Ultra Air 2nd Colombian Airline To Cease Operations In 1 Month

After struggling to find a buyer or investor, Colombian low-cost airline Ultra Air suspended operations just 30 days after competitor Viva was abruptly grounded. Ultra had recently admitted struggles but sought to reassure passengers that it would carry on.

Less than a year ago, Ultra was flying high. William Shaw, co-founder of both Viva and Ultra, gave an interview to Finance Colombia touting the upstart airline’s success and optimistic prognosis. After Viva collapsed, Shaw said that supplier and investor confidence made things difficult for Ultra, but they had what they needed for the time being. Then, on the ides of March, Ultra seemed to have found a savior, when Chilean airline Jetsmart signed a letter of intent to purchase Ultra. Jetsmart, backed by American Airlines and US aviation private equity firm Indigo Partners, had recently obtained approval by Colombian regulators to fly domestic routes within Colombia.

“Not so fast!”—Lee Corso

Less than a week after showing up as a savior, Jetsmart backed out of its deal with Ultra, leaving the airline even worse off than before. It is not publicly known whether this was “dirty dealing” or the result of findings during the due diligence process.

Update–Jetsmart Responds:

To the previous assertion, Jetsmart representatives offered a written response to Finance Colombia (translated by Finance Colombia):

We would like to specify that, as reported at the time, JetSMART saw a commercial possibility in ULTRA AIR that would allow it to expedite its entry into the Colombian market and therefore made its interest public by signing a letter of understanding with the representatives of ULTRA Air. . However, and as is appropriate in these cases, within the framework of due diligence, the conditions were not found to continue with the negotiation, giving up the process, as was made publicly known.

For JetSMART and its representatives, it is important to specify the transparency with which the process was carried out within the framework of the protocols and current regulations.

Yesterday, Finance Colombia saw a document indicating that Ultra was grounding half of its fleet and was having trouble making payroll. Today, Ultra’s wings were finally clipped, with the airline issued a statement saying (translated by Finance Colombia):

We profoundly lament to inform all our clients, providers and authorities that from midnight last night Ultra Air has suspended airline operations in Colombia, as such no programmed routes will be flown from March 30.

It has been a year since we launched, the only regular commercial airline from Colombian capital, with a friendly proposal, happy and modern, Ultra Air came to attend a segment of the market that could not fly before due to the high costs of this essential service. During this time, the airline transported more than 2 million passengers with fair prices; connected the country’s principal cities, gained more than 8% market share of the Colombian market, and generated over 1,200 direct and indirect jobs.

Nevertheless, adverse macroeconomic situations for the industry such as the increase in fuel rates, and the currency exchange rate, created a substantial peaking in costs for airlines, causing an operating deficit during the previous months.

Additionally, the suspension of operations of the third largest airline in the country put industry suppliers and aircraft lessors on alert, leading them to demand immediate and even prepayment of supplies and services necessary for operation, but unusual in the industry.

As a consequence of all this, and despite the labor of our investors, and the solicitation for help from the national government through the Fondo Nacional de Garantias (a Colombian government credit guarantor, something like the US SBA’s loan guarantee program) Ultra Air sees continuing operations as impossible, and apologizes to its employees, clients, providers, and other interested groups that are affected by this situation, and reiterates its commitment to work until the last moment to minimize the impact for persons who have trusted in this project.

We offer apologies to our travelers for the inconvenience that this decision presents, that as we said before, we lament most profoundly. To submit your solicitations, you may write to [email protected] or through the following link: www.ultraair.com

We are attentive to solving the impasse [this creates] in your travel plans.