Two major Latin American airlines to team up

Gol and Avianca, two major airlines from Brazil and Colombia respectively, announced on Wednesday a deal to join forces under the same parent company, the Abra Group Limited, which will be based in the United Kingdom. The new entity will also own the economic interests of low-cost carrier Viva in Colombia and Peru (but without a controlling role) and a minority stake in Chile’s Sky Airline, the second-biggest in the country (behind Latam).

The deal, which was years in the making, is set to create a group with a combined annual revenue of USD 7 billion and a fleet of some 300 planes. Abra will get USD 350 million in new money from a group of investors led by hedge funds Elliott International, Kingsland, and South Lake — which became Avianca shareholders when the company underwent a restructuring process.

According to a securities filing, each airline will “keep its own brand, team, and culture while benefiting from the greater efficiency and investments that the controlling group will bring.” In the document, the companies say Abra will “provide a platform for cost reduction, greater economies of scale, the expansion of routes, services, products, and frequent-flyer programs.”

Salvadoran executive Roberto Kriete, who co-founded airlines TACA and Volaris in the past, will be chairman of Abra’s board of directors. Constantino Jr., chairman of Gol’s...