BOGOTA (Reuters) - Low-cost Colombian airline Viva Air has voluntarily started a local debt restructuring process, the company said late on Friday, as it awaits authorization of its merger with Avianca airlines.
Viva Air said in a statement that it made the decision to start the Business Recovery Process (known by the Spanish acronym PRE) due to the challenges from the current economic climate and from the impact of the COVID-19 pandemic.
"The company has not been able to access capital during the last nine months since it has not yet been able to finalize its merger with another airline, which is still pending authorization from the National Government," the airline said.
"Viva accepts this voluntary recovery process that lasts 90 days, in order to restructure its debts through negotiation with its main creditors to continue operating under sustainable conditions," it added.
The airline said it entered the process after much consideration, as it awaits a decision on the Avianca merger. Its financial situation has been aggravated by the rise in fuel prices last year and the devaluation of the Colombian peso.
The announcement came after ultra-low-cost airline JetSMART Airlines also announced its intention to buy 100% of Viva Air.
Colombia's Civil Aeronautics group objected in November to a merger between Avianca and Viva, arguing that it represented an anticompetition risk.
The airlines filed an appeal and in January the aviation governing body annulled the merger process citing procedural irregularities, and restarted it.
Viva, which has operations in Colombia and Peru, has a fleet of 23 aircraft and some 1,000 direct employees.