Struggling Latin American discounter Viva Air has entered the local equivalent to bankruptcy protection under Colombian law, as it works to restructure debt while awaiting a decision on its proposed merger with Avianca.

The Medellin-based airline said Friday that it had filed for Colombia’s Business Recovery Process, or known locally as PRE, to restructure its debt following challenges related to the Covid-19 pandemic and the delays in approvals to its combination with Avianca.

“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,” Viva told Reuters.

Viva flights continue to operate as normal as the carrier begins restructuring, flight tracking website FlightRadar24 shows.

Viva CEO Felix Antelo told Airline Weekly in October that the merger was necessary for the airline’s continued survival. He noted that the deal would provide the budget carrier with the “financial muscle” to expand its low-fare model to more travelers.

Avianca and Viva announced plans to merge in August, after the former took a controlling stake in the latter earlier in 2022. However, Colombian regulator, Aerocivil, blocked the combination on competitive grounds in November. Aerocivil reopened the case in January after Avianca and Viva — Colombia’s first and third largest airlines — offered concessions to promote competition in Colombia.

And Chile-based budget airline JetSmart made a competing offer earlier in February to take full control of Viva.

Aerocivil tweeted Friday that it was advancing with “technical and legal rigor” its evaluation of the proposed Avianca and Viva merger, and anticipated a “prompt” decision on the matter.

Tags: airlines, avianca, jetsmart, latin america, viva air