Colombian 'Avianca' agrees to form a new company with ' Viva' to reduce costs and see growth after emerging from bankruptcy .

Colombian Flag-carrier Avianca has taken a step towards a merger with Viva , the Low cost carrier from the country, while keeping separate branding and strategies, the firms released statement on Friday.

• Avianca and Viva will combine to create a new holding company , retaining thier brands.
• Viva will manage its operations in Colombia and Peru separately from Avianca.
• Declan Ryan, founding partner of the low-cost airline Viva, will sit on the board.
• Transactions between Viva and Avianca still require regulatory approval.

COVID-19 pandemic is the prime driver and merging the companies economically under an Umbrella group, is aimed at utilizing the synergy amid crisis.

"Majority shareholders from both airlines together announce that Viva will form part of Avianca Group International Limited (Avianca Group), while Viva founding member Declan Ryan will join the board of the new group, bringing all his expertise in aviation," the companies said in a joint statement.

It's not done yet , Avianca Group's absolute control of Viva's operations in Colombia and Peru will be subject to approvals from regulatory authorities in both the countries.

Once merger is approved , the airlines will keep their separate branding and business strategies. The synergy will offer more competitive pricing and explore growth opportunity following bankruptcy.

“The pandemic has awakened in countries around the world the need to create a robust and sustainable group of airlines to create value for consumers while ensuring and strengthening domestic and international air connections,” Avianca said in a statement.

Avianca completed a restructuring at the end of 2021 which allowed it to emerge from Chapter 11 bankruptcy , and the aim was to compete with low-cost carriers on price while keeping parts of the business. The airline has more than 110 aircraft, with some 12,000 employees.

Avianca had previously filed for bankruptcy in the early 2000s, and was rescued by a deal with Bolivian oil tycoon German Efromovich. 

Roberto Kriete of Avianca said,

“This new and powerful airline group is using a more efficient cost structure to deliver lower fares, a route network that provides direct connections between destinations, a strong loyalty program, and friendly and efficient service. It will benefit our customers.”

At present , Viva has 22 aircraft and some 1,200 employees, has offices in Colombia and Peru, and serves destinations in Mexico and the United States as well as destinations throughout the region.

Declan Ryan said,

“By providing the fundamental advantages that bring people together, it will have a positive impact on Colombia, the connectivity of the region and the economic development of the country.”