Avianca Desists From The Integration With Viva
Although Avianca repeatedly sought to safeguard Viva's existence and thus protect consumers, employment, and regional connectivity, unfortunately, the conditions to the transaction defined by Aerocivil would not only avoid Viva to be a financially and operationally viable airline but could also jeopardize the stability of Avianca.- Avianca will continue to be an ally for Colombians and will take measures to help the stability of the sector. Among others, it will seek to add aircraft to strengthen regional connectivity, offer employment options to Viva employees, and extend the protection for users affected by Viva and Ultra until May 31.
Bogotá, May 13, 2023. Avianca consistently reiterated for months its conviction that integration was the best solution to respond to Viva's financial crisis, and to protect consumers, employees and air connectivity. However, after studying Aerocivil's resolution 873 of 2023 in detail, and noting that Aerocivil's conditions make Viva's recovery impossible and could even affect Avianca's stability, the Company was unfortunately forced to desist from the integration.
The technical shortcomings of Resolution 873 are numerous. Among others, the following stand out:
1. Little regulatory flexibility to provide certainty about the conditions for reactivation of Viva's operations.
2. Failure to adjust the conditions to Viva's current reality and to the time elapsed between the start of the process on August 8, 2022 and the date of a firm decision. 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.
3. Despite Avianca's willingness to return more than 75% of Viva's slots at El Dorado -and more than 72% of Viva's slots in "premium" slots-, the authority demanded the return of such a number of slots that would not allow Viva to base a single aircraft at the country's main airport efficiently. This would make Viva economically unviable, and explicitly contradicts other conditions that require that Viva continue to provide connectivity on the historic routes where it was the only operator, and that passengers affected by the cessation of Viva's operations, which according to official figures exceed 500,000, be protected.
Despite this unfortunate outcome - in which other airlines in the market played a detrimental role, improving their competitive position in the market by delaying the authority's decisions - Avianca's intention is to continue being an ally of Colombians, so it will seek to increase its number of aircraft to provide better connectivity to the regions, while implementing mechanisms to offer employment options to Viva employees. In view of its intention to make this important investment, Avianca respectfully calls for a clear and fair application of the Colombian Aeronautical Regulations (RAC) to all operators equally.
Adrian Neuhauser, President and CEO of Avianca, said: "Unfortunately, the conditions of this resolution, which is already a firm decision, make 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 imposed by Aerocivil, it would jeopardize Avianca's stability and Colombia's connectivity.
From the beginning of the request for integration we have been respectful of the process. However, it is our responsibility to protect Avianca and put it at the service of the country as a key piece of development, while taking care of our employees and our customers, and responding to the shareholders who have believed in us by investing billions of dollars over the past few years.
During the current crisis in the sector, in which not only Viva but also Ultra have stopped flying, Avianca has constantly sought to propose solutions: not only is it the only company that made a concrete proposal to save Viva, but it has mobilized more than 160 thousand people free of charge (compared to less than 10.000 that have been rescued by all the other airlines in the sector as a whole) and has provided additional flights to critical destinations such as San Andres, Medellin, Riohacha or Buenos Aires, among many others. In this sense, it maintains its conviction of being a key player in connectivity and avoiding a deeper crisis and will continue to protect affected Viva and Ultra users until May 31st.
"Unfortunately, this long process puts Viva, the airline that brought the low-cost model to the country, allowed millions of Colombians on flights 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, diverting the flow of passengers to countries such as Panama, Chile and Peru" concluded Neuhauser.