Colombia's Avianca has confirmed it is merging with Central American consortium carrier Grupo TACA.
In a letter today to employees that has been obtained by ATI, Avianca CEO Fabio Villegas says Avianca's board after months of study has decided to pursue a "strategic merger" with Grupo TACA.
But Villegas stresses that each company will maintain its own identity and will continue to operate independently.
He says "the project offers big opportunities given the multitude of synergies" the two carriers will be able to pursue. Their combined network will also provide Avianca and TACA customers with improved connections throughout the Americas and the world. The two carriers already codeshare on some routes.
"I am sure with the commitment of all employees we will create with Grupo TACA the most important airline leader in Latin America," Villegas says.
He calls the deal with TACA "of great significance for our company and the Latin American aviation industry in general". Villegas says combined the carriers have an "optimistic future" which is sure to be "recognised nationally and internationally".
He adds both carriers already have the same philosophy when it comes to providing a high quality "warm" service that distinguishes Latin America from other regions.
Chile-based LAN is now the biggest airline group in Latin America, with passenger airlines in Chile, Argentina, Ecuador and Peru plus cargo airlines in Brazil, Colombia, Mexico and the US. Publicly-traded LAN also has been looking at establishing new passenger airlines in Colombia and Brazil, perhaps through a merger or acquisition.
Based in El Salvador, Grupo Taca includes airlines in nearly every Central American country as well as in Peru. TACA, which is privately owned, also has a stake in Mexican low-cost carrier Volaris.
Avianca is predominately owned by Brazil's Synergy Group, which also owns Brazilian carrier OceanAir and Ecuadorean regional carrier VIP. It is unclear if the Avianca-TACA tie-up will include these smaller carriers but Avianca already last year took over the management of OceanAir. Avianca last year also acquired Colombian cargo carrier Tampa.
Once the transaction is complete, TACA CEO and Chairman Roberto Kriete will serve as chairman of the new group’s board of directors and Avianca CEO Fabio Villegas plans to serve as CEO.
Other members of the new company’s senior management team include current TACA COO Estuardo Ortiz who will assume the same role upon the company’s formation, and Avianca CFO Gerardo Grajales, who also assumes the same role once the merger is complete.
Avianca is roughly double the size of TACA on a revenue basis with the former generating about $2 billion in annual revenues and the latter about $1 billion. LAN as a group last year generated $4.5 billion in revenues.