Colombia’s Avianca ditches merger plan with Ryan’s Viva Air

Viva Air, the South American budget airline of which Declan Ryan owns a significant stake, had a fleet of 22 jets last year

John Mulligan

A PLAN to merge Declan Ryan’s South American low-cost Viva airline with Avianca has been ditched.

Avianca – Colombia’s biggest airline – said at the weekend that it was pulling the plug on the proposed merger due to conditions that were required by Colombia’s aviation regulator to permit the transaction.

Mr Ryan, a son of the late Ryanair founder Tony Ryan, owns a significant stake in Viva Air. As part of the merger proposal, he joined the Avianca board.

Mr Ryan owns Dublin-based aviation consultancy Irelandia, which has helped launch a number of low-cost airlines around the world.

Declan Ryan of Irelandia owns a significant stake in Viva Air

The decision to merge the two businesses was prompted last year by the impact the Covid pandemic had on the global airline industry.

“This is an important day for Viva as it is the perfect scenario to continue with our growth and expansion strategy, staying true to our goal of inclusiveness in air travel,” Mr Ryan said in April last year when the deal was first announced.

He said at the time that the merger would “encourage growth” in the regional air transport market, “promoting low rates for users”.

Avianca has close to 20,000 employees and a fleet of about 190 aircraft. It is part of the Star Alliance.

As of last year, Viva had a fleet of 22 jets and 1,200 employees and units in Colombia and Peru that serve destinations across the region, as well as Mexico and the US.

However, the company suspended flights in February, blaming the aviation regulator in Colombia for the slow progress that it said was being made in the proposed Avianca merger.

Announcing the end of the merger plan, Avianca said conditions proposed by Colombia’s regulator “would not allow Viva to be a financially and operationally viable airline”. Avianca insisted the conditions would also put its own stability at risk.

It also said the regulator would require Avianca to assume routes, commitments and prices that “don’t coincide with Viva’s remaining capacity” after having suspended its operations.

In 2019 Viva received a $50m (€46m) investment from New York-based private equity firm Cartesian Capital for Viva Air Group, in return for a stake in the airline.

Avianca exited a restructuring process in 2021 that saw it emerge from Chapter 11 bankruptcy.

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