Brazilian airline Azul is reportedly close to signing a memorandum of understanding with Gol Linhas Aéreas in the coming weeks, according to Valor Econômico newspaper.

The document is expected to outline the intention to merge the two airlines, as well as details related to governance, capital structure, and various options for structuring the agreement. Neither Gol nor Azul has commented on the matter.

It is known that Azul has been in talks with Abra Group to "explore opportunities" amid speculation about a potential tie-up with Gol. Last May, the two airlines announced a codeshare agreement, increasing the interconnection of their services.

A crucial factor for the potential merger is the conclusion of Gol's Chapter 11 bankruptcy process, which, according to Valor Econômico, is expected to be finalized in April. This resolution could pave the way for the combination of the two airlines, aiming to create a more robust structure in Brazil’s competitive aviation market.

If completed, the merger between Azul and Gol could result in one of the largest airlines in South America. However, it would face opposition from LATAM, which is unlikely to easily accept market concentration in the hands of its main competitors.