Avianca Group has abandoned its plan to acquire Grupo Viva due to the onerous conditions imposed by the Colombian civil aviation authority (Aerocivil).
"Unfortunately, the terms of this resolution, which is now a firm decision, have made it impossible to rescue Viva by making it not only unviable as an airline but also, if the integration were to take place under the conditions prescribed, it would jeopardise Avianca's stability and Colombia's connectivity," Chief Executive Adrian Neuhauser said.
The termination of the merger means that Grupo Viva - the parent of Viva (Colombia) (Medellín José Maria Córdova) and Viva Air Perú (Lima International) - will not be revived. The low-cost carrier has been dormant since February 28, 2023, when it suspended all flight operations under growing financial distress.
Avianca Group said Aerocivil's resolution contained "numerous technical shortcomings" in particular, it based its analysis on the situation from August 2022, when the airlines first applied for consent.
"The conditions require Avianca to assume obligations, routes, and service and price level commitments that do not match Viva's remaining capacity after two months of suspended operations," the holding said.
Avianca also criticised the resolution for offering "little regulatory flexibility regarding certainty about the conditions for Viva's resumption of operations". The mandated slot reallocation procedures were so strict, Avianca argued, that they would effectively prevent the revived LCC from efficiently basing even a single aircraft at Bogotá. This would, in turn, make Viva's post-merger network unfeasible.
Avianca Group said it would continue to provide free-of-charge flights on avianca airlines (AV, Bogotá) to Viva passengers through May 31, 2023.
"This long process puts Viva - the airline that brought the low-cost model to the country, allowed millions of Colombians to fly at competitive prices, and provided direct and indirect employment to thousands of families - at imminent risk of disappearing. Now the challenge for the country will be to advance plans to protect the sector and prevent Colombia from continuing to lose competitiveness, while diverting the flow of passengers to countries such as Panama, Chile, and Peru," Neuhauser added.
Aerocivil initially authorised the merger in late April 2023, only for Avianca to appeal the terms. On May 5, the regulator issued a new resolution, slightly relaxing the terms and requiring a final decision by May 13, 2023.
