LATAM Airlines Enters the Race to Acquire Viva Air Colombia
LATAM Airlines Colombia has become the third carrier to express interest in taking over struggling Viva Air, following Avianca and JetSmart
LATAM Airlines Colombia, an affiliate of Chile-based LATAM Airlines Group, has expressed its interest in the takeover of local low-cost carrier Viva Air Colombia.
Viva Air—a relatively young airline founded in 2009—has been struggling financially and eventually filed for bankruptcy last week, although it continues to operate flights as usual.
Bids to take over the failing airline were officially opened last year, and the Colombian flag carrier Avianca immediately expressed interest. However, the proposed merger between Avianca and Viva Air was blocked in November by Aerocivil, the Colombian civil aviation regulator. The authorities claimed that merging the two airlines would harm competition in the country’s aviation market and thus pose a risk to consumers.
Following Aerocivil’s decision to block the acquisition, an appeal was launched by Avianca and Viva Air, and the process began again in January. Viva Air said that the authorities’ decision to block the deal means it has been unable to gain the capital needed to stay afloat.
“The company has not been able to access capital during the last nine months since it has not yet been able to finalize its merger with another airline, which is still pending authorization from the National Government,” said Viva Air.
The second airline to enter the race for Viva Air was JetSMART, a Chilean low-cost carrier that announced its intention to purchase the Colombian airline last week. And now, LATAM Airlines Colombia has become the third airline to enter the bidding war. However, like JetSMART, they have yet to suggest how much they would be willing to offer.
“In a written communication to the president of Viva Air Colombia and Castlesouth Limited, the company has informed that any transaction is subject to a financial analysis (which would be carried out expeditiously), an agreement between the parties, and the corresponding regulatory approvals,” said LATAM in a press release on Tuesday.
“The Colombian affiliate of LATAM group is prepared and has the capacity to strengthen its operations in the country. As such, a potential acquisition of Viva Air Colombia becomes a growth opportunity, offering Colombian consumers the best value proposition in the local market in terms of service, and the country new alternatives to strengthen its connectivity and development of tourism.”
However, Castlesouth Limited, the controlling shareholder of Viva Air, has said the ideal scenario would be for the Colombian government to approve Avianca’s takeover of the carrier, as opposed to LATAM or JetSMART.
“Given Viva’s current financial condition, immediate approval by the National Government to integrate Viva with Avianca is in the best interests of Viva and its passengers, creditors, employees, and other interested parties, including the Colombian public,” said Castlesouth Limited in a statement.
Viva Air Colombia has a fleet of 19 Airbus A320neos and has flown more than eight million passengers into, out of, and within Colombia as of December 2022.
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