Avianca would merge with Sky Airlines to create a mega low-cost carrier in South America

After the crisis caused by the pandemic in the airline industry, alliances have emerged as viable market strategies and a tool to ensure the viability of the business that is gradually returning to «normality».

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This is the case of Avianca, which would be setting its sights on Sky Airlines, one of the most relevant low-cost airlines in the region.

According to Diario Financiero, Avianca and Sky Airlines would merge to become the largest low-cost airline in Latin America.

As a result of this merger, Holger Paulmann, owner, and President of Sky Airlines would not only be the Director of an Avianca subsidiary at the regional level but would also become a shareholder of the holding company as well.

Avianca sources, consulted by Aviacionline, stated that «for the moment» they had no information to share. However, although at the time of publication of this report none of the parties involved has made an official statement, it is expected that by the end of 2021 or early 2022, the documentation and legal process to formalize the aforementioned merger will begin.

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It should be noted that, if this operation is completed, the two companies would have to overcome the legal barriers to free competition in the countries where they would operate together, mainly in Chile and Colombia.

At the moment, the merger of the commercial brands is not being contemplated, since both airlines would continue to operate under their own colors, although this could change in the medium term.

Avianca is currently in the process of exiting from Chapter 11 of the U.S. Bankruptcy Law, where it is waiting for the Court to approve its reorganization plan, which would allow creditors to exchange US$ 935 million in debt for 72% of the airline and eliminate some US$ 3 billion of additional debt.

In this context, the merger with the Chilean low-cost airline would have had the approval of Elliot Management and Caoba, creditors in Avianca’s reorganization plan, who have already had previous relations with Paulmann and Sky Airlines.