SAO PAULO, May 11 (Reuters) - Brazilian carrier Gol Linhas
Aereas Inteligentes SA and Colombia's Avianca said on
Wednesday they were combining under the roof of a common holding
company, signaling a move toward post-pandemic Latin American
The deal would create one of the region's largest airlines,
roughly matching Chile's LATAM Airlines Group SA in
terms of scheduled seats, according to global aviation
The holding company, called Abra Group, will be jointly
controlled by Avianca and Gol's main shareholders, the firms
said, adding that both airlines would operate independently and
maintain their respective brands.
They said other financial investors had committed to invest
up to $350 million in Abra Group upon the closing of the deal,
which is expected in the second half.
The move comes after Avianca completed a bankruptcy
reorganization last December and agreed in April to merge with
Viva - another key Colombian airline - and could attract notice
from competition regulators.
Abra, which has called itself a "pan-Latin American network
of airlines," will also own a non-controlling 100% economic
interest in Viva's operations in Colombia and Peru and a
minority interest in Chile's Sky Airline.
Shares in Gol, Brazil's largest airline, closed down 1.7%,
underperforming the broader Bovespa stock index, which
ICF managing director Carlos Ozores said that commercial
benefits seemed limited given the lack of overlap between the
two airlines, which use different aircraft types.
But Abra Group could boost consolidation momentum in the
sector, he said in an interview.
Avianca is Colombia's flag-carrier as well as a leading
airline in Central America and Ecuador.
"Through this deal they are already positioning themselves
to be one of the three or four airlines that I think will form
the Latin American aviation marketplace," Ozores said. "I think
this is going to drive a wave of further action, because nobody
wants to be left out."
Brazil's Azul SA confirmed late in 2021 it was
making a bid for Chile's LATAM, which is in bankruptcy
proceedings, but then decided to focus on its own operations.
Analysts at Citi cautioned that antitrust considerations as
well as Gol and Avianca's separate partnerships with U.S.-based
airlines could raise issues. American Airlines Group Inc
holds a stake in Gol and in Chile's JetSmart while Avianca is an
United Airlines partner.
American Airlines and United did not immediately respond to
requests for comment.
In Brazil, operations of Avianca's local unit were suspended
in 2019 after it filed for bankruptcy.
Roberto Kriete, an Avianca board member, will serve as the
group's chairman, while Gol's founder Constantino de Oliveira
Junior will be its chief executive.
Abra will focus on achieving synergies to ensure lower costs
and expand routes, the firms said, without providing details.
Gol said in a separate filing that the transaction involved
its controlling shareholder, investment fund MOBI FIA, and
certain shareholders of Avianca Holding including Kingsland
International, Elliott International and South Lake One.
MOBI FIA will contribute its Gol shares to the newly formed
company in exchange for common shares of Abra, Gol said.
Gol said the deal would not entail a public tender offer as
there would be no sale or transfer of control. But a Brazilian
minority shareholders association disagreed.
"The truth is that MOBI FIA will no longer be the
controller, its shares will be transferred to a holding company
in the UK ... So a takeover bid is imperative," Aurelio
Valporto, head of the Abradin association, said.
(Reporting by Gabriel Araujo and Andre Romani; Editing by
Louise Heavens, Will Dunham, Edmund Blair and Bernard Orr)