Avianca was a slow-moving, bloated legacy carrier based in Colombia that had spread its wings around South America but not in a wise way. Then it went bankrupt, got new management, and the airline has completely transformed itself. Now, it has its eyes set on… Europe? Yep, Europe. And it’s an impressively deliberate plan that actually does fit well with the airline’s strengths.
To be fair, it’s not really Avianca that I’m talking about anymore. It is the new parent company Abra Group which is based in the UK. Abra was created in May 2022 when Avianca and Brazil’s Gol came together under single ownership. (It technically also controlled Viva before it died, but we won’t talk about that.)
As the press release explained, this isn’t a merger as you might expect in the US. This is a holding company-style transaction which it describes this way:
Together, Avianca and GOL will anchor a pan-Latin American network of airlines that will have the
lowest unit cost in their respective markets, the leading loyalty programs across the region, and
other synergistic businesses. Avianca and GOL will continue to maintain independent brands,
talent, teams, and culture while benefiting from greater efficiencies and investments under
common aligned ownership.
Abra will provide a platform for the operating airlines to further reduce costs, achieve greater
economies of scale, continue to operate a state-of-the-art fleet of aircraft, and expand their
routes, services, product offerings, and loyalty programs.
This brings together the Avianca strongholds in Colombia, and Central America (former TACA flying) plus a little Ecuador and marries it with Gol’s Brazilian focus. It’s a complementary network, but both companies are either already done with or coming out of the bankruptcy spa. So they’ll have fresh corporate structures to work with.
In October 2023, Abra then signed a “memorandum of understanding” with Aerolineas Argentinas. Now, I know what you’re saying… Aerolineas is the most doomed airline in the world these days, and it is an absolute mess. But just know that this is not an equity transaction. If Aerolineas can contribute to the success of Abra somehow, then great. If not, well, no harm, no foul. In the meantime, it does present a pretty impressive-looking network.
Maps via Cirium
This is all pretty basic work here. There have been plenty of deals between airlines with complementary networks before. But what comes next is where Abra is making things interesting.
In May of this year, Abra took a stake in Wamos Air. Why on earth would Abra care about a charter/wet-lease specialist out of Spain? Well, the press release from Abra included a statement from CEO Adrian Neuhauser which included this rationale:
And third, because this partnership will allow us to participate in long-haul markets with wide-body aircraft in other countries beyond our current Colombia operation.
That may sound strange, but the pieces are starting to come together. Remember how IAG — owner of British Airways, Iberia, and others — is trying to buy Air Europa? Well, bringing Iberia and Air Europa under the same roof has been problematic for the EC, so they are pushing for divestitures. Apparently IAG has just recently submitted its latest offer to the EC which presumably improves upon the last offer that said it would give up to 40 percent of Air Europa’s frequencies. This is not a small giveback.
Previously, Avianca was cited as being one of the airlines interested in participating, and that made some sense. After all, routes where Air Europa and Iberia overlap today include Madrid – Bogotá, Buenos Aires, Caracas, Guayaquil, Havana, Lima, Montevideo, Panama City, Quito, Santo Domingo, and São Paulo. Avianca can do some of that flying today, but it wants more. The problem is, there is still a patchwork of bilateral agreements connecting these countries so it might not be possible for a Colombian airline. What’s the one unifying factor? A Spanish airline can fly these.
So with a strategic stake in Wamos, Abra can now have the vehicle to easily fly the Air Europa cast-off routes, maybe even under the Avianca brand name.
That’s not all, however. Just last week, Abra announced it had entered into a joint venture with Volotea. Volotea is a big low-cost operator in Europe that covers much fo the continent. But it has a particularly large presence in Spain.
July 2024 Volotea Spanish route map via Cirium
Despite covering much of Spain, it only flies to a handful of cities from Madrid: Lyon, Murcia, Nantes, Olbia, Toulouse, and Verona this month. It wants more from Madrid, but to get in there, it sure would like to take over some of that Air Europa short-haul flying.
This is not just an assumption. This is explicitly what the airlines are saying in the press release:
The complementary nature of Volotea’s short-haul operations and Abra Group airlines’ long-haul and intra-Americas services make this alliance a comprehensive solution, positioning it as the best alternative to act as a ‘remedy taker’ in the merger between IAG and Air Europa, offering European and Latin American consumers more alternatives at better prices.
It has been impressive watching this all come together over several months. This gives Abra the ability to strengthen its position in the lucrative South America – Spain market while also providing low-cost connections beyond thanks to Volotea.
I have no idea if this will be the chosen instrument, but it sure shows a remarkable commitment to the idea. I’d love to see this in action.
The Air Show is live early this holiday week. Today, you can finally listen to that WestJet episode I’ve been talking about. Happy 4th, everyone.
