Colombia's two major airlines have won the latest round in the political battle over the proposed merger, but the plan faces new hurdles.
Aces and Avianca succeeded in replacing Emilio José Archila, superintendent for industry and trade, who was set to hear their appeal. Archila had ruled against the merger in June, citing concerns over competition. The airlines questioned his impartiality and he was replaced by development minister Eduardo Pizano.
The appeal will now take longer. Juan Emilio Posada, Aces chief executive, predicts a decision, originally due in September, will be made near to the end of the year.
With Avianca's losses worsening, time does not favour the merger. Avianca's first-half operating deficit more than doubled to $82 million during the first half of 2001, despite a 7% increase in revenues.
Avianca's instability has been the driving force behind this merger, and Aces insists that Avianca restructure its debts before completing the deal. The bigger the debts, of course, the harder that becomes.
The only good news for the airlines is that Pizano has asked AeroCivil, Colombia's equivalent of the US Department of Transportation, for its views on the merger. AeroCivil, which oversees aviation but not competition, was not involved in the initial decision to block the merger.
In the meantime, Aces appears to be hedging its bets by renewing talk about its need for an international alliance.
Source: Airline Business
