Colombia's civil aviation authority objects to Avianca merger

FILE PHOTO: An Avianca Airlines plane prepares to take off at the San Oscar Arnulfo Romero International Airport in San Luis Talpa, El Salvador, February 8, 2022. REUTERS/Jose Cabezas/File Photo

BOGOTA (Reuters) – Colombia’s civil aviation authority on Tuesday objected to a potential merger between airline Avianca, Colombia’s flag carrier, and budget airline Viva, saying the transaction represented a risk to competition and customer well-being.

Avianca and Viva signed a deal to merge into one group and unify their economic rights in April as part of a strategy to strengthen both airlines after the global aviation industry was battered by the coronavirus pandemic.

If the merger were to complete, the combined group would control 100% of the services offered on 16 routes, the civil aviation authority said.

Potential competitors would face new challenges for growth or expansion into markets affected by the bigger barriers to entry resulting from the control that the new entity would hold following the merger, the authority added.

“According to the law, a merger such as the one planned by Avianca and Viva must be objected to, due to the adverse effects on the market,” the civil aviation authority said, adding the companies may file an appeal.

Avianca did not immediately respond to the decision, while Viva said it will revise alternatives.

Avianca exited a restructuring process late last year after earlier filing for Chapter 11 bankruptcy in the United States. The airline has more than 130 plans and employs some 12,000 staff.

Budget carrier Viva has 23 planes and around 1,000 direct employees.

Source: Read Full Article