In an interview with Portafolio, Estuardo Ortiz, CEO of JetSmart, recounted the details of the business that he proposed to Viva to acquire the company’s shares. Among them, the Chilean airline hopes to maintain the model low cost and strengthen its position in the region.
How long have you had a presence in the region?
We are a low-cost airline that was founded in 2016 and began operations in 2017 in the Chilean domestic market and in December of that same year we made the first international flights. In April 2019 we started domestic flights in Peru. As of today, we are operating 23 Airbus A320 and A321 aircraft, all new from the factory, on 79 routes throughout South America. We have transported more than 16 million passengers.
From the beginning, JetSmart has been a South American project to establish an ‘ultra low cost’ airline in Colombia, Brazil, Chile, Peru, Paraguay, among others. Our goal is to carry more than 100 million passengers in 2028.
(Read: ‘JetSmart presented a proposal to generate distraction’: Avianca).
Why your interest in buying Viva?
Now after the pandemic, we want to grow and reach other markets and here comes Colombia, it is the third largest market in Latin America and the second largest in South America after Brazil.
We know the market, we have been flying it with routes from Chile (Bogotá, Medellín and Cali to/from Santiago and Cali – Antofagasta) and we have closely followed everything related to the Colombian market, we believe they have great potential, we see what is happening and we believe that it is the opportune moment to begin negotiations for Viva, which has an operation that we like.
How much would the transaction cost?
At the moment we cannot advance these figures. We express our interest in starting negotiations with Viva, this will have to take time to understand the characteristics and conditions of the business.
But we know the market, the industry, the business, the model, the company and we believe that in this context we have the capacity and resources to carry out the transaction.
(Read: JetSMART is interested in buying 100% of Viva’s shares).
Do you have the financial muscle for this operation in a context of inflation and devaluation in the region?
The JetSmart model has proven to be very resilient, we have managed not only to overcome the pandemic, but to grow 60% from July 2022 to December of the same year, flying 79 routes, it is an increasingly consolidated operation.
Our investors and shareholders are aware of our intention to move towards Viva. So yes, we believe that we can have the ability to not only acquire the company, but to continue it, operate it and grow it.
Estuardo Ortíz, CEO of JetSMART.
There are Viva’s economic rights in the hands of Avianca shareholders, will they cede?
That is up to Viva’s shareholders to see what course it should take. We believe that we are a viable option, very attractive and another alternative that, unlike the other, does not have the challenges of government approval, because there is no market concentration, there is no reduction in competition, on the contrary, it would strengthen the free competition, our model is low cost, we have been developing it for many years.
We are part of a portfolio of airlines of an investment fund that manages airlines around the world and has extended the business model, so I think it is a very positive alternative for the market, Colombians, tourism and above all for investors.
(See: ‘There is no plan B for the integration with Avianca’, they say from Viva).
Has Viva mentioned something to you?
Not at the moment, we are waiting to start this process soon and I am sure that it is something that they cannot not review in detail and we are ready to start immediately.
Is there the possibility of working side by side in this business with Avianca?
Our interest is to obtain 100% of Viva’s shares and operate it within the JetSmart holding, not in belonging to other groups or generating other alliances.
Is it a resounding no to the possibility?
It’s a no. We are very clear about our path, our long-term development plan and we believe that we can generate customer value with low prices and new routes, so we want to continue working with our model and our plan.
How do you want to work from Colombia?
Our model is quite positive. For example, the market in Chile has grown by more than 50% since our arrival, we fly more routes that do not go through Santiago de Chile or Buenos Aires than those that we fly directly between interregional cities.
We recently started Peru, we have 7 flights from Arequipa and in Chile we have operations bases outside of Santiago.
We are convinced that our proposal will bring Colombia lower prices, more tourism, more employment and that model is proven in the world, they are one of the most financially and operationally successful. We believe that this work will have a long-term benefit in the development of the country.
(Keep reading: ‘There is interest in generating more effective health for patients’).
Before Viva declared her difficult situation, did they have the magnifying glass on buying another Colombian?
We participated in the public hearing process on November 24 requesting domestic routes for JetSmart in Colombia. That process is still ongoing and we await a prompt response on the matter.
We have always considered Colombia as a strategic market and as part of what we envision JetSmart to be in South America. We are focused on this option.
If you acquire it, would you keep the brand as it is?
Part of the negotiation process is to understand the details of the operation, we see that Viva has developed very positively in recent years, these are decisions that would be made later.
Aren’t you afraid to start operating an airline (like others) that operates at a loss? It’s a changing business…
This is a cyclical industry, that exists, it is reality. We live in a region that has high volatility in multiple aspects, be it political or economic, but our long-term plan is very clear, we know that the low-cost model works and is very profitable, and we are willing to invest for the future at this time. .
PAULA ANDREA GALEANO BALAGUERA
