Brazilian airlines Azul and GOL plan merger: Supported by Lula da Silva
The merger of Azul and GOL, announced through a Memorandum of Understanding, aims to create a stronger player in Brazil's aviation industry. Supported by President Lula, the proposal now awaits approval from regulatory bodies like CADE and is subject to economic and operational agreements between the parties
The Memorandum of Understanding announced to the market regarding the intention to combine the businesses of Azul and Abra in Brazil, which would lead to the union of Azul and GOL, positions Brazil at a higher level of global strength in a highly globalized sector, according to the companies. This initiative has the support of Brazilian President Inácio Lula da Silva.
In an interview with Folha de São Paulo, Azul’s president, John Rodgerson, addressed concerns about the potential approval by the Administrative Council for Economic Defense (CADE). Critics argue that the merger would reduce competition in Brazil, reported Aeroin, our partner outlet.
“There are many people who say this creates a company with 60% of the Brazilian market. But LATAM has 70% of the market in Chile, where people travel three times more than in Brazil. In Colombia and Canada, it is also above 60% (market concentration). Other countries, like Germany and South Korea, understood that it is strategic to have a strong company with enough capital to connect more,” said Rodgerson.
When asked about the government’s position, Rodgerson mentioned a conversation with Lula, in which the president expressed support for the idea of creating a stronger company in Brazil.
The executive also provided insight into the operational details of the potential merger: “The aircraft, pilots, and flight attendants will belong to either GOL or Azul. The connection will be joint, ticket prices will remain the same, and all back-office functions will be integrated. The operational part will remain separate. For domestic flights, there could eventually be an Azul flight and another by GOL, depending on seat availability.”
Rodgerson added that the operation would feature a single ticket system: “It doesn’t matter if the passenger buys a ticket from Azul or GOL. This means that if a customer purchases a ticket from Brasília to Congonhas with Azul, they will be able to return with GOL.”
The companies aim to function as one, maintaining their aircraft operations under separate brands, but integrating other areas for greater efficiency.
The agreement is subject to several conditions, including economic terms between Abra, GOL’s controlling entity, and Azul; the satisfactory completion of due diligence; execution of definitive agreements; corporate and regulatory approvals (including from CADE); and the approval of the Brazilian government. It also depends on the conclusion of GOL’s reorganization plan under Chapter 11 and Abra receiving the necessary compensation.
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