Avianca of Colombia and TACA of El Salvador to merge

Friday, October 9, 2009, 15:03 by Jose Philip

Two of major airlines based in Latin America – Avianca, of Colombia, and TACA, the international airline based in San Salvador, the capital of El Salvador, are going to merge in a  deal intended to cuts costs.

However, the two carriers will keep their respective identity and also operate separately, Avianca and TACA (Transportes Aéreos del Continente Americano, or Air Transport of the American Continent) said in a joint statement.

Avianca and TACA combined fly to nearly 100 destinations in South American, North America and Europe, where they operate both passenger services and cargo services.

The two carriers combined have around 130 aircraft, have 4 hubs (in Lima, Bogota, San Jose and San Salvador), have more than 3 million frequent-flyer members, employs about 13,000 people and will earn annual sales amounting to $3 billion, the joint statement said.

All these factors, which would work in favour of the new entity, are expected to enhance competition on long-haul routes.

The merged company will result in the creation of one of the biggest airline operators in Latin America.

At present, TACA is expanding fast by establishing standalone operations throughout the Latin America region.

In a separate statement, Fabio Villegas, chief executive of Avianca, said that, after the merger, the shareholders of Avianca would get 67% of the stock in the new holding company. The investors of TACA will get the rest of the stock.

Fabio Villegas described the merger of Avianca and TACA as a “historic event” in aviation since the merger brings together two carriers with “the most operating time in the world.”

According to the merger deal, Synergy Aerospace Corporation, the parent company of Avianca, will own two-thirds of the combined company.

Synergy Aerospace Corporation Synergy is controlled by German Efromovich, the Bolivian-born businessman. Kingsland Holding Limited owns TACA.

Aviation analysts are of the opinion that the merger of Avianca and TACA will be watched keenly by airline operators outside Latin America, for whom the region is important owing to its high growth rates as well as business fares.

TACA and Avianca are privately owned, and they are a part of a new class of Latin America-based carriers which have replaced the government-controlled flag carriers that caved in all over the region in the last one decade.

Roberto Kriete, chief executive and chairman of TACA, is to head the board of the merged company.

The Avianca-TACA merger deal is subject to approval by the aviation regulators.

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