Colombian low-cost airline Viva Air voluntarily began the process of restructuring local debt, while awaiting approval for a merger with Avianca, Reuters reported on February 11.
“Viva is starting a voluntary restructuring process that will last 90 days to restructure its debt through negotiations with its main creditors,” the company said.
The airline said its financial position worsened due to rising fuel prices last year and the devaluation of the Colombian peso.
The announcement comes after ultra-low cost airline JetSMART Airlines also announced its intention to buy 100% of Viva Air.
The intention to buy the Colombian low-cost airline Viva Air was announced by the low-cost airline JetSMART Airlines, supported by Indigo Partners, on February 7, Reuters reports.
If successful, the deal would destroy Viva’s plans to merge with Colombia’s flag carrier Avianca.
Chile’s JetSMART Airlines said in a statement that it plans to start talks to buy the Colombian airline, but did not disclose the amount it could pay to acquire Viva or funding plans.
JetSMART is part of the low cost airline portfolio of private investor Indigo Partners, along with US-based Frontier Airlines, European Wizz Air WIZZ.L and Mexican Volaris.
The Chilean carrier currently operates 79 South American routes, including flights to the Colombian capital Bogota, as well as Medellin and Cali.
Colombia’s civil aviation regulator initially rejected a proposal to merge Avianca and Viva in November on the grounds that it posed risks to competition in the sector and consumer welfare.
That same month, Avianca and Viva filed an appeal, offering alternatives such as conceding some routes and giving rivals better landing and takeoff schedules.
In January, the regulator annulled the merger, citing procedural irregularities, and started the process over again, with neither company having to reapply.
A possible merger between JetSMART and Viva would create the best conditions for competition in the market, Ortiz said, adding that airlines have no competing routes in Colombia.