LONDON – Last week saw the Colombian carrier Viva Air initiate a business recovery process after struggling greatly from the Covid-19 pandemic – a move that was done with the pending approval of a merger with Colombia’s Avianca.
However, LATAM Colombia has now expressed interest in Viva Air, with the hopes of negotiating a possible acquisition of the airline.
In recent news, LATAM Colombia, subsidiary of LATAM Airlines Group, expressed their interest in starting negotiations for a possible aqcuisition of the troubled carrier Viva Air.
In a letter to the Viva Air President and Castlesouth Limited, LATAM Colombia reported that the operation is subject to a financial analysis, which LATAM Colombia would have the capacity to carry out expedited, to a possible agreement between Viva Air and LATAM Colombia themselves, as well as to the regulatory approvals.
LATAM Colombia has served the country for over a decade, and has always had the constant concern to invest in the Colombian market.
On the proposal, LATAM said the following:
“In this way, an eventual acquisition of Viva Air Colombia becomes a growth opportunity, offering Colombian consumers the best value offer in the local market in terms of service, and the country new alternatives to strengthen its connectivity and the development of tourism”
“For this reason, we consider that this potential operation would be the best option to strengthen the conditions of free competition,”
“As well as offer the necessary support that will allow responding to the financial situation of Viva Air Colombia and its creditors, which will result in the strengthening of the Colombian airline industry.”
The recovery process
Viva Air recently announced its initiation of a business recovery process, the Delaware Business Recovery (PRE), in accordance with regulations set to protect companies heavily affected by the Covid-19 pandemic.
The airline’s view with this process is to achieve permanence in the market, while they await an urgent definition from Aerocivil regarding a possible alliance with major carrier Avianca.
Viva’s determination to initiate the process occurs due to the crisis the airline is facing when adding to the effect of the Covid-19 pandemic, along with the current macroeconomic factors that are of public knowledge.
Adding to this, Viva Air has not been able to access capital over the past nine months due to the lack of possibilities to integrate with another airline, which in this case is Avianca, currently pending authorization from the National Government.
Possible alliance – the details
Earlier in 2022, AviationSource reported the two parties – Viva Air and Avianca – had sought merger authorization.
The proposed merger aims to shore up Viva to its survival viable, while it faces a “complex financial situation that requires immediate intervention,” Felix Antelo, CEO and President of Grupo Viva, said.
The two parties had asked the Colombian authorities for permission to merge, ensuring the continuity of the ULCC model that gave so many Colombians the opportunity to fly in an airplane.
Avianca has asked the Colombian authorities to approve a merger with Viva under the legal figure “company in crisis”, allowing the possible bailout of ULCC. Avianca recently exited Chapter 11 and is currently in a strong financial position with less debt.