After Viva Colombia filed for a reorganization process in the South American country and closed in on a possible bankruptcy, the Colombian Civil Aviation Authority (Aerocivil) announced it will speed up the review of the merger of this ultra-low-cost carrier with Avianca.
Speeding up the process
On Friday, Aerocivil announced on Twitter it will speed up, with technical and legal rigor, the integration request between Avianca and Viva Colombia, “Under criteria of efficiency, celerity, and due process, according to the applicable norms, a prompt decision is expected that will benefit users, competition and the sector.”
This week had the last few days in which people could publicly submit comments on the integration process between both carriers, which would create a mega Colombian airline with 48% of current departures and 56% of all seats available, according to data from Cirium.
Nonetheless, the time is running out on Viva Colombia, an ultra-low-cost airline that has faced financial issues since last year. Viva has returned several leased aircraft and canceled routes throughout Colombia in the previous few months.
The Colombian authorities did not disclose any information regarding the review of the merger. Viva and Avianca filed for an integration process under the Ivan Duque administration last year. The Duque administration rejected the merger proposal under the terms that it would represent a risk to competition and the well-being of the consumers. A few months later, the new administration under Gustavo Petro reopened Avianca and Viva’s merger proposal after it found “procedural irregularities.”
The JetSMART bid
This week was crucial for the future of Viva Air, an ultra-low-cost carrier with a fleet of around 20 Airbus A320-family planes. The Medellín-based company received a proposal from Chile’s JetSMART to acquire 100% of its shares.
In a statement, JetSMART said that acquiring Viva Air would strengthen competition and maintain the ultra-low-cost model in Colombia, generating significant benefits for consumers, employment, and tourism in the region. Viva acknowledged the proposal and said the organization is reviewing the possible implications that this announcement could have in the development of the merger process with Avianca.
Meanwhile, Avianca disregarded JetSMART’s proposal. Avianca said that a purchase would require the same lengthy approvals needed by Avianca for its merger with Viva. Moreover, this hypothetical acquisition should be under the scope of the Colombian authorities and other markets such as the United States, Peru, Argentina, and Chile.
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Viva Colombia’s reorganization process
A couple of days after JetSMART’s announcement, Viva began a reorganization process in Colombia. This process –which is not a bankruptcy– will give the airline 90 days to restructure its debts through negotiations with its main creditors. During this time, the airline will wait for the possible approval of its merger with Avianca. In a statement, Viva said,
“After studying all the viable alternatives to face our current situation, we entered this voluntary process of mediation while we wait for the urgent decision regarding our merger with Avianca.”
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