BOGOTÁ (Reuters) – Colombia’s flagship airline Avianca is backing out of a merger with Viva Air, blaming conditions set by the country’s aviation regulator, the company announced on Saturday.

In a statement, Avianca said the conditions set by the regulator “would not allow Viva to be a financially and operationally viable airline,” and would also put Avianca’s stability at risk.

Among the reasons, Avianca said the agreement granted little “regulatory flexibility” to restart Viva’s operations.

It also said the agreement required Avianca to assume routes, commitments and prices that “do not match Viva’s remaining capacity” after suspending operations for two months.

“Unfortunately the conditions of this resolution, which is a firm decision, make the rescue of Viva impossible,” Avianca CEO Adrian Neuhauser said in the statement, adding that the conditions also put Colombia’s connectivity at risk.

Colombia’s aviation regulator did not immediately respond to a request for comment.

The merger was a lifeline for embattled Viva, which has struggled financially in the wake of the coronavirus pandemic and seen its situation worsen due to higher fuel prices in 2022 and the depreciation of the Colombian peso.

Colombia’s aviation regulator approved the merger in late April after repeated delays, and the civil aviation authority opposed the deal last November, before annulling and reopening the process in January after citing procedural irregularities.

In the midst of limbo, Viva Air abruptly suspended operations at the end of February, stranding passengers at airports across the country.

(Reporting by Oliver Griffin; Writing by Alexander Villegas; Editing by David Gregorio)

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