 and March 15, 20132014. Total awards to be redeemed as of December 31, 2014 are equal to 6,032,162.

A summary of the terms of the awards excluding the 1,840,000 New Awards is as follows:



|               |  |                    |  |                                           
|-------------- |  | ------------------ |  | ------------------------------------------
|Vesting dates  |  | Percentage vesting |  | Redemption period                         
|March 15, 2013 |  | 25%                |  | From March 16, 2013 through March 15, 2018
|March 15, 2014 |  | 25%                |  | From March 16, 2014 through March 15, 2019
|March 15, 2015 |  | 25%                |  | From March 16, 2015 through March 15, 2020
|March 15, 2016 |  | 25%                |  | From March 16, 2016 through March 15, 2021

A summary of the terms of the 1,840,000 New Awards is as follows:



|                 |  |                    |  |                                               
|---------------- |  | ------------------ |  | ----------------------------------------------
|Vesting dates    |  | Percentage vesting |  | Redemption period                             
|November 6, 2014 |  | 25%                |  | From November 7, 2014 through November 6, 2019
|November 6, 2015 |  | 25%                |  | From November 7, 2015 through November 6, 2020
|November 6, 2016 |  | 25%                |  | From November 7, 2016 through November 6, 2021
|November 6, 2017 |  | 25%                |  | From November 7, 2017 through November 6, 2022



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Participants who are terminated, or resigned, cease to be part of the Share Plan. The awards
were only issued to board members and key management.

The Company has determined the fair value of the outstanding awards as of
December 31, 2014 and 2013 using the TurnbullWakeman model, which is a variation of the BlackScholes model and was deemed to be an appropriate valuation model given the requirement that the share price be above a certain threshold
for 30 days prior to redemption.

For the valuation as of December 31, 2014, the TurnbullWakeman model uses several inputs
including:



| |  |  | Expected term of 1.60 to 5.35 years
| | - |  | -----------------------------------



| |  |  | Time in averaging period of 0.08 years
| | - |  | --------------------------------------



| |  |  | Stock price of COP$3,420 in the Colombian Stock Exchange and $11.73 in the New York Stock Exchange
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | Strike price of COP$5,000 for tranche 1 and $15 for tranches 2, 3, 4, and for the New Awards in all tranches
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Risk free rate of 0.80% to 5.10%
| | - |  | --------------------------------



| |  |  | Dividend yield of 2.19%
| | - |  | -----------------------



| |  |  | Volatility of 25.22% to 29.73%
| | - |  | ------------------------------

For the valuation as of December 31, 2013, the
TurnbullWakeman model uses several inputs including:



| |  |  | Expected term of 2.10 to 6.35 years
| | - |  | -----------------------------------



| |  |  | Time in averaging period of 0.08 years
| | - |  | --------------------------------------



| |  |  | Stock price of COP$3,700 in the Colombian Stock Exchange and $15.44 in the New York Stock Exchange
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | Strike price of COP$5,000 for tranche 1 and $15 for tranches 2, 3, 4, and for the New Awards in all tranches
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | Risk free rate of 0.70% to 4.74%
| | - |  | --------------------------------



| |  |  | Dividend yield of 2.03%
| | - |  | -----------------------



| |  |  | Volatility of 24.97% to 37.10%
| | - |  | ------------------------------

Since Avianca Holdings S.A. has a public traded history of
approximately three and a half years for the preferred shares, which is shorter than all the expected terms except for Tranche 13 of the original Share Plan and Tranche 1 and 2 of the New Awards, the Company used data for guideline public
companies similar to Avianca Holdings S.A. to estimate its equity volatility.

Based on the aforementioned assumptions, the Company
determined that the income of the Share Plan Awards for the period ended December 31, 2014 and 2013 was $2,540 and $355, respectively which has been recognized within operating profit. As of December 31, 2014 and 2013, $1,256 and $3,723,
respectively, is reflected as a noncurrent liability on the Consolidated Statement of Financial Position.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(25) | Equity
|---- | ------

Common and preferred stock

As of December 31, 2012, the Company purchased 4,123,491 of its outstanding preferred shares, for this reason, outstanding preferred stock
was decreased by $515 and additional paidin capital on preferred stock was decreased by $9,051.

On November 5, 2013, the
Company issued 12,500,000 American Depository Shares, or ADSs, each representing 8 preferred shares. Net proceeds from this offering amounted to approximately $183,553 million (net of issuance costs amounting to $3,956). Preferred stock has no
voting rights and cannot be converted to common stock. Holders of the preferred shares and ADSs will be entitled to receive a minimum dividend to be paid preferentially over holders of common shares, so long as dividends have been declared by our
shareholders at their annual meeting. If no dividends are declared, none of our shareholders will be entitled to any dividends. If dividends are declared and our annual distributable profits are sufficient to pay a dividend per share of at least COP
50 per share to all our holders of preferred and common shares, such profits will be paid equally with respect to our preferred and common shares. However, if our annual distributable profits are insufficient to pay a dividend of at least COP
50 per share to all our holders of preferred and common shares, a minimum preferred dividend of COP 50 per share will be distributed pro rata to the holders of our preferred shares, and any excess above such minimum preferred
dividend will be distributed solely to holders of our common shares.

In connection with that offering, the common shareholders
(selling shareholders) converted 75,599,997 common shares to preferred shares, representing 14,734,910 ADSs. As a consequence, the number of common shares was reduced to 665,800,003; the number of preferred shares increased in 75,599,997
to 331,187,285 preferred shares. The Company did not receive any of the net proceeds from the sale of ADS by the selling shareholders.

As
of December 31, 2013, the Company purchased 197,141 of its outstanding preferred shares, for this reason, outstanding preferred stock was decreased by $25 and additional paidin capital on preferred stock was decreased by $452.

On November 28, 2014, the common shareholders (selling shareholders) converted 5,000,000 common shares to preferred shares. As
a consequence, the number of common shares was reduced to 660,800,003 and the number of preferred shares increased in 5,000,000 to 336,187,285 preferred shares.

The following is a summary of authorized, issued and paid shares:



|                                |  |                   |               |  |                   |  |               | 
|------------------------------- |  | ----------------- | ------------- |  | ----------------- |  | ------------- | 
|                                |  | December 31, 2014 |               |  | December 31, 2013 | 
|Authorized shares               |  |                   | 4,000,000,000 |  |                   |  | 4,000,000,000 | 
|Issued and paid common stock    |  |                   | 660,800,003   |  |                   |  | 665,800,003   | 
|Issued and paid preferred stock |  |                   | 336,187,285   |  |                   |  | 331,187,285   | 



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Other Comprehensive Income (OCI) Reserves



|                                                |  |                    |          |   |                       |   |         |                                                  |  |   |                                     |   |  |                    |        |   |                                             |   |     |                                         |  |   |                   |   |  |   |        |   |  |   |          |  
|----------------------------------------------- |  | ------------------ | -------- | - | --------------------- | - | ------- | ------------------------------------------------ |  | - | ----------------------------------- | - |  | ------------------ | ------ | - | ------------------------------------------- | - | --- | --------------------------------------- |  | - | ----------------- | - |  | - | ------ | - |  | - | -------- | -
|                                                |  |                    |          |   |                       |   |         |                                                  |  |   | Income tax reserves relating to (4) |   |  |                    |        |   |                                             |  
|                                                |  | Hedgingreserves(1) |          |   | Fair valuereserves(2) |   |         | Reserves relatingto actuarial gainsand losses(3) |  |   | Hedgingreserves                     |   |  | Fair valuereserves |        |   | Reserverelating toactuarial gainsand losses |   |     | Revaluation ofadministrativeproperty(5) |  |   | Total OCIReserves |  
|As of December 31, 2012                         |  | $                  | 3,697    |   |                       | $ | (3,599) |                                                  |  | $ | (119,104)                           |   |  | $                  |       |   |                                             | $ | 394 |                                         |  | $ | 24,208            |   |  | $ | 25,418 |   |  | $ | (68,986) |  
|Other comprehensive income (loss) in the period |  |                    | 10,654   |   |                       |   | 2,028   |                                                  |  |   | 66,277                              |   |  |                    | (1,755 | ) |                                             |   | (97 | )                                       |  |   | (14,525           | ) |  |   | 3,439  |   |  |   | 66,021   |  
|                                                |  |                    |          |   |                       |   |         |                                                  |  |   |                                     |   |  |                    |        |   |                                             |   |     |                                         |  |   |                   |   |  |   |        |   |  |   |          |  
|As of December 31, 2013                         |  | $                  | 14,351   |   |                       | $ | (1,571  | )                                                |  | $ | (52,827                             | ) |  | $                  | (1,755 | ) |                                             | $ | 297 |                                         |  | $ | 9,683             |   |  | $ | 28,857 |   |  | $ | (2,965   | )
|                                                |  |                    |          |   |                       |   |         |                                                  |  |   |                                     |   |  |                    |        |   |                                             |   |     |                                         |  |   |                   |   |  |   |        |   |  |   |          |  
|Other comprehensive income (loss) in the period |  |                    | (113,249 | ) |                       |   | (1,527  | )                                                |  |   | 16,439                              |   |  |                    | 14,433 |   |                                             |   | 386 |                                         |  |   | (2,239            | ) |  |   | (4,307 | ) |  |   | (90,064  | )
|                                                |  |                    |          |   |                       |   |         |                                                  |  |   |                                     |   |  |                    |        |   |                                             |   |     |                                         |  |   |                   |   |  |   |        |   |  |   |          |  
|As of December 31, 2014                         |  | $                  | (98,898  | ) |                       | $ | (3,098  | )                                                |  | $ | (36,388                             | ) |  | $                  | 12,678 |   |                                             | $ | 683 |                                         |  | $ | 7,444             |   |  | $ | 24,550 |   |  | $ | (93,029  | )
|                                                |  |                    |          |   |                       |   |         |                                                  |  |   |                                     |   |  |                    |        |   |                                             |   |     |                                         |  |   |                   |   |  |   |        |   |  |   |          |  



|(1) | Hedging Reserves
|--- | ----------------

The hedging reserve comprises the effective portion of the cumulative net
change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition of the hedged cash flows.



|(2) | Fair value reserves
|--- | -------------------

The fair value reserve comprises the cumulative net change in the fair
value of availableforsale financial assets until the assets are derecognized or impaired.



|(3) | Reserve relating to actuarial gains and losses
|--- | ----------------------------------------------

It comprises actuarial gains or losses on
defined benefit plans and postretirement medical benefits recognized in other comprehensive income.



|(4) | Income tax on other comprehensive income
|--- | ----------------------------------------

Whenever an item of other comprehensive income gives
rise to a temporary difference, a deferred income tax asset or liability is recognized directly in other comprehensive income.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(5) | Revaluation of administrative property
|--- | --------------------------------------

Revaluation of administrative property is related to
the revaluation of administrative buildings and property in Colombia, Costa Rica, and El Salvador. The revaluation reserve is adjusted for increases or decreases in fair values of such property.

The following provides an analysis of items presented net in the statement of profit or loss and other comprehensive income which have been subject to
reclassification, without considering items remaining in OCI which are never reclassified to profit of loss:



|                                                   |  |      |          |   |      |   |        |      |  |   |        |  
|-------------------------------------------------- |  | ---- | -------- | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                   |  | 2014 |          |   | 2013 |   |        | 2012 | 
|Cash flow hedges:                                  |  |      |          |   |      |   |        |      |  |   |        |  
|Reclassification during the year to profit or loss |  | $    | 8,864    |   |      | $ | 8,410  |      |  | $ | 5,910  |  
|Effective valuation of cash flow hedged            |  |      | (122,113 | ) |      |   | 2,244  |      |  |   | (2,213 | )
|                                                   |  |      |          |   |      |   |        |      |  |   |        |  
|                                                   |  | $    | (113,249 | ) |      | $ | 10,654 |      |  | $ | 3,697  |  
|                                                   |  |      |          |   |      |   |        |      |  |   |        |  
|Fair value reserves:                               |  |      |          |   |      |   |        |      |  |   |        |  
|Reclassification during the year to profit or loss |  | $    |         |   |      | $ | 1,116  |      |  | $ |       |  
|Valuations of availableforsale investments       |  |      | (1,527   | ) |      |   | 912    |      |  |   | 3,775  |  
|                                                   |  |      |          |   |      |   |        |      |  |   |        |  
|                                                   |  | $    | (1,527   | ) |      | $ | 2,028  |      |  | $ | 3,775  |  
|                                                   |  |      |          |   |      |   |        |      |  |   |        |  
|Income tax on other comprehensive income:          |  |      |          |   |      |   |        |      |  |   |        |  
|Reclassification during the year to profit or loss |  | $    | 15,068   |   |      | $ | (186   | )    |  | $ | 645    |  
|Temporary differences within OCI                   |  |      | (249     | ) |      |   | (1,666 | )    |  |   | (1,371 | )
|                                                   |  |      |          |   |      |   |        |      |  |   |        |  
|                                                   |  | $    | 14,819   |   |      | $ | (1,852 | )    |  | $ | (726   | )
|                                                   |  |      |          |   |      |   |        |      |  |   |        |  

Dividends

The following
dividends were paid by the Company during the year ended December 31, 2014 and 2013:



|                                                                                                     |  |                  |        |  |                  |   |        | 
|---------------------------------------------------------------------------------------------------- |  | ---------------- | ------ |  | ---------------- | - | ------ | 
|                                                                                                     |  | December 31,2014 |        |  | December 31,2013 |  
|COP$75/approximately $4 cents per ordinary share (2013: COP$75/approximately $4 cents) paid in US$   |  | $                | 25,865 |  |                  | $ | 30,371 | 
|COP$75/approximately $4 cents per preferred share (2013: COP$75/approximately $4 cents) paid in COP$ |  |                  | 13,079 |  |                  |   | 6,550  | 
|                                                                                                     |  |                  |        |  |                  |   |        | 
|Total                                                                                                |  | $                | 38,944 |  |                  | $ | 36,921 | 
|                                                                                                     |  |                  |        |  |                  |   |        | 

Dividends of 75/0.04 COP$/US$ per share were declared in March 2014 and paid in April 2014 based on profits for the year 2013.
Dividends of 75/0.04 COP$/US$ per share were declared in March 2013 and paid in April 2013 based on profits for the year 2012.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(26) | Operating revenue
|---- | -----------------

The Company had no major customers which represented more than 10% of
revenues in 2014 and 2013. The Company utilizes its segmented gross revenue information by type of service rendered and by region, as follows:

By type of service rendered



|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|------------------------ |  | -------------------------- | --------- |  | ---------- |  | --- | -------------------------- |  | - | ---------- |  |  | -------------------- | --- | - |  | - | -------- | 
|                         |  | Year endedDecember 31,2014 |           |  | Percentage |  |     | Year endedDecember 31,2013 |  |   | Percentage |  |  | Year onYearVariation |    
|Domestic                 |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|Passenger                |  | $                          | 1,071,254 |  |            |  | 23  | %                          |  | $ | 1,031,299  |  |  |                      | 23  | % |  | $ | 39,955   | 
|Cargo and mail           |  |                            | 240,134   |  |            |  | 5   | %                          |  |   | 196,062    |  |  |                      | 4   | % |  |   | 44,072   | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|                         |  |                            | 1,311,388 |  |            |  | 28  | %                          |  |   | 1,227,361  |  |  |                      | 27  | % |  |   | 84,027   | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|International            |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|Passenger                |  |                            | 2,791,467 |  |            |  | 59  | %                          |  |   | 2,831,098  |  |  |                      | 61  | % |  |   | (39,631) | 
|Cargo and mail           |  |                            | 324,728   |  |            |  | 7   | %                          |  |   | 308,677    |  |  |                      | 7   | % |  |   | 16,051   | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|                         |  |                            | 3,116,195 |  |            |  | 66  | %                          |  |   | 3,139,775  |  |  |                      | 68  | % |  |   | (23,580) | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|Other (1)                |  |                            | 275,988   |  |            |  | 6   | %                          |  |   | 242,468    |  |  |                      | 5   | % |  |   | 33,520   | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|Total operating revenues |  | $                          | 4,703,571 |  |            |  | 100 | %                          |  | $ | 4,609,604  |  |  |                      | 100 | % |  | $ | 93,967   | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 



|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|------------------------ |  | -------------------------- | --------- |  | ---------- |  | --- | -------------------------- |  | - | ---------- |  |  | -------------------- | --- | - |  | - | -------- | 
|                         |  | Year endedDecember 31,2013 |           |  | Percentage |  |     | Year endedDecember 31,2012 |  |   | Percentage |  |  | Year onYearVariation |    
|Domestic                 |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|Passenger                |  | $                          | 1,031,299 |  |            |  | 23  | %                          |  | $ | 1,009,541  |  |  |                      | 23  | % |  | $ | 21,758   | 
|Cargo and mail           |  |                            | 196,062   |  |            |  | 4   | %                          |  |   | 99,505     |  |  |                      | 2   | % |  |   | 96,557   | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|                         |  |                            | 1,227,361 |  |            |  | 27  | %                          |  |   | 1,109,046  |  |  |                      | 25  | % |  |   | 118,315  | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|International            |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|Passenger                |  |                            | 2,831,098 |  |            |  | 61  | %                          |  |   | 2,541,018  |  |  |                      | 60  | % |  |   | 290,080  | 
|Cargo and mail           |  |                            | 308,677   |  |            |  | 7   | %                          |  |   | 384,575    |  |  |                      | 9   | % |  |   | (75,898) | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|                         |  |                            | 3,139,775 |  |            |  | 68  | %                          |  |   | 2,925,593  |  |  |                      | 69  | % |  |   | 214,182  | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|Other (1)                |  |                            | 242,468   |  |            |  | 5   | %                          |  |   | 235,017    |  |  |                      | 6   | % |  |   | 7,451    | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 
|Total operating revenues |  | $                          | 4,609,604 |  |            |  | 100 | %                          |  | $ | 4,269,656  |  |  |                      | 100 | % |  | $ | 339,948  | 
|                         |  |                            |           |  |            |  |     |                            |  |   |            |  |  |                      |     |   |  |   |          | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(1) | Other operating revenue
|--- | -----------------------

Other operating revenue for the years ended December 31,
2014, 2013 and 2012 is as follows:



|                       |  |                  |         |  |                  |   |         |                  |  |   |         | 
|---------------------- |  | ---------------- | ------- |  | ---------------- | - | ------- | ---------------- |  | - | ------- | 
|                       |  | December 31,2014 |         |  | December 31,2013 |   |         | December 31,2012 | 
|Frequent flyer program |  | $                | 141,402 |  |                  | $ | 142,252 |                  |  | $ | 131,176 | 
|Ground operations (a)  |  |                  | 20,756  |  |                  |   | 20,423  |                  |  |   | 16,730  | 
|Leases                 |  |                  | 30,744  |  |                  |   | 24,181  |                  |  |   | 21,783  | 
|Maintenance            |  |                  | 16,624  |  |                  |   | 6,228   |                  |  |   | 7,692   | 
|Interline              |  |                  | 1,565   |  |                  |   | 5,421   |                  |  |   | 7,709   | 
|Other                  |  |                  | 64,897  |  |                  |   | 43,963  |                  |  |   | 49,927  | 
|                       |  |                  |         |  |                  |   |         |                  |  |   |         | 
|                       |  | $                | 275,988 |  |                  | $ | 242,468 |                  |  | $ | 235,017 | 
|                       |  |                  |         |  |                  |   |         |                  |  |   |         | 



|(a) | Company provides services to other airlines at main hub airports.
|--- | -----------------------------------------------------------------



|(27) | Derivatives recognized as hedging instruments
|---- | ---------------------------------------------

Financial instruments recognized as
hedging instruments at fair value though other comprehensive income as of December 31, 2014 and 2013 are the following:



|                               |  |       |    |  |                  |   |         |                  |  |   |        | 
|------------------------------ |  | ----- | -- |  | ---------------- | - | ------- | ---------------- |  | - | ------ | 
|                               |  | Notes |    |  | December 31,2014 |   |         | December 31,2013 | 
|Cash flow hedges  Assets      |  |       |    |  |                  |   |         |                  |  |   |        | 
|Fuel price hedges              |  |       |    |  |                  | $ | 4,204   |                  |  | $ | 16,552 | 
|                               |  |       |    |  |                  |   |         |                  |  |   |        | 
|Total                          |  |       |    |  |                  | $ | 4,204   |                  |  | $ | 16,552 | 
|                               |  |       |    |  |                  |   |         |                  |  |   |        | 
|Cash flow hedges  Liabilities |  |       |    |  |                  |   |         |                  |  |   |        | 
|Fuel price hedges              |  |       | 23 |  |                  | $ | 110,084 |                  |  | $ |       | 
|                               |  |       |    |  |                  |   |         |                  |  |   |        | 
|Total                          |  |       |    |  |                  | $ | 110,084 |                  |  | $ |       | 
|                               |  |       |    |  |                  |   |         |                  |  |   |        | 

Financial assets and liabilities at fair value through other comprehensive income reflect the change in fair
value of fuel price derivative contracts designated as cash flow hedges. Hedged items are designated future purchases deemed as highly probable forecast transactions.

Cash flow hedges liabilities are recognized within Other Liabilities in the Consolidated Statement of Financial Position.

The Company purchases jet fuel on an ongoing basis as its operating activities require a continuous supply of this commodity. The increased
volatility in jet fuel prices has led the Company to the decision to enter into commodity contracts. These contracts are expected to reduce the volatility attributable to fluctuations in jet fuel prices for highly probable forecast jet fuel
purchases, in accordance with the risk management strategy outlined by the Board of Directors. The contracts are intended to hedge the volatility of the jet fuel prices for a period between three and twelve months based on existing purchase
agreements.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The following table indicates the periods in which the cash flows associated with cash flow
hedges are expected to occur, and the fair values of the related hedging instruments.



|            |  |            |         |  |            |   |         | 
|----------- |  | ---------- | ------- |  | ---------- | - | ------- | 
|            |  | Fair Value |         |  | 112months |  
|Fuel price  |  |            |         |  |            |   |         | 
|Assets      |  | $          | 4,204   |  |            | $ | 4,204   | 
|Liabilities |  |            | 110,084 |  |            |   | 110,084 | 
|            |  |            |         |  |            |   |         | 

The terms of the foreign currency forward contracts have been negotiated for the expected highly probable
forecast transactions to which hedge accounting has been applied. As of December 31, 2014 and 2013, a net gain (loss) relating to the hedging instruments of $(113,249) and $ 10,654, respectively is included in other comprehensive income (see
Note 25).



|(28) | Derivative financial instruments
|---- | --------------------------------

Derivative financial instruments at fair value through
profit or loss as of December 31, 2014 and 2013 are the following:



|                                                   |  |       |    |  |                  |   |       |                  |  |   |        | 
|-------------------------------------------------- |  | ----- | -- |  | ---------------- | - | ----- | ---------------- |  | - | ------ | 
|                                                   |  | Notes |    |  | December 31,2014 |   |       | December 31,2013 | 
|Derivatives not designated as hedges  Assets      |  |       |    |  |                  |   |       |                  |  |   |        | 
|Derivative contracts of foreign currency           |  |       |    |  |                  | $ |      |                  |  | $ | 46     | 
|                                                   |  |       |    |  |                  |   |       |                  |  |   |        | 
|Total                                              |  |       |    |  |                  | $ |      |                  |  | $ | 46     | 
|                                                   |  |       |    |  |                  |   |       |                  |  |   |        | 
|Derivatives not designated as hedges  Liabilities |  |       |    |  |                  |   |       |                  |  |   |        | 
|Derivative contracts of foreign currency           |  |       | 23 |  |                  | $ | 578   |                  |  | $ | 6      | 
|Derivative contracts of interest rate              |  |       | 23 |  |                  |   | 5,893 |                  |  |   | 13,824 | 
|                                                   |  |       |    |  |                  |   |       |                  |  |   |        | 
|Total                                              |  |       |    |  |                  | $ | 6,471 |                  |  | $ | 13,830 | 
|                                                   |  |       |    |  |                  |   |       |                  |  |   |        | 

Financial instruments through profit or loss are derivative contracts not designated as hedges for accounting
purposes that are intended to reduce the levels of risk of foreign currency and interest rates.

Liabilities on derivatives not designated
as hedges are recognized within Other Liabilities in the Consolidated Statement of Financial Position.

Foreign currency risk

Certain foreign currency forward contracts are measured at fair value through profit or loss and are not designated as hedging
instruments for accounting purposes. The foreign currency forward contract balances vary with the level of expected foreign currency sales and purchases and changes in foreign currency forward rates.



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Interest rate risk

The Company incurs interest rate risk primarily on financial obligations to banks and aircraft lessors. Certain financial derivative
instruments are recognized at fair value through profit or loss and are not designated as hedging instruments for accounting purposes. The interest rate contracts vary according to the level of expected interest payable and changes in interest rated
of financial obligations. Interest rate risk is managed through a mix of fixed and floating rates on loans and lease agreements, combined with interest rate swaps and options. Under these agreements, the Company pays a fixed rate and receives a
variable rate.



|(29) | Offsetting of Financial Instruments
|---- | -----------------------------------

The Company has derivative instruments that could
meet the offsetting criteria in paragraph 42 of IAS 32 given that the Company has signed with its counterparties enforceable master netting arrangements. Consequently, when derivatives signed with the same counterparty and for the same type of
notional result in gross assets and liabilities, the positions are set off resulting in the presentation of a net derivative. As of December 31, 2014 and 2013, the Company has not set off derivative instruments because it has not had gross
assets and liabilities with the same counterparty for the same type of notional.



|(30) | Fair value measurements
|---- | -----------------------

The fair values of financial assets and liabilities, together
with the carrying amounts shown in the Consolidated Statement of Financial Position as of December 31, 2014 are as follows:



|                                         |  |       |    |  |                   |   |           |            |  |   |           | 
|---------------------------------------- |  | ----- | -- |  | ----------------- | - | --------- | ---------- |  | - | --------- | 
|                                         |  |       |    |  | December 31, 2014 |  
|                                         |  | Notes |    |  | Carryingamount    |   |           | Fair value | 
|Financial assets                         |  |       |    |  |                   |   |           |            |  |   |           | 
|Availableforsale securities            |  |       | 6  |  |                   | $ | 1,455     |            |  | $ | 1,455     | 
|Derivative instruments                   |  |       | 27 |  |                   |   | 4,204     |            |  |   | 4,204     | 
|                                         |  |       |    |  |                   |   |           |            |  |   |           | 
|                                         |  |       |    |  |                   | $ | 5,659     |            |  | $ | 5,659     | 
|                                         |  |       |    |  |                   |   |           |            |  |   |           | 
|Financial liabilities                    |  |       |    |  |                   |   |           |            |  |   |           | 
|Short term borrowings and longterm debt |  |       | 17 |  |                   | $ | 3,170,577 |            |  | $ | 3,200,729 | 
|Derivative instruments                   |  |       | 23 |  |                   |   | 116,555   |            |  |   | 116,555   | 
|                                         |  |       |    |  |                   |   |           |            |  |   |           | 
|                                         |  |       |    |  |                   | $ | 3,287,132 |            |  | $ | 3,317,284 | 
|                                         |  |       |    |  |                   |   |           |            |  |   |           | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The fair values of financial assets and liabilities, together with the carrying amounts shown
in the Consolidated Statement of Financial Position as of December 31, 2013 are as follows:



|                                         |  |  |       |  |                   |   |           |            |  |   |           | 
|---------------------------------------- |  |  | ----- |  | ----------------- | - | --------- | ---------- |  | - | --------- | 
|                                         |  |  |       |  | December 31, 2013 |  
|                                         |  |  |       |  | Carryingamount    |   |           | Fair value | 
|Financial assets                         |  |  |       |  |                   |   |           |            |  |   |           | 
|Availableforsale securities            |  |  |       |  |                   | $ | 14,878    |            |  | $ | 14,878    | 
|Derivative instruments                   |  |  | 27,28 |  |                   |   | 16,598    |            |  |   | 16,598    | 
|                                         |  |  |       |  |                   |   |           |            |  |   |           | 
|                                         |  |  |       |  |                   | $ | 31,476    |            |  | $ | 31,476    | 
|                                         |  |  |       |  |                   |   |           |            |  |   |           | 
|Financial liabilities                    |  |  |       |  |                   |   |           |            |  |   |           | 
|Short term borrowings and longterm debt |  |  | 17    |  |                   | $ | 2,265,495 |            |  | $ | 2,268,126 | 
|                                         |  |  |       |  |                   |   |           |            |  |   |           | 
|                                         |  |  |       |  |                   | $ | 2,265,495 |            |  | $ | 2,268,126 | 
|                                         |  |  |       |  |                   |   |           |            |  |   |           | 

The fair value of the financial assets and liabilities is included at the amount at which the instrument could
be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

Management assessed that cash
and cash equivalents, account receivable, account payable and other current liabilities approximate their carrying amount largely due to the shortterm maturities of these instruments.

Fair values have been determined for measurement and/or disclosure purposes based on the following methods.



| | (a) | The fair value of availableforsale financial assets is determined by reference to the present value of future principal and interest cash flows, discounted at a market based interest rate at
the reporting date.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | The Company enters into derivative financial instruments with various counterparties, principally financial institutions with investment grade credit ratings. Derivatives valued using valuation techniques with market
observable inputs are mainly interest rate contracts, foreign currency forward contracts and commodity contracts. The most frequently applied valuation techniques include forward pricing and swap models, using present value calculations. The models
incorporate various inputs including the credit quality of counterparties, foreign currency spot and forward rates, interest rate curves and forward rate curves of the underlying commodity.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | The fair value of shortterm borrowings and longterm debt, which is determined for disclosure purposes, is calculated based on the present value of future principal and interest cash flows,
discounted at a market based interest rate at the reporting date. For finance leases, the market rate is determined by reference to similar lease agreements.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



| | (d) | The Company uses the revaluation model to measure its land and buildings which are composed of administrative properties. Management determined that this constitutes one class of asset under IAS 16, based on the nature,
characteristics and risks of the property. The fair values of the properties were determined by using market comparable methods. This means that valuations performed by the appraisals are based on active market prices, adjusted for difference in the
nature, location or condition of the specific property. The Company engaged accredited independent appraisals, to determine the fair value of its land and buildings.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | The Frequent flyer liability is included in the Consolidated Statement of Financial Position within Air traffic liability. The Company estimates the fair value of miles awarded under the LifeMiles program by applying
statistical techniques. Inputs to the models include making assumptions about expected redemption rates, the mix of products that will be available for redemption in the future and customer preferences.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fair values hierarchy

The table below analyses financial instruments carried at fair value by valuation method. The different levels have been defined as follows:



|         |  |                                                                                                                                                                
|-------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|Level  1 |  | inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
|Level  2 |  | inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; or                      
|Level  3 |  | inputs are unobservable inputs for the asset or liability.                                                                                                     

For assets and liabilities that are recognized in the financial statements on a recurring basis, the Company
determines whether transfers have occurred between Levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



The following table provides the fair value measurement hierarchy of the Companys
assets and liabilities as of December 31, 2014:

Quantitative disclosures of fair value measurement hierarchy for assets:



|                                                                  |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |        | 
|----------------------------------------------------------------- |  | ---------------- | ----------------- |  | -------------------------------------- |  | - | ------------------------------------ |  |  | -------------------------------------- |  |  | ----- | - |  |  |  | ------ | 
|                                                                  |  |                  |                   |  | Fair value measurement using           | 
|Assets measured at fair value                                     |  | Date ofvaluation |                   |  | Quoted pricesin activemarkets(Level 1) |  |   | Significantobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) |  |  | Total |  
|Derivative financial assets (Note 27 and 28) Aircraft fuel hedges |  |                  | December 31, 2014 |  |                                        |  |  |                                      |  |  | 4,204                                  |  |  |       |  |  |  |  | 4,204  | 
|Availableforsale securities (Note 6)                            |  |                  | December 31, 2014 |  |                                        |  |  |                                      |  |  | 1,455                                  |  |  |       |  |  |  |  | 1,455  | 
|Assets held for sale (Note 12)                                    |  |                  | December 31, 2014 |  |                                        |  |  |                                      |  |  | 1,369                                  |  |  |       |  |  |  |  | 1,369  | 
|Revalued administrative property (Note 14)                        |  |                  | December 31, 2014 |  |                                        |  |  |                                      |  |  | 78,442                                 |  |  |       |  |  |  |  | 78,442 | 

Quantitative disclosures of fair value measurement hierarchy for liabilities:



|                                                  |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |         | 
|------------------------------------------------- |  | ---------------- | ----------------- |  | -------------------------------------- |  | - | ------------------------------------ |  |  | -------------------------------------- |  |  | ----- | - |  |  |  | ------- | 
|                                                  |  |                  |                   |  | Fair value measurement using           | 
|Liabilities measured at fair value                |  | Date ofvaluation |                   |  | Quoted pricesin activemarkets(Level 1) |  |   | Significantobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) |  |  | Total |  
|Derivative financial liabilities (Note 27 and 28) |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |         | 
|Aircraft fuel hedges                              |  |                  | December 31, 2014 |  |                                        |  |  |                                      |  |  | 110,084                                |  |  |       |  |  |  |  | 110,084 | 
|Foreign currency derivatives                      |  |                  | December 31, 2014 |  |                                        |  |  |                                      |  |  | 578                                    |  |  |       |  |  |  |  | 578     | 
|Interest rate derivatives                         |  |                  | December 31, 2014 |  |                                        |  |  |                                      |  |  | 5,893                                  |  |  |       |  |  |  |  | 5,893   | 
|Frequent flyer liability (Note 22)                |  |                  | December 31, 2014 |  |                                        |  |  |                                      |  |  | 150,760                                |  |  |       |  |  |  |  | 150,760 | 



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AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|                                                |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |           | 
|----------------------------------------------- |  | ---------------- | ----------------- |  | -------------------------------------- |  | - | ------------------------------------ |  |  | -------------------------------------- |  |  | ----- | - |  |  |  | --------- | 
|                                                |  |                  |                   |  | Fair value measurement using           | 
|Liabilities measured at fair value              |  | Date ofvaluation |                   |  | Quoted pricesin activemarkets(Level 1) |  |   | Significantobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) |  |  | Total |  
|Liabilities for which fair values are disclosed |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |           | 
|Shortterm borrowings and longterm debt        |  |                  | December 31, 2014 |  |                                        |  |  |                                      |  |  | 3,200,729                              |  |  |       |  |  |  |  | 3,200,729 | 

The following table provides the fair value measurement hierarchy of the Companys assets and liabilities
as of December 31, 2013:

Quantitative disclosures of fair value measurement hierarchy for assets:



|                                             |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |        | 
|-------------------------------------------- |  | ---------------- | ----------------- |  | -------------------------------------- |  | - | ------------------------------------ |  |  | -------------------------------------- |  |  | ----- | - |  |  |  | ------ | 
|                                             |  |                  |                   |  | Fair value measurement using           | 
|Assets measured at fair value                |  | Date ofvaluation |                   |  | Quoted pricesin activemarkets(Level 1) |  |   | Significantobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) |  |  | Total |  
|Derivative financial assets (Note 27 and 28) |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |        | 
|Aircraft fuel hedges                         |  |                  | December 31, 2013 |  |                                        |  |  |                                      |  |  | 16,552                                 |  |  |       |  |  |  |  | 16,552 | 
|Foreign currency derivatives                 |  |                  | December 31, 2013 |  |                                        |  |  |                                      |  |  | 46                                     |  |  |       |  |  |  |  | 46     | 
|Availableforsale securities                |  |                  | December 31, 2013 |  |                                        |  |  |                                      |  |  | 14,878                                 |  |  |       |  |  |  |  | 14,878 | 
|Assets held for sale (Note 12)               |  |                  | December 31, 2013 |  |                                        |  |  |                                      |  |  | 7,448                                  |  |  |       |  |  |  |  | 7,448  | 
|Revalued administrative property (Note 14)   |  |                  | December 31, 2013 |  |                                        |  |  |                                      |  |  | 88,610                                 |  |  |       |  |  |  |  | 88,610 | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Quantitative disclosures of fair value measurement hierarchy for liabilities:



|                                                  |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |           | 
|------------------------------------------------- |  | ---------------- | ----------------- |  | -------------------------------------- |  | - | ------------------------------------ |  |  | -------------------------------------- |  |  | ----- | - |  |  |  | --------- | 
|                                                  |  |                  |                   |  | Fair value measurement using           | 
|Liabilities measured at fair value                |  | Date ofvaluation |                   |  | Quoted pricesin activemarkets(Level 1) |  |   | Significantobservableinputs(Level 2) |  |  | Significantunobservableinputs(Level 3) |  |  | Total |  
|Derivative financial liabilities (Note 27 and 28) |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |           | 
|Foreign currency derivatives                      |  |                  | December 31, 2013 |  |                                        |  |  |                                      |  |  | 6                                      |  |  |       |  |  |  |  | 6         | 
|Interest rate derivatives                         |  |                  | December 31, 2013 |  |                                        |  |  |                                      |  |  | 13,824                                 |  |  |       |  |  |  |  | 13,824    | 
|Frequent flyer liability (Note 22)                |  |                  | December 31, 2013 |  |                                        |  |  |                                      |  |  | 127,873                                |  |  |       |  |  |  |  | 127,873   | 
|Liabilities for which fair values are disclosed   |  |                  |                   |  |                                        |  |   |                                      |  |  |                                        |  |  |       |   |  |  |  |           | 
|Shortterm borrowings and longterm debt          |  |                  | December 31, 2013 |  |                                        |  |  |                                      |  |  | 2,268,126                              |  |  |       |  |  |  |  | 2,268,126 | 



|(31) | Income tax expense
|---- | ------------------

The major components of income tax expense for the years ended
December 31, 2014, 2013 and 2012 are:



|                                                              |  |                  |        |  |                  |   |         |                  |  |   |        | 
|------------------------------------------------------------- |  | ---------------- | ------ |  | ---------------- | - | ------- | ---------------- |  | - | ------ | 
|Consolidated statement of comprehensive income                |  |                  |        |  |                  |   |         |                  |  |   |        | 
|                                                              |  |                  |       
|                                                              |  | December 31,2014 |        |  | December 31,2013 |   |         | December 31,2012 | 
|Current Income tax:                                           |  |                  |        |  |                  |   |         |                  |  |   |        | 
|Current income tax charge                                     |  | $                | 33,781 |  |                  | $ | 40,296  |                  |  | $ | 49,884 | 
|Deferred tax expense:                                         |  |                  |        |  |                  |   |         |                  |  |   |        | 
|Relating to origination and reversal of temporary differences |  |                  | 16,499 |  |                  |   | 6,164   |                  |  |   | 14,821 | 
|                                                              |  |                  |        |  |                  |   |         |                  |  |   |        | 
|Income tax expense reported in the income statement           |  | $                | 50,280 |  |                  | $ | 46,460  |                  |  | $ | 64,705 | 
|                                                              |  |                  |        |  |                  |   |         |                  |  |   |        | 
|Consolidated statement of other comprehensive income          |  |                  |        |  |                  |   |         |                  |  |   |        | 
|Income tax charged directly to other comprehensive income     |  | $                | 12,580 |  |                  | $ | (16,377 | )                |  | $ | 9,975  | 
|                                                              |  |                  |        |  |                  |   |         |                  |  |   |        | 



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



A reconciliation between tax expense and the product of accounting profit multiplied by
domestic tax rate for the years ended December 31, 2014, 2013 and 2012 is as follows:



|                                                                                  |  |                  |      |    |                  |   |         |                  |  |  |       |    |  |   |         |   |  |  |       |    |  |   |         |  
|--------------------------------------------------------------------------------- |  | ---------------- | ---- | -- | ---------------- | - | ------- | ---------------- |  |  | ----- | -- |  | - | ------- | - |  |  | ----- | -- |  | - | ------- | -
|                                                                                  |  | December 31,2014 |      |    | December 31,2013 |   |         | December 31,2012 | 
|Accounting profit after income tax                                                |  |                  |      |    |                  | $ | 128,494 |                  |  |  |       |    |  | $ | 248,821 |   |  |  |       |    |  | $ | 38,257  |  
|Total income tax expense                                                          |  |                  |      |    |                  |   | 50,280  |                  |  |  |       |    |  |   | 46,460  |   |  |  |       |    |  |   | 64,705  |  
|                                                                                  |  |                  |      |    |                  |   |         |                  |  |  |       |    |  |   |         |   |  |  |       |    |  |   |         |  
|Profit before income tax                                                          |  |                  |      |    |                  | $ | 178,774 |                  |  |  |       |    |  | $ | 295,281 |   |  |  |       |    |  | $ | 102,962 |  
|                                                                                  |  |                  |      |    |                  |   |         |                  |  |  |       |    |  |   |         |   |  |  |       |    |  |   |         |  
|Income tax at Colombian statutory rate                                            |  |                  | 34.0 | %  |                  |   | 60,783  |                  |  |  | 34.0  | %  |  |   | 100,396 |   |  |  | 33.0  | %  |  |   | 33,977  |  
|Tax credit (1)                                                                    |  |                  | (9.5 | %) |                  |   | (17,049 | )                |  |  | (10.8 | %) |  |   | (32,025 | ) |  |  | (38.8 | %) |  |   | (40,006 | )
|Productive fixed assets special deduction                                         |  |                  | (0.6 | %) |                  |   | (1,142  | )                |  |  | (1.9  | %) |  |   | (5,711  | ) |  |  | (2.3  | %) |  |   | (2,423  | )
|Nontaxable dividends                                                             |  |                  | (0.2 | %) |                  |   | (315    | )                |  |  | (0.4  | %) |  |   | (1,050  | ) |  |  | (2.4  | %) |  |   | (2,538  | )
|Nondeductible taxes                                                              |  |                  | 1.0  | %  |                  |   | 1,785   |                  |  |  | 0.7   | %  |  |   | 2,174   |   |  |  | 4.0   | %  |  |   | 4,177   |  
|Effect of tax exemptions and tax rates in foreign jurisdictions                   |  |                  | 3.8  | %  |                  |   | 6,852   |                  |  |  | 4.6   | %  |  |   | 13,462  |   |  |  | 25.2  | %  |  |   | 26,003  |  
|Prior year expenses                                                               |  |                  | 0.6  | %  |                  |   | 1,135   |                  |  |  | 1.0   | %  |  |   | 2,965   |   |  |  | 10.8  | %  |  |   | 11,178  |  
|Permanent differences in subsidiaries                                             |  |                  | 1.9  | %  |                  |   | 3,350   |                  |  |  | 1.3   | %  |  |   | 3,935   |   |  |  | 7.45  | %  |  |   | 7,672   |  
|Effect of investments in US Dollars                                               |  |                  | (3.9 | %) |                  |   | (7,013  | )                |  |  | (2.2  | %) |  |   | (6,541  | ) |  |  | (6.8  | %) |  |   | (7,092  | )
|Withholding tax on remittances abroad of aircraft leasing, engines, and insurance |  |                  | 0.2  | %  |                  |   | 446     |                  |  |  | 0.3   | %  |  |   | 757     |   |  |  | 1.0   | %  |  |   | 1,040   |  
|Fiscal penalties                                                                  |  |                  | 0.2  | %  |                  |   | 291     |                  |  |  | 0.1   | %  |  |   | 162     |   |  |  | 0.3   | %  |  |   | 336     |  
|Exchange rate differences                                                         |  |                  | (3.3 | %) |                  |   | (5,924  | )                |  |  | (5.0  | %) |  |   | (14,639 | ) |  |  | 25.7  | %  |  |   | 26,481  |  
|Nondeductible permanent differences (2)                                          |  |                  | 4.0  | %  |                  |   | 7,081   |                  |  |  | (5.9  | %) |  |   | (17,425 | ) |  |  | 5.7   | %  |  |   | 5,900   |  
|                                                                                  |  |                  |      |    |                  |   |         |                  |  |  |       |    |  |   |         |   |  |  |       |    |  |   |         |  
|                                                                                  |  |                  | 28.1 | %  |                  | $ | 50,280  |                  |  |  | 15.8  | %  |  | $ | 46,460  |   |  |  | 62.9  | %  |  | $ | 64,705  |  
|                                                                                  |  |                  |      |    |                  |   |         |                  |  |  |       |    |  |   |         |   |  |  |       |    |  |   |         |  



|(1) | Airline companies in Colombia are entitled to a tax credit or discount for income tax purposes based on the proportion between the international flights income and total income of the Company during the year. The
legislative purpose of this tax provision is to limit the Companys exposure to double taxation on their worldwide income in Colombia, therefore limiting the tax expense to local Colombian source income.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | This item includes various permanent differences that are nondeductible expenses for Corporate Income Tax purposes in Colombia. Consequently, they are necessary to the reconciliation between statutory and
effective tax rates. These other permanent differences include various items such as consolidation of special purpose entities, and loss on property, plant and equipment.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Below we show an analysis of the Companys deferred tax assets and liabilities:



|                                        |  |                                              |         |   |                  |   |        |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|--------------------------------------- |  | -------------------------------------------- | ------- | - | ---------------- | - | ------ | ---------------- |  | - | ---------------- | - |  | ---------------- | ------- | - |  | - | ------- | -
|                                        |  | Consolidated Statement of Financial Position |        
|                                        |  |                                              |         |   |                  |   |        |                  |  |   | Variation        |  
|                                        |  | December 31,2014                             |         |   | December 31,2013 |   |        | December 31,2012 |  |   | December 31,2014 |   |  | December 31,2013 |        
|Assets                                  |  |                                              |         |   |                  |   |        |                  |  |   |                  |   |  |                  |         |  
|Accounts payable                        |  | $                                            | 15,970  |   |                  | $ | 107    |                  |  | $ | 2,387            |   |  | $                | 15,863  |   |  | $ | (2,280  | )
|Inflation adjustments                   |  |                                              | 759     |   |                  |   | 839    |                  |  |   | 1,015            |   |  |                  | (80     | ) |  |   | (176    | )
|Deposits and other assets               |  |                                              | (3,551  | ) |                  |   | (8,340 | )                |  |   | 2,828            |   |  |                  | 4,181   |   |  |   | (11,168 | )
|Aircraft maintenance                    |  |                                              | (5,410  | ) |                  |   | 1,876  |                  |  |   | 2,869            |   |  |                  | (7,286  | ) |  |   | (993    | )
|Pension liabilities                     |  |                                              | (20,514 | ) |                  |   | 30,982 |                  |  |   | 41,270           |   |  |                  | (51,496 | ) |  |   | (10,288 | )
|Provisions                              |  |                                              | 46,834  |   |                  |   | 24,038 |                  |  |   | 32,520           |   |  |                  | 19,750  |   |  |   | (8,482  | )
|Loss carry forwards                     |  |                                              | 736     |   |                  |   | 792    |                  |  |   |                 |   |  |                  | (56     | ) |  |   | 792     |  
|Air traffic liability                   |  |                                              |        |   |                  |   |       |                  |  |   | 1,310            |   |  |                  |        |   |  |   | (1,310  | )
|Investments                             |  |                                              |        |   |                  |   |       |                  |  |   | (10,203          | ) |  |                  |        |   |  |   | 10,203  |  
|Other                                   |  |                                              | 840     |   |                  |   | 599    |                  |  |   | (352             | ) |  |                  | 241     |   |  |   | 951     |  
|                                        |  |                                              |         |   |                  |   |        |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Total Assets                            |  |                                              | 35,664  |   |                  |   | 50,893 |                  |  |   | 73,644           |   |  |                  | (18,883 | ) |  |   | (22,751 | )
|Liabilities                             |  |                                              |         |   |                  |   |        |                  |  |   |                  |   |  |                  |         |  
|Other                                   |  |                                              | 15,760  |   |                  |   | 7,940  |                  |  |   | 2,528            |   |  |                  | 7,820   |   |  |   | 5,412   |  
|                                        |  |                                              |         |   |                  |   |        |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Total liabilities                       |  |                                              | 15,760  |   |                  |   | 7,940  |                  |  |   | 2,528            |   |  |                  | 7,820   |   |  |   | 5,412   |  
|                                        |  |                                              |         |   |                  |   |        |                  |  |   |                  |   |  |                  |         |   |  |   |         |  
|Net deferred tax assets / (liabilities) |  | $                                            | 19,904  |   |                  | $ | 42,953 |                  |  | $ | 71,116           |   |  | $                | (26,703 | ) |  | $ | (28,163 | )
|                                        |  |                                              |         |   |                  |   |        |                  |  |   |                  |   |  |                  |         |   |  |   |         |  

Reflected in the statement of financial position as
follows:



|                         |  |   |        |  |  |   |        |  |  | 
|------------------------ |  | - | ------ |  |  | - | ------ |  |  | 
|Deferred tax assets      |  | $ | 35,664 |  |  |   | 50,893 | 
|Deferred tax liabilities |  |   | 15,760 |  |  |   | 7,940  | 
|                         |  |   |        |  |  |   |        |  |  | 
|Deferred tax assets net  |  | $ | 19,904 |  |  | $ | 42,953 | 
|                         |  |   |        |  |  |   |        |  |  | 



|                                                                      |  |                  |         |   |                  |   |         |  
|--------------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|Reconciliation of deferred tax assets net                             |  | December 31,2014 |         |   | December 31,2013 |  
|Opening balance as of January 1,                                      |  | $                | 42,953  |   |                  | $ | 71,116  |  
|Tax income during the period recognized in profit or loss             |  |                  | (16,499 | ) |                  |   | (6,164  | )
|Tax income during the period recognized in other comprehensive income |  |                  | 12,580  |   |                  |   | (16,377 | )
|Deferred Taxes acquired in business combinations                      |  |                  | (8,568  | ) |                  |   |        |  
|Exchange differences                                                  |  |                  | (10,562 | ) |                  |   | (5,622  | )
|                                                                      |  |                  |         |   |                  |   |         |  
|Closing balance as of December 31                                     |  | $                | 19,904  |   |                  | $ | 42,953  |  
|                                                                      |  |                  |         |   |                  |   |         |  



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



Income Tax

At December 31, 2014, the Companys subsidiaries have tax loss carry forwards of approximately $189,275, which are available to
offset future taxable income in the relevant jurisdictions, if any, from 2016. The tax loss carry forwards in the tax jurisdiction of Chile amounting to $7,656 can be carried forward indefinitely.

Tax reform

On
December 23, 2014 a new tax reform, effective from January 1, 2015, was enacted in Colombia. Main amendments are as follows:



| |  |  | A new net worth tax for taxpayers presenting a net equity, as of January 1, 2015, greater than COP$1,000 million.
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | An income tax for equality (CREE), establishing, permanently, a rate of 9%, while introducing modifications to its former structure and compensation.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A surcharge to CREE at increasing rates for the years 2015, 2016, 2017 and 2018.
| | - |  | --------------------------------------------------------------------------------



| |  |  | New mechanisms against tax evasion; modifications to financial transactions applicable tax rates, among other income tax amendments were incorporated.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



|(32) | Provisions for legal claims
|---- | ---------------------------

As of December 31, 2014 and 2013, the Company is
involved in various claims and legal actions arising in the ordinary course of business. Out of the total claims and legal actions Management has estimated a probable loss of $14,157 and $14,984, respectively. These claims have been accrued for in
the Consolidated Statement of Financial Position within Provisions for legal claims.

Certain proceedings are considered
possible obligations. Based on the plaintiffs claims, as of December 31, 2014 and 2013, these contingencies amount to a total of $74,567 and $53,306, respectively. Certain losses which may result from those proceedings will be covered
either by insurance companies or with funds provided by third parties. The proceedings that will not be settled using the aforementioned forms of payment are estimated at $35,316 as of December 31, 2014 and $25,877 as of December 31, 2013.

In accordance with IAS 37, proceedings that the Company considers to represent a remote risk are not accrued in the Consolidated Financial
Statements.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(33) | Future aircraft leases payments
|---- | -------------------------------

The Company has 81 aircraft under operating leases with
an average remaining lease term of 41 months. Operating leases may be renewed in accordance with managements business plan. Future operating lease commitments are as follows:



|                      |  |          |           | 
|--------------------- |  | -------- | --------- | 
|                      |  | Aircraft |          
|Less than 1 year      |  | $        | 276,688   | 
|Between 1 and 5 years |  |          | 649,194   | 
|More than 5 years     |  |          | 163,737   | 
|                      |  |          |           | 
|                      |  | $        | 1,089,619 | 
|                      |  |          |           | 

The Company has seven spare engines under operating leases for its E190 and A320 family aircraft, and A330
fleets. Future operating lease commitments are as follows:



|                      |  |         |       | 
|--------------------- |  | ------- | ----- | 
|                      |  | Engines |      
|Less than 1 year      |  | $       | 4,198 | 
|Between 1 and 5 years |  |         | 2,668 | 
|                      |  |         |       | 
|                      |  | $       | 6,866 | 
|                      |  |         |       | 

The Company has three Airbus A319, five Fokker 100 and one A330F under operating lease to OceanAir Linhas
Aéreas, S.A. Future minimum income from these lease agreements is as follows:



|                      |  |          |         | 
|--------------------- |  | -------- | ------- | 
|                      |  | Aircraft |        
|Less than 1 year      |  | $        | 25,511  | 
|Between 1 and 5 years |  |          | 92,180  | 
|More than 5 years     |  |          | 61,939  | 
|                      |  |          |         | 
|                      |  | $        | 179,630 | 
|                      |  |          |         | 



|(34) | Acquisition of aircraft and other commitments
|---- | ---------------------------------------------

In accordance with the agreements in
effect, future commitments related to the acquisition of aircraft and engines are as follows:

Airbus  The Company has 50 firm
orders for the acquisition of A320 family aircraft with deliveries scheduled between 2015 and 2019 as well as 21 purchase options.

Under
the terms of this purchase agreement to acquire Airbus aircraft, the Company must make predelivery payments to Airbus on predetermined dates

Boeing  The Company has 11 firm orders for the acquisition of B7878 aircraft with deliveries scheduled between 2015 and 2019
as well as 10 purchase options.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



ATR  The Company has 1 firm order for the acquisition of ATR 72 with delivery
scheduled in 2015 as well as 15 purchase options.

Embraer  The Company has up to 8 purchase options.

Other  The Company has 8 firm orders for the acquisition of spare engines with deliveries between 2015 and 2020.

The value of the final purchase orders is based on the aircraft price list (excluding discounts and contractual credits granted by the
manufacturers) and including estimated surcharges. As of December 31, 2014, commitments acquired with manufacturers for the purchase of aircraft and advance payments are summarized below. Advance payments are subsequently applied to aircraft
acquisition commitments.



|                                 |  |      |           |  |      |   |           |      |  |   |           |  |  |            |           |  |       |   |           |  |  |   |           | 
|-------------------------------- |  | ---- | --------- |  | ---- | - | --------- | ---- |  | - | --------- |  |  | ---------- | --------- |  | ----- | - | --------- |  |  | - | --------- | 
|                                 |  | 2015 |           |  | 2016 |   |           | 2017 |  |   | 2018      |  |  | Thereafter |           |  | Total |  
|Advance payments                 |  | $    | 126,667   |  |      | $ | 123,134   |      |  | $ | 158,335   |  |  | $          | 110,632   |  |       | $ | 1,182     |  |  | $ | 519,950   | 
|Aircraft acquisition commitments |  | $    | 1,279,754 |  |      | $ | 1,214,495 |      |  | $ | 1,427,295 |  |  | $          | 1,168,098 |  |       | $ | 1,613,714 |  |  | $ | 6,703,356 | 

On December 31, 2014, the Company signed a Memorandum of Understanding for the purchase of 100 A320 NEO
Family aircraft with delivery dates between 2019 and 2024. Under the terms of the agreement to acquire Airbus aircraft, once the purchase agreement is signed, the Company must make predelivery payments to Airbus on predetermined dates as
follows:



|                                 |  |      |        |  |      |   |   |      |  |   |        |  |  |            |         |  |       |   |            |  |  |   |            | 
|-------------------------------- |  | ---- | ------ |  | ---- | - | - | ---- |  | - | ------ |  |  | ---------- | ------- |  | ----- | - | ---------- |  |  | - | ---------- | 
|                                 |  | 2015 |        |  | 2016 |   |   | 2017 |  |   | 2018   |  |  | Thereafter |         |  | Total |  
|Advance payments                 |  | $    | 55,801 |  |      | $ |  |      |  | $ | 15,778 |  |  | $          | 114,261 |  |       | $ | 874,371    |  |  | $ | 1,060,211  | 
|Aircraft acquisition commitments |  | $    |       |  |      | $ |  |      |  | $ |       |  |  | $          |        |  |       | $ | 10,673,773 |  |  | $ | 10,673,773 | 

The value of the purchase orders above is based on the aircraft price list (excluding discounts and contractual
credits granted by the manufacturers) and including estimated surcharges.



|(35) | Accounts classification
|---- | -----------------------

Starting July 1, 2014, the Company implemented the first
phase of its new ERP System (Enterprise Resource Planning System). This change harmonized and improved the chart of accounts across the organization, which allows the Company to better monitor and allocate its operational costs. The new chart of
accounts resulted in the reclassification of certain line items within operating expenses and was applied retrospectively from January 1, 2014. The necessary information to reclassify 2013 operating expenses under the new chart of accounts was
not available.

These reclassifications had no material impact on the key line items in the Companys income statements such as
operating revenue, operating profit, profit before tax or net profit.



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##### Table of Contents

AVIANCA HOLDINGS S.A. AND SUBSIDIARIES

(Republic of Panama)

Notes to Consolidated Financial
Statements

(In USD thousands)



|(36) | Subsequent events
|---- | -----------------

Venezuelas foreign exchange regime

Despite the uncertainty of the current exchange control in Venezuela, the government has unofficially announced a new currency system on
February 12, 2015 called Marginal Currency System or SIMADI, consisting of a mechanism from which both businesses and individuals are allowed to purchase and sell foreign currency at the price set by the market. According to this, the system
known as SICAD II was annulled and combined with the former rate SICAD 1, creating a new exchange rate named SICAD exclusively applicable for nonessential goods at which 1.00 USD is exchange at 12.00 VEF. Although this rate remains static as
of March 24, 2015, it is expected to fluctuate. The official exchange rate remains unchanged (1.00 USD = 6.30 VEF) and it is still used for preferential goods only. Despite these events, no changes have occurred as of the date of issuance of
the financial statements with relevant impact on the accounting treatment applied for balances denominated in VEF. The current cash balances will not be affected by the new regime and will continue to be converted at the exchange rate of $6.3 and
$12.0 as approved by the Venezuelan Government.

Aviation Center

On January 15, 2015 the Company signed a turnkey contract for the design, construction and implementation of the Aviation Center (The
Center) in adjacent areas to the José María Córdova International Airport. The Center covering a total area of 44,300 m2 will have 8,800 m2 in hangars and aircraft component repair facilities as well as premises for aircraft
taxi, parts and replacements warehouses, and training classrooms. The project, of an estimated cost of $42,287, due date for completion is set for December 31, 2015, except an extension of the term is agreed by the contracting parties. The
disbursement schedule consists of a 30% upfront payment, monthly consecutive installments of $2,749 equal to 65% of the total investment and a final payment for the remaining 5% of project value.

****



F-97