Viva Air, the ‘low cost’ paisa, is cracking

Viva Air, the Colombian low-cost airline, changes its president. Felix Antelo, Argentine and former CEO of the Peruvian subsidiary of Latam, announced this Thursday his resignation from the management of a company immersed in a financial crisis that threatens his existence. The executive, who arrived in Colombia five years ago, says goodbye brandishing health problems and in the midst of repeated protests by workers overwhelmed by the company’s decision to leave five aircraft on the ground as a last measure to mitigate the situation.

The union has indicated that this measure could result in the loss of some 300 jobs distributed between Bogota and Medellin (for a total workforce of 1,250 employees). It has been of little use, for now, that the company has taken refuge a few weeks ago under the rescue law designed by the Government to restructure the debt that has been crushing hundreds of businesses since the pandemic.

As a backdrop is the indecision about the integration process with Avianca. It is an operation that is being reviewed by the Civil Aeronautics, in charge of ensuring free competition in the air market, and by the Superintendency of Industry and Commerce, also endowed with auditing powers. The reason? They must review whether the marriage infringes the right to free competition in the local market and whether the merger would have been signed before the necessary approvals from the controller.

The legal figure, known as a “company separation”, has been criticized by various actors in the sector who at the time denounced the participation of the Irishman Declan Ryan, the company’s largest shareholder, on the Avianca board. The European manager, son of the founder of the RyanAir line, a forerunner in the sector of cheap tickets, had to give up his chair in November last year.

Nor does it add points to Avianca’s defense for having publicized in an official statement dated May 11, the creation of the new Abra Limited Group. It would be a new Colombian-Brazilian consortium, which had the economic rights of Viva, and which sought to balance the relationship of forces in the region with the Chilean giant Latam. With an investment of 350 million dollars, this time Avianca’s partner was Brazilian Gol, the third largest airline in that country with 250 planes and connections with Latin America and the United States.

For now, Viva Air has appointed Francisco Lalinde, a mechanical engineer and management specialist with 30 years of experience in the airline industry, as interim president and CEO. Lalinde had been serving as vice president of operations. The company issued a statement urging Aerocivil to “act quickly to approve the pending transaction and thus allow the company to become part of a larger and more solid group of airlines.”

It is a desperate call to stop the financial bleeding that Viva has been dragging since the pandemic, which hit it in full growth and when it had 43 domestic and 13 international routes. The situation has incidentally whetted the appetite of companies such as the Chilean JetSmart and Latam, interested in taking over the shares of the Colombian low-cost company. Two declarations of intent that have only generated turbulence in the panorama. And it is that there are not a few analysts in the sector who face the situation with a central and until now unresolvable question: who should address the new suitors with their rescue offers.