Avianca remains a strong player after Viva deal crumbles

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The fate of the Colombian ultra-low cost carrier Viva has been sealed, now that Avianca has abandoned plans to purchase its low cost rival. It is not a surprise that Avianca walked away from the deal - which included broadly a year of wrangling with the Colombian government to gain a decision regarding the acquisition.

Viva's financial state continued to weaken after Avianca announced plans to acquire the ULCC in Apr-2022.

In Aug-2022 the two companies asked Colombia's regulator Aerocivil for a speedy decision regarding the transaction - given Viva's fragile financial state. In the space of a month during early 2023 Viva entered a voluntary restructuring, then ceased operations. After Viva was grounded, Aerocivil approved the deal, but with numerous conditions.

Although the foot-dragging by the government was frustrating, overall Avianca remains in a strong position and - for better or worse - Colombia's market will continue to remain dynamic in the near term.

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