Avianca and GOL to form Latin American aviation giant

GOL's Boeing 737. Photo" Adriano Soares/Airliners/Net

In yet another major announcement by Avianca, the airline company’s principal shareholders reached an agreement with Brazil’s GOL Linhas Aéreas to create Abra Group, and which will have 100% financial control over the operations of low-cost carrier Viva in Colombia and Peru.

The announcement comes just two weeks after Avianca reached an agreement to acquire Viva under a new holding company with Declan Ryan. The union between London-registered Avianca Group International and Dublin-based Ryanair DAC offers both airlines “a more efficient cost structure (…) lower prices, as well as a route network that promotes direct connectivity between destinations,” said Roberto Kriete, president of Avianca’s board of directors.

The creation of the Abra Group remains subject to customary regulatory approvals and closing conditions, yet gives the airlines (Avianca, GOL, Viva Colombia and Viva Peru) a minority interest investment through convertible debt in Chile’s Sky Airline. The consolidation of four carriers creates “a leading air transportation group across Latin America,” and powerful regional competitor to Chile-based LATAM Airlines Group.

The airlines will maintain, however, their independent brands.Together, Avianca and GOL, will anchor a pan-Latin American network of airlines that will have the lowest unit cost in their respective markets, the leading loyalty programs across the region, and other synergistic businesses,” reads the press release.

“Abra will provide a platform for the operating airlines to further reduce costs, achieve greater economies of scale, continue to operate a state-of-the-art fleet of aircraft, and expand their routes, services, product offerings, and loyalty programs.” Avianca is a member of Star Alliance, while GOL has its own mileage program Smiles with 17.6 million members.

Constantino de Oliveira Jr, who pioneered Latin America’s low-cost carrier revolution when he founded GOL Airlines in 2001, has been named the group’s CEO.

Adrian Neuhauser, current President and CEO of Avianca, and Richard Lark, current CFO of GOL, will serve as the group’s Co-Presidents, in addition to maintaining their current roles at both airlines. “Our vision is to create an airline group that tackles 21st Century issues, and improves air travel for our customers, employees, and partners as well as the communities in which we operate,” remarked Roberto Kriete, chairman of Abra Group.

“Our customers will benefit from access to even better fares, more destinations, more frequent flights and seamless connections, and the ability to earn and use points across the brands’ loyalty programs. They will also be able to enjoy enhanced travel benefits and access to superior products and services,” he said.

This agreement offers the four airlines to possibility to serve a population of over one billion, and GDP worth US$ 3 trillion. The formation of Abra Group is expected to be completed by the end of 2022.

A combined fleet of Avianca’s 120 aircraft (distributed between Airbus A320s and Boeing 787 Dreamliners), as well as Viva’s 23 all-Airbus A320s, and Gol’s 142 aircraft belonging to the Boeing 737 family, will almost match the 350 aircraft operated by LATAM.