Avianca gives up on finalizing merger

Unfortunately, the conditions of this resolution, which is already the firm decision, make it impossible to rescue Viva by making it unfeasible as an airline.

Adrian Neuhauser, President and CEO of Avianca

Avianca complied with the deadline that it had been given and on Saturday morning announced that it had abandoned the integration with Viva Air, considering that the conditions imposed by Civil Aeronautics not only did not make the operation of the low-cost airline unfeasible cost, but it would also put your financial stability at risk.

The company’s decision opens the way to one of the scenarios seen by industry experts. According to analysts, with the decision, Viva will not be able to comply with the Business Recovery Process, which established a payment schedule for creditors and people affected by the cessation of operations.

Juan Felipe Reyes, aeronautical lawyer at Parra Rodríguez Abogados, stressed, prior to learning about the airline’s decision, that “Viva Air does not survive, or rather revives, if Avianca does not accept the integration.”

Reyes highlighted that the low-cost airline will possibly not be available in the market, because if the integration is rejected, it would be left alone without financing, so it will not be possible to pay creditors or carry out the REM for lack of money. The experts consulted stressed that, if another airline does not come to rescue Viva, it would leave the market and could be liquidated.

Andrés Palacios Lleras, a professor at the Universidad del Rosario, mentioned that there are alternatives in case the conditions are not renegotiated and Avianca decides not to join. The people affected may open “administrative processes before the Superintendencies, especially the Superintendency of Transportation and the Superintendence of Companies.”

In addition, he emphasized that judges may rule in favor of users in legal proceedings of a civil nature. However, the agencies “could not sue under the consumer statute.”

Avianca announced that it is desisting from its intention to join the low cost, for not finding that the conditions to do so, stipulated by the Civil Aeronautics, were viable to rescue it financially.

“Despite the fact that Avianca repeatedly sought to safeguard the existence of Viva and thus protect consumers, employment, and regional connectivity, unfortunately the conditions for the transaction defined by Aerocivil not only would not allow Viva to be a financially and operationally viable airline , but they could even put the stability of Avianca and the sector at risk,” the company said in a statement.

Adrian Neuhauser, president and CEO of Avianca, insisted that “unfortunately the conditions of this resolution, which is already the firm decision, make it impossible to rescue Viva by making it not only unfeasible as an airline, but also, if the integration occurs under the conditions imposed by Aerocivil, it would put the stability of Avianca and the connectivity of Colombia at risk.”