Grupo Abra, a New Airline Holding Company, Already Plans to Go Public

Grupo Abra, the new airline holding company formed by Colombian Avianca and Brazilian Gol, is taking shape and is now planning to go public.

Although the new company is still pending legal approvals, the leadership of Avianca and Gol have announced their intention for the holding company to negotiate shares on the London and New York stock exchanges within the next 12 to 18 months.

“Abra is a reality. The financial transaction closed just over a week ago, and therefore today we have common capital and common ownership between Avianca and GOL,” Adrián Neuhauser, CEO of Avianca, said in a statement.

Designing an IPO to strengthen consolidation

The Initial Public Offering (IPO) plans to attract investors and consolidate the company resulting from the joint efforts of both airlines. Both companies will maintain their brands and human resources, and Abra will be their alliance to make a leap into the Latin American airline market.

During the Covid-19 pandemic, Gol managed to avoid filing for bankruptcy, while Avianca obtained protection from its creditors in the United States through a process known as Chapter 11. This process helped reduce its debt, which decreased from $5.3 billion in 2020 to $3.1 billion by the end of last year.

For the Colombian company, this represents overcoming the failed project of incorporating the now-defunct Viva Air a few months ago.

Competing with LATAM in Latin America

Abra joins a trend among airline groups seeking to strengthen their position. The aim is to compete better by leveraging economies of scale. This was the case, for example, with the IAG Group, consisting of Iberia and British Airways, or with Air France-KLM.

Thus, Abra Group plans to directly compete with Latam for the Latin American airline market. To achieve this, a management team is being formed, headed by Salvadoran Roberto Kriete as the holding company’s president, and Brazilian Constantino de Oliveira Júnior as the CEO of the company.

Abra stated that “the management team will work to generate synergies that ensure the lowest cost structures for each airline in their respective markets. They will expand their route networks, services, and loyalty programs, as well as develop new and innovative products and services that meet the current needs of passengers and customers.”