Brazil’s Azul explores acquisitions as LATAM p’ship ends

Azul Linhas Aéreas Brasileiras (AD, Sao Paulo Viracopos) is looking for acquisition and partnership opportunities after LATAM Airlines Brasil (JJ, Sao Paulo Congonhas) terminated a short-lived codeshare partnership between the two rival airlines. “The codeshare with LATAM was a unique solution in our pandemic response,” Chief Executive John Rodgerson said in an investor update. “We also realized that industry consolidation would be important for the post-pandemic recovery and Azul would be a key part of any such activity. At the end of the first quarter of 2021, we hired financial advisors and are actively exploring consolidation opportunities. We believe the cancellation of the codeshare by LATAM is a reaction to that process.” The airline did not provide any further colour regarding potential acquisitions either in terms of specific carriers or operating niche. LATAM Airlines Brasil and Azul began codesharing in August 2020, partially in response to the slump in domestic demand caused by the COVID-19 pandemic. The local LATAM Airlines Group unit terminated the partnership on May 25, saying that it did not fulfil its expectations. It added that as the pandemic was slowly subsiding, the demand would return, justifying the return to competition between Brazil’s two largest carriers. While not a member of any multinational airline holding, Azul counts United Airlines (UA, Chicago O’Hare) among its shareholders with a 7.8% stake. Azul itself began its consolidation drive in 2020, acquiring regional specialist TwoFlex Táxi Aéreo Inteligente (2F, Jundiaí) for BRL123 million reais (USD21.5 million). The Cessna (single turboprop) C208 operator has since been rebranded as Azul Conecta (2F, Jundiaí). According to the ch-aviation capacities module, Azul is currently Brazil’s largest domestic airline with a 39% market share by capacity. LATAM trails in second place with a 32.3% market share, while GOL Linhas Aéreas Inteligentes has a 27.2% market share. The only other airline with a more than 1% market share is VoePass Linhas Aéreas (2Z, Ribeirão Preto) with 1.4%.