This was Viva Air’s financial situation before suspending operations: the airline only negotiated 18% of its debt

Without notice, the “low cost” airline live air suspended operations on the morning of February 28, leaving thousands of passengers stranded at domestic and international airports waiting to hear what will happen to their tickets. It was the result of a economic crisis of several months, during which the company had warned of the risk of not being able to continue operating and of its supposed need to merge with Avianca to survive.

Anyway, he had started a Disaster recovery process (PRE) “in order to restructure its debts through negotiation with its main creditors to continue to operate under sustainable conditions guaranteeing the sustainability of the company”, he said in a press release.

But, the airline would not have renegotiated all its debts. Viva Air’s liabilities, certified by Kpmg’s tax auditor, amounted to 4.07 trillion pesos. However, according to the newspaper The Republicthe company would have incorporated only $738,200 million into its recovery process, i.e. 18.1% of its total debt, leaving aside 3.3 trillion pesos.

The low-cost airline has been going through an economic crisis since the pandemic and, although it has recovered in 2021, factors such as the rising dollar and the war in Ukraine, which have made fuel prices more expensive, have worsened its economic problems. Therefore, he had targeted his fusion with Avianca so as not to disappear.

However, the Civil aeronautics did not allow this measure, citing a violation of free competition, since between them would monopolize 60% of the market, and ensured that the airline could have sought other solutions, such as loans or investment research ensure the continuity of its operation.

Despite this, Avianca and Viva have indicated that the airline’s crisis low cost It was not possible to resolve it because Aeronautics did not authorize the merger.

“The fact that Viva has not negotiated with all the creditors is a sign that it is more interested in being acquired by Avianca than in recovering by other means. There are legal mechanisms that could avoid the suspension of operations,” explained Diego Márquez, a lawyer with a master’s degree in business law and director of the MQA law firm, for the newspaper. The Republic.

Viva Air suddenly suspended operations just hours after Civil Aeronautics cleared the entry of other airlines as Avianca’s third-party competitors in the integration process.

By this decision, the transport superintendence announced the opening of the relevant investigations and also asked the company to guarantee the rights of users with the actions provided for by current regulations regarding compliance with information to users and transport contracts.

Meanwhile, the Minister of Transport and Telecommunications of Peru (country affected by Viva’s suspension of operations) announced that he was going to initiate an administrative procedure against the airline for non-compliance with the route coverage service.

For their part, the workers de Viva filed a request for popular action before the Cundinamarca Administrative Court in order to order the integration of the company with Avianca and thus avoid the loss of more than 1,250 direct and 5,000 indirect jobs. Attached to this legal action was a request for precautionary measures in which the protection of workers’ rights

“We present a request for an urgent precautionary measure to prevent an imminent attack on the collective rights to administrative morality, the defense of public heritage and the right to work, due to the actions and omissions of the Special Administrative Unit for Aeronautics civilian,” the request states.