JetSmart drops plans to acquire Colombia-based Ultra Air

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While Viva Air and Avianca merger is still to be approved, JetSMART might swoop in to buy the Colombian low-cost carrier

JetSmart has said it is no longer interested in purchasing Ultra Air after signing he Memorandum of Understanding (MoU) with the Colombian carrier.

The two low-cost carriers signed the MoU on March 16, 2023, amid several developments in the Colombian airline market, namely Viva Air suspending its operations and the Civil Aviation Authority of Colombia (Aeronáutica Civil de Colombia, Aerocivil) deliberating on whether to approve the Avianca and Viva Air merger.

JetSmart’s Chief Executive Officer (CEO) Estuardo Ortiz stated that “due to various factors” the airline was unable to continue with the acquisition of the Colombian carrier. “Our commitment and confidence in the Colombian market remains firm,” read Ortiz’s statement on March 22, 2023.

Instead, the Chile-based JetSmart, which has subsidiaries in Argentina in Peru, will focus on “meeting the requirements of our certification process [in Colombia], working closely with Civil Aeronautics, who have performed with the highest level of professionalism,” the CEO added.

Meanwhile, Ultra Air stated that it will “continue working to obtain new resources from our investors and bankers, since JetSmart’s withdrawal from the signed agreement may force us to adjust the operation,” according to local media reports. In addition, the Colombian Superintendencia de Transporte, an agency within the Ministry of Transport, issued a statement on March 23, 2023, which said that the low-cost carrier must inform it “for preserving liabilities for the advance sale of tickets in order to guarantee the effective measure of compliance with the passenger management plan, in the event of a possible cessation and/or suspension of operations”.

Furthermore, since Ultra Air does not have much liquidity, Superintendencia de Transporte ordered the low-cost carrier to “implement a work plan detailing a list broken down by routes, which must include the schedule of commercial flights” for seven days of the week, identifying the aircraft and crews that would operate the flights. The airline must also inform the governmental agency every Monday before 6:00 PM whether there is any economic and operational risk for the next three months and separately inform the agency about how negotiations to acquire additional capital are progressing.

If it fails to do so, successive fines will be imposed upon Ultra Air.

On the same day that JetSmart pulled out of the deal to purchase Ultra Air, Avianca announced that it is reassessing its merger with Viva Air despite receiving approval from Aerocivil on March 21, 2023. Viva Air was forced to suspend its operations on February 27, 2023, after the airline failed to receive a response from Aerocivil regarding the merger in due time.

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