DALLAS —  Viva Aerobus (VB) and its competitor, Volaris (Y4) have agreed to form a holding company for a low-cost carrier, marking a significant development in Mexico's competitive airline market. 

According to UPI.com, this is a merger of equals: the parent companies of the two airlines will merge, while the airlines will continue to operate independently.

Structure, Timeline

Under the proposed structure, each airline's shareholders will receive 50% of the new holding company on a fully diluted basis. Viva's shareholders will receive shares in Volaris's holding company, while current shareholders will retain their existing shares. 

The deal has been approved by the boards of both airlines and is anticipated to be completed by 2026. The shares are to remain listed on both Mexico and the US.

Competition Brews

The joint entity will be the largest low-cost carrier network in Mexico and will further fuel competition in this sector against its flag carrier, Aeromexico (AM). All of Y4 and VB's flights operate on an all-Airbus fleet and point-to-point routes.

This new linkage is expected to enhance efficiency and reduce friction with regulatory issues, as Mexico faces air transport tensions with the United States.