A fleet of Viva Air aircraft at José María Córdova International Airport in Rionegro (Colombia). Luis Eduardo Noriega A (EFE)
Colombia’s corporate watchdog on Thursday morning announced the seizure and confiscation of all assets and rights of low-cost airline Viva Air. A decision that ends all business activities after 14 years of existence. It also ends a long process of financial agony in which the company has used every lifeline at its disposal to avoid outright bankruptcy. The failed business integration project with Avianca and the failed attempt to benefit from a business restructuring process were useless.
The Medellín-based company, which has a subsidiary in Peru, filed on June 20 to initiate the liquidation process. A decision by the shareholders’ meeting, chaired by its President Francisco Lalinde, after concluding at the end of May that, despite its best efforts, Viva does not have the financial means to continue flying operations, as stated in the AGM resolution Supersociedades. In this way, a company that ranked second by volume of business in the local market disappears, leaving more than 16,000 affected passengers on the ground after ceasing its activities.
After the hard blow to the Colombian aviation market, the regulator has stated that “the process begins with assets of US$452,818,480 in thousand pesos”. A value, he adds, that needs to be adjusted and “really determined at the time of the trial judge’s approval of the asset register at the appropriate stage of the proceedings.” The regulator’s review also found that the business recovery agreement was useless after Avianca’s refusal had to continue a merger process in which there had been everything: speculation, lawsuits from competitors, breaches of competition rules or changes in the board of the flag carrier.
Analysts have been pondering the possibility of such an outcome for months, and it puts Ultra Air, the other low-cost company struggling to emerge from the abyss, in a very tricky spot. In any case, an important chapter in the history of aviation in Colombia has closed, with low-cost airlines opening up the market to travelers who previously had no access to them. And although there are other companies in the same segment, such as Easy Jet or the newcomer Jet Smart, the conditions and operation of the business must be reconsidered by the authorities, according to analysts.
The Superintendency of Companies’ resolution stresses that the decision aims to protect “the company’s few assets” and “the rights of its most vulnerable creditors, as is the case with workers.” Factors that have prevented Viva from fleeing include the embargoes and other constraints imposed by creditors that have hampered the ability to administer the assets; or the termination of aircraft leases and the obligation to return them.
A collection of obstacles for a company that has collapsed after the pandemic. Now there is a commercial offer between the active airlines to take over the routes abandoned by Viva and a possible increase in ticket prices. A bitter end for the yellow birds and the more than 4,000 direct and indirect employees who made operations possible for more than a decade.
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