Colombian airline Avianca and El Salvador-based TACA said Wednesday they will merge under a single holding company, cutting costs and bolstering their clout in Latin America.
Avianca's shareholders will control two thirds of the new company, with the other third in the hands of TACA owners, TACA CEO Roberto Kriete told reporters in San Salvador.
He said the combined airlines would have annual sales of USD$3 billion but their brands would remain separate for now.
Hit by the economic slowdown, airlines around the world are struggling with weak demand and volatile fuel prices. Some have turned to acquisitions to increase economies of scale.
"The joining of the airlines is part of... what's happening in the industry," Kriete said. "This puts us on par with Latin America's largest airlines."
Avianca and TACA are privately held. Together they would have 129 planes and more than 100 destinations in the Americas and Europe, Avianca CEO Fabio Villegas said at the news conference in the Salvadoran capital.
Avianca is controlled by Colombian-Brazilian businessman German Efromovich while TACA has been owned by the Kriete family since 1961.
TACA, which flies to 22 countries in the Americas and nine cities in the United States, was founded in 1931 as a one-plane operation with a contract to the Honduran government.
Other Latin American airlines have also been affected by the global downturn.
Mexico's AeroMexico is considering partial stock deals with local and international players, CEO Andres Conesa said at event in Mexico City on Wednesday.
AeroMexico and rival Mexicana may not survive unless they merge with each other or smaller competitors, many experts warn.
Chilean airline LAN said in August it was interested in deals to help it expand in Colombia, Brazil, Mexico and Central America.
In Brazil, TAM has embarked on a strict cost-cutting program.
