Viva thinks the story of airline consolidation in Latin America is far from over


  • Viva, Avianca and GOL are creating a new wave of consolidation in the Latin American market.
  • Viva believes that many factors contributed to her participation in “Abra”.
  • The creation of Abra will result in many benefits for the airline conglomerate.
  • Viva predicts more in-store consolidation for Latin America.

Viva started thinking long-term once Colombia reopened

Viva, Avianca and GOL are creating a new wave of consolidation in the Latin American market.

At the end of April 2022, the national Colombian company Avianca announced its intention to acquire its rival Viva. Soon after, Avianca expanded its reach with the creation of Abra.

Abra will include the main shareholders of Avianca and the majority shareholder of GOL. Abra Group will hold a 100% non-majority stake in Viva and convertible debt representing a minority investment in Chilean airline Sky.

See related CAPA report: Avianca continues to shake up the Latin American aviation scene with the creation of “Abra”

Speaking at the recent CAPA Americas Aviation and LCCs Summit in Puerto Rico, Viva CEO Felix Antelo explained that once it restarted operations after the Colombian market reopened during the COVID-19 pandemic , Viva had engaged with many parties about its future.

Mr. Antelo explained that Colombia is one of the fastest growing airline markets in the world, and Viva is the country’s leading low-cost airline, which has created an attractive value proposition.

Viva foresees many benefits from the creation of Abra

The airlines that make up Abra will retain their own separate brands and operating segments, “and if we do it right…the opportunity we see is huge,” Antelo said.

He explained that residents of Latin America take an average of 0.5 air trips per person per year, compared to two to three trips for people in Europe, the United States and Australia.

“There is a long way to go,” he said.

The creation of the mega airline group Abra also has many advantages, Antelo said, including investments in technology and large-scale collaboration with suppliers.

Being part of a strong financial group that has better access to capital and an ability to deploy technology faster is “the right way to go,” Antelo said.

Abra is not writing the last chapter of consolidation in Latin America

Mr. Antelo does not believe that Abra is writing the final chapter of airline consolidation in Latin America.

He believes that in the future, three to four major airline groups will emerge in Latin America and South America, resulting in a more profitable and sustainable industry.

Comparing the Latin America region to the United States or Europe, Antelo explained, “You have too many companies for the size of the market,” and he predicted further consolidation “on the road”.

The timing of this consolidation is difficult to determine, Mr. Antelo said; but he said Abra expects the antitrust approval process for its consolidation to take about a year.

Who will take the next step in Latin American mergers and acquisitions?

The question is: who will take the next step?

Data from CAPA and OAG show that LATAM Airlines Group is the largest operator in Latin America measured by departure frequencies, followed by Azul.

Azul attempted to buy LATAM earlier this year, but scrapped those plans after determining that LATAM’s valuation in the company’s Chapter 11 reorganization plan was above what Azul deemed credible.

LATAM Airlines Group is expected to emerge from bankruptcy protection in 2022, and it is likely assessing how to move forward in a rapidly changing environment.

Clearly, a tie-up with Azul would give the combined entity its own powerful level of scale in the region, but Azul recently said it was confident in its strategy in Brazil and focused on its core business.

Ultra-low-cost airline group JetSMART, which has operations in Chile, Argentina and soon Peru, could be a potential suitor for LATAM – but American Airlines has recently invested in JetSMART and GOL. Given this dynamic, the possibility of a LATAM-JetSMART tie-up seems somewhat unlikely.

There are also unanswered questions regarding Abra’s partnership strategy.

Avianca is a member of Star Alliance and was pursuing a joint venture with United Airlines and Copa Airlines prior to the COVID-19 pandemic.

The GOL remains non-aligned, but as mentioned earlier, it is deepening its ties with America. Viva, meanwhile, has launched an interline agreement with the Mexican ULCC Viva Aerobus.

Delta Air Lines has also maintained an investment in LATAM, and the two operators are working on launching their own joint venture. Presumably, Delta will have some influence on the direction LATAM takes once it exits Chapter 11.

And for now, Panama-based Copa believes that if it continues to focus on its business model, it can do very well.

It is difficult to determine what will happen next in Latin America

As Abra now struggles to navigate the regulatory approval process, it appears the Latin American consolidation story is far from over.

But predicting which entity will take the next step is not straightforward, as many different dynamics remain in play.

Whatever the outcome, Latin America will be a region to watch closely next year.

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