EconomyFinancialColombian airlines Avianca and Viva will be integrated into...

Colombian airlines Avianca and Viva will be integrated into a conglomerate

Colombian airlines Avianca and Viva signed an agreement through which the second company will become part of the Avianca Group conglomerate, the Colombian company reported. This movement coincides with a change in Avianca’s business model, increasingly oriented to low-cost since it concluded its restructuring.

“The majority shareholders of both airlines jointly announce that Viva would become part of the same holding company as Avianca Group International Limited (Avianca Group), and that Declan Ryan, founding partner of Viva, would join the board of directors of the new group, contributing all its expertise in the world of aviation,” the Colombian company said in a statement.

However, “the effective control of the airlines will remain totally independent” and “any future decision to have the control and/or management of the two airlines under the same holding company will be subject to obtaining all the required regulatory authorizations” , added the information.

“This new and strong group of airlines would benefit customers by having a more efficient cost structure that would allow them to offer even lower prices, as well as a route network that would promote direct connectivity between destinations, a strong loyalty program and a service friendly and efficient according to the needs of today’s traveler,” said Roberto Kriete, main shareholder and president of the Board of Directors of Avianca, quoted in the statement.

Regarding “the eventual incorporation of the control rights of Viva’s operations in Colombia and Peru to the Avianca Group holding company, it will be subject to requesting and obtaining all the necessary regulatory authorizations in the countries that are required.” .

This means that, for the time being, “the control and administration of Viva in Colombia and Peru will not be part of the same holding company , and to that extent Viva’s operations will continue to compete with the airlines that are part of the Avianca Group in all countries where both groups have a presence”.

“This transaction will strengthen a sector that has gone through the most complex crisis in its history and will give better opportunities to the more than 13,000 employees who are part of both airlines,” the statement said.

Once the approval of the regulatory authorities is obtained, “both Avianca and Viva would have a more stable financial profile that would allow them to accelerate investment, innovation and growth,” the company explained.

Changes in the business model

Avianca completed a financial restructuring process in December 2021 and emerged from Chapter 11 of the United States bankruptcy law, which it had filed for in May 2020, in the midst of the crisis caused by the pandemic in the airline sector.

After this restructuring, the company changed its business model, combining attributes of the low-cost airline model with those of a traditional company.

At the same time, Avianca created a new holding company, called Avianca Group International Limited, domiciled in the United Kingdom.

“This is an important day for Viva as it is the perfect setting to continue with our growth and expansion strategy, upholding the flag of air inclusion and strengthening our company,” Ryan said in the statement.

70% of Viva is in the hands of Irelandia Aviation and the remaining 30% is held by Cartesian Capital Group.

With information from EFE

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