Earlier this year, Colombian low cost carrier Viva announced that it would join in the creation of the Abra holding group, along with Avianca, and Brazilian carrier Gol. The multi-airline merger has yet to be approved by government regulators, and is opposed by some competing airline operators.
Ultra Air’s CEO Founder William Shaw, who also happens to be the co-founder of Viva Air told Colombian business magazine Portfafolio “The concern that we have is with the threat; with what the government just raised on the first day (the merger was announced, of “either you let us merge or we go bankrupt” to create a monopoly that is going to keep 65% of the Colombian market routes, and that can’t be good for the consumer.”
Avianca’s CEO Adrian Neuhauser fired back telling tourism industry journal Reportur that “Accusing Avianca of trying to make a monopoly, I believe is deflecting the discussion from what they are really trying to do, which is the low-cost competitors similar to Viva are trying to take advantage of the opportunity to let Viva die.
In the midst of such back and forth by executives of competing airlines, Viva issued a statement seeking to clear the airspace, without creating further turbulence, saying:
As we have mentioned on previous occasions, airlines in the world are going through complex times due to macroeconomic variables such as the record price of fuel, the devaluation of local currencies against the dollar and very high inflation, factors that affect our operation and represent a risk for the industry in general.
A macroeconomic moment like this presents us with great challenges that we are facing thanks to the benefits of the ‘Super Low Cost’ model, which includes cost efficiencies and flexibility in adjusting routes or company size. Notwithstanding the foregoing, one way of dealing with this complex moment is the possibility of enabling forms of integration and consolidation of alliances that allow for greater financial muscle in favor of the sustainability of the airlines and, therefore, of the sector itself, guaranteeing its long-term sustainability and growth. This is exactly what we are looking for from Viva; integration into Grupo Abra, to ensure the sustainability of Viva in the medium and long term.
Viva continues to receive new Airbus A320neo aircraft and operating normally, though as a privately held company, it is not obligated to issue financial results to the public that would offer insight into its actual financial condition. In recent weeks the airline has adjusted its route network, for example ending flights between San Andrés, Colombia and the coastal cities of Cartagena and Barranquilla. Flights between Orlando and Medellín have been reduced to a seasonal schedule.