Could JetSMART swoop in and acquire the restructuring Viva Air?

With Viva Air announcing its restructuring and the Colombian authorities yet to render a decision on its merger with Avianca, could Chile-based JetSMART swoop in and buy the airline?

Estuardo Ortiz, Chief Executive Officer (CEO) of the Chilean low-cost carrier, indicated that it had presented an offer to Viva Air’s shareholder to acquire a 100% stake in the Colombian airline.

Its advantage compared to Avianca is that it does not operate any domestic flights in the country, and only has four flights to/from Colombia: two from Cali Alfonso Bonilla Aragon International Airport (CLO) to Santiago International Airport (SCL) and Antofagasta International Airport (ANF) and a pair of single flights from Medellin Jose Maria Cordova International Airport (MDE) and Bogota El Dorado International Airport (BGO) to SCL.

“We do not have any domestic routes in Colombia, so we do not share a common route with Viva, except in South America where we only share 3% of what Viva flies,” stated Ortiz in an interview with La Republica.

The CEO of the company continued that JetSMART does not share common routes with Viva Columbia, whereas 83% of routes flown by Viva are also covered by the Columbian full-service carrier.

Ortiz said that if it was to acquire Viva Air, the low-cost carrier would continue to operate independently and offer “super affordable prices for the Colombian population”.

However, details still need to be refined during negotiations, with JetSMART having already engaged with shareholder deputy directors and legal representatives in order to begin talks.

“We are in a position to be able to conduct it [the merger – ed. note] quickly due to the advantage that [neither of the airlines] does not have a market concentration,” Ortiz noted.

Viva Air entered a 90-day voluntary restructuring process on February 10, 2023, while the approval process for the merger with Avianca continued to drag on. Initiated in April 2022 with a shareholder agreement, the two airlines announced their intentions to merge on August 8, 2022.

The Civil Aviation Authority of Colombia (UAEAC) rejected the merger because of competition and consumer well-being concerns on November 8, 2022. Avianca indicated that it is “concerned about the recent negative decision” made by the UAEAC, especially since Viva Air is in a financially fragile situation.

In January 2022, the Colombian authority announced that there was “substantial irregularity in the processing of the administrative action in the first instance,” and reversed the decision to deny the merger between Avianca and Viva Air. The UAEAC “will communicate the final decision to public opinion in a timely manner” regarding the final decision following the reversal.