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Azul and Abra Join Forces in Brazilian Aviation

In a significant development for Brazil's aviation sector, Azul S.A. and Abra, the major investor behind Gol and Avianca, have inked a non-binding Memorandum of Understanding (MoU) with the intent of merging their business operations in Brazil. This strategic partnership could reshape the landscape of air travel in the country, providing enhanced connectivity, service offerings, and new destinations for consumers.

Key Points of the MoU

The MoU signified a promising step towards combining the strengths of both airlines while keeping their independent operational certificates and brand identities intact. With nearly 90% of their routes complementing each other, the collaboration aims to create synergies that will benefit travelers, offering them expanded options and products.

According to Azul’s CEO, John Rodgerson, this merger is not just about creating a robust airline; it’s about reinforcing the Brazilian airline market itself. The main goal is to stimulate growth within the aviation industry, enhance service quality, and increase the number of flights.

Impact on Customers and Brazil’s Economy

For the customers of both Azul and Gol, the combination of efforts promises access to a broader array of travel destinations, improved routes, and enriched services. This initiative could see the number of cities served in Brazil swell to over 200, potentially revolutionizing air travel in the country, which is pivotal for such a vast nation with over 220 million citizens.

Moreover, the anticipated economic impact is profound. With around 110 million air journeys taking place annually, Brazil’s airline market is underdeveloped compared to many of its neighboring countries, offering immense potential for growth. The partnership aims to harness this potential by increasing the availability of domestic and international flights.

The agreement's implementation is a multi-stage process. It encompasses essential governance and capital structure arrangements aimed at achieving regulatory approvals. The ultimate goal is to ensure that the combined entity operates with a net leverage comparable to Gol’s financial standing at the time of the transaction—following the completion of its reorganization plan.

The Road Ahead

Both parties recognize that the journey ahead includes navigating necessary due diligence, securing definitive agreements, and gathering the required corporate and regulatory approvals, including assessments by Brazil's antitrust authorities.

In summary, the non-binding MoU between Azul and Abra represents an important move towards enhancing the Brazilian aviation landscape. These efforts are expected to deliver better value and service for consumers while positioning the country more favorably in a globalized aviation market. As the merger progresses, the focus will likely remain on ensuring that the transformation not only benefits the businesses involved but also addresses the travel needs of a rapidly growing population.

About Azul S.A.

Azul S.A. is Brazil's largest airline by the number of flights and destinations served, operating over 1,000 daily flights to more than 160 cities. With a fleet of over 160 aircraft and a workforce of over 14,000 crew members, Azul has secured its reputation through a commitment to quality service, earning accolades such as the most punctual airline in the world in 2022 according to Cirium. In 2020, it was also chosen as the best airline globally by TripAdvisor. The ongoing expansion aims to further strengthen its position in the competitive aviation landscape.

Conclusion

As Azul and Abra forge ahead in this collaborative venture, the potential benefits for both consumers and the broader Brazilian economy could be profound, paving the way for an exciting future in air travel within Brazil.