Colombia’s Avianca and Brazil’s GOL to join forces, creating uncertainty for US partners

May 11, 2022

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Two of Latin America’s biggest airlines are joining forces.

Avianca, the flag carrier of Colombia, and GOL, the third-largest airline in Brazil, will come together under a new holding company called Abra Group Limited, which will own both airlines.

Each airline will maintain its own brand and continue to operate separately. When the deal closes, expected in the second half of this year, Abra Group will operate similarly to the large airline holding company in Europe –  International Airlines Group (IAG), which owns British Airways, Iberia, Aer Lingus and other smaller airlines.

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Abra will also own low-cost carriers Viva Colombia and Viva Peru, which recently announced plans to join Avianca, while keeping operations independent.

Even though these airlines will all remain independent, there may be some awkward uncertainties for two major U.S. airlines: American and United.

American has partnered with GOL since early 2020, months after its longtime Latin America partner LATAM shocked the airline world by ditching American — and the Oneworld alliance — to partner with Delta. Since then, that partnership — which features reciprocal frequent-flyer benefits and a codeshare — has strengthened. Earlier this year, American announced a $200 million strategic investment in GOL.

For United, Avianca is a fellow Star Alliance airline. Before the COVID-19 pandemic sent Avianca — and other airlines in the region — into bankruptcy, there were even plans for United to form a joint venture with Avianca and fellow Star Alliance carrier Copa. United helped finance Avianca’s exit from bankruptcy last year. It owns approximately 16.4% of the carrier — a significantly larger stake than American’s investment in GOL.

More: American Airlines plans GOL partnership, new Miami flights in battle for South America

Now, both U.S. airlines would own stakes in the new company — though it’s possible the new group could move to divest those stakes if keeping both seems untenable.

From a passenger perspective, it’s also unclear if both GOL and Avianca will be able to maintain separate partnerships with American and United, respectively. Typically, large airline holding companies maintain allegiance to one set of airlines — even if not every airline is in the alliance. For example, Lufthansa Group’s airlines are mostly part of Star Alliance, with the exception of a few like Eurowings and Eurowings Discover. Still, United considers those airlines to be MileagePlus partners, even though they’re not Star Alliance members.

In other words, it would be unusual for this combined airline to maintain such relationships with two fiercely competitive U.S. partners. It’s unclear what direction the new company might go, though Avianca’s ties with United have a deeper, longer history than the ties American has recently forged with GOL.

Featured photo by MAURO PIMENTEL/AFP via Getty Images.

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