Since Avianca’s intention to integrate the low-cost airline Viva Air into its operation was announced a little over a year ago, due to the latter’s difficult financial situation, The process was not only marked by speculation, delays, demands from the control authorities and a series of circumstances that last weekend led the directors of the renowned red airline to give up an initiative that many already took as a fact.
(Also read: Aerocivil responds to Avianca after giving up integration with Viva Air)
All this failed process began a year ago (end of April) when the shareholders of the companies Avianca and Viva Air they reached an agreement under which the partners of the latter gave up their economic rights so that the two companies would operate under the same parent company or tenurefor which you can count on the approval of the market authorities.
«Many airlines around the world are looking to join forces and create strong and sustainable groups that serve as the backbone of their connections.»Adrián Neuhauser, president of Avianca, told his collaborators at the time, confirming the new union. But what they never imagined is that they were just beginning a tortuous path towards an integration from which they would have to give up a year later.
(You may also be interested: More than 1,000 Viva employees still hope to be linked to Avianca)
As development progressed and the market authorities awaited a response to the integration process, the first obstacles began to appear, while at Viva Air the company’s financial deterioration became more evident, which In July of last year, it already had problems attending to some of its itineraries in the country.
As reported by the company to its Armenia-Cartagena and Armenia-San Andrés routes, they only lasted four months of operation, they had to be suspended due to fuel costs, but the problems in this regard would intensify.
In August 2022, the high cost of fuel, high inflation and the skyrocketing dollar increased Viva’s difficulties, which hit its cash flow and prevented it from meeting some obligations. The Cali and the Caribbean operation was suspended, it had to return seven of its aircraft and its president resigned.
While the market was speculating that the financial difficulties of Viva Air were not true and that it was all a move by Avianca to gain market share and a form of pressure on Civil Aeronautics (Aerocivil) to approve the integration of the two airlines that, according to what was said, had already been integrated some time ago.
Those rumors led At the end of September, Avianca filed a complaint with the Attorney General’s Office for the alleged crime of procedural fraud, by representatives of the airline Ultra Air.
But the first setback was received by the airlines in November when Aerocivil concluded that the integration represented risks to competition in the sector and the well-being of consumers, for which reason it objected to the operation, a measure that was immediately appealed by Avianca.
The controversy over the integration of Avianca and Viva Air took a new turn after the The Superintendence of Industry and Commerce (SIC) formulated a statement of charges for allegedly having carried out this operation in April without the prior authorization of the Civil Aeronautics, against which red airline argued that, with the acquisition of economic rights, its shareholders did not participate in the decisions and management of Viva; therefore, talking about business integration was not possible.
New year, new obstacles
But the problems surrounding the possible integration of the two companies were far from over. Less than a week before the deadline to respond to the appeal that Avianca and Viva filed after their integration request was denied, Aerocivil made the decision to annul the process.
«When studying the appeal, a procedural irregularity has been found that is going to be cleared with an annulment, rolling back the initial decisions and decisions will be made with guarantees of due process and of course quickly. We know the importance of a prompt decision, but also the effects of not taking it for the public treasury and for Aerocivil», indicated at the time by the Ministry of Transportation.
In the midst of this uncertainty about the fate of the low-cost airline, initiatives arose from JetSmart and Latam to acquire the company in financial difficulties, intentions that never advanced, much less came to fruition.
Meanwhile, the crisis in Viva reached a critical level, to the point that on January 11 of this year its directives announced the start of a business recovery process in accordance with the regulations that protect companies affected by the crisis that ended the covid-19 pandemic, with a view to achieving its permanence in the market and waiting for the decision by Aerocivil on its business integration with Avianca.
planes on the ground
In the midst of the delays and delays in Aerocivil’s decision regarding an eventual integration between Avianca and Viva, at the end of January the latter reached its most critical point, that of no return, forced to leave its five aircraft in land, emerged to thousands of travelers who already have their tickets and scheduled their trips both in Colombia and abroad.
Due to the chaos unleashed in the country’s airports with the definitive suspension of the operations of this airline, both the SIC and the Superintendence of Transportation initiated administrative investigations against the company and ordered it to respond to the passengers who had purchased their tickets.
The airline’s breaches even led to the company being denounced for fraud.
After the crisis that put an end to the Viva operation broke out, Aerocivil finally gave its approval to the integration with Avianca, although it set a series of conditions that would be met so that the process could be firm. One of those conditions aimed to compensate passengers with current reservations affected by the paralysis of Viva’s operations.
Faced with these conditions, Avianca said that it would study them before making a final decision regarding the integration.
In the midst of this situation, the Ultra Air crisis also broke out, which, also overwhelmed by the market situation, had to suspend its operations, deepening the difficulties of the country’s air operations.
Despite the chaos generated by the situation of both airlines, the Minister of Transportation at the time, Guillermo Reyes, kept the hope that they would recover and operate again.
«By the way it is going, it is most likely that before the end of this month the Viva airline will fly through the Colombian air again, which is something important for passengers, company workers and travel companies,» Reyes said when announcing that a final decision in the case of integration would soon be known.
But the weeks passed and the integration decision between Avianca and Viva was not forthcoming. Finally, after several months of uncertainty, at the end of April the Civil Aeronautics issued Resolution 00815, of April 25, 2023, which confirms the integration of Viva Air and Avianca; Of course, with some conditions, such as respecting the rights of Viva Air users; return the slotsboth in departures and arrivals, and maintain Viva Air’s low-cost scheme as an option that materializes alternatives, etc.
However, Avianca responded that said resolution made «the operation of
Live in the medium term», so that after being submitted to appeals and reversals, it did not remain firm.
A new resolution (00815) was then issued, but in it the conditions of resolution 00518 were reiterated. In fact, it does not allow a realistic integration and rescue transaction for Viva.
Finally, given the impossibility of complying with the conditions imposed by Aerocivil, Avianca gave up this integration this weekend, thus putting an end to a story that has affected the Colombian air sector.
Its directives indicated operations that Aerocivil imposed conditions that made the merger with Viva Air, low-cost, unfeasible, which suddenly ceased its ends last February and will no longer be in the passenger transport business in Colombia.