Avianca Now Noncommittal On Viva Acquisition After Colombian Regulators Impose Conditions On Deal
At 28 minutes before midnight last night, Colombia’s civil aviation authority, Aerocivil (aka Civil Aeronautics) announced publicly that it would approve Avianca’s takeover of insolvent Colombian low-cost carrier Viva, but with conditions and restrictions designed to preserve competition in Colombia’s domestic aviation market, especially with regards to slots at Bogotá’s congested El Dorado international airport. The deal still would need to pass an investigation being carried out by Colombia’s business and competition regulator, the Superintendency of Industry and Commerce.
After Avianca and Viva repeatedly demanded speedy approval by the Colombian government for their deal, Viva abruptly ceased operations on the last day of February. Now, Avianca is no longer in such a hurry to consummate the deal, citing Viva’s deteriorated situation and the conditions imposed by Aerocivil.
If Viva remains shut down, Avianca has effectively eliminated its strongest competitor.
In a statement issued this morning, Avianca said (translated by Finance Colombia):
After having informed [the Colombian government] in 2022 about the acquisition of the economic rights of Viva Air by the controlling shareholders of Avianca (transaction covered by Resolution 10390 of 2015 of the Superintendence of Industry and Commerce) and having requested more than seven months ago the integration of both companies to the Civil Aeronautics -Aerocivil- in the framework of the evident financial crisis of the low-cost carrier, Avianca received yesterday the notification of approval with conditions by the Civil Aeronautics.
Given the operational, financial and technical implications of Aerocivil’s decision, Avianca will study the resolution and the implications of the measures set forth by the authority as soon as possible to determine the feasibility of complying with them. In this context, it should be noted:
- Viva Air no longer has the same capabilities – route network, planes, workers – that it had before the temporary suspension of its operations, a factor that must be analyzed in detail to determine the relevance of the conditions established by Civil Aeronautics.
- As provided by the Civil Aeronautics, against this decision there is room for appeals and reinstatement not only by the parties involved but also by interested third parties recognized by the authority in the process (LATAM, Wingo, Ultra Air and Aerolíneas Argentinas), for which approval with conditions is not yet firm. Until that happens, Avianca is not empowered to intervene in the operational or financial situation of the Viva airline, nor will it be able to resolve, as required by the resolution, the situation of the users affected by the low-cost carrier.
Regardless of the foregoing and meeting the needs of users who have been affected by this situation, Avianca will continue to offer those with confirmed tickets alternatives for their relocation:
- Free of charge until March 24, subject to seat availability and in order of arrival at the airport.
- Through special protection rates that allow seat confirmation.
To date and seeking to preserve the stability of the Colombian air system, Avianca has led the protection of passengers affected by Viva by having relocated more than 70,000 users on 103 routes (61,000 on the domestic Colombia and 9,000 on international routes), and has arranged five planes and has put 56 exclusive counters at the airports at the service of the situation.
The speed of the authority will be essential so that there can be a solution that allows safeguarding the existence of what remains today of the low-cost pioneer in Colombia.