Azul Linhas Aéreas announced on Monday an agreement to purchase the main assets of competitor Avianca Brasil for $ 105 million. The package includes the transfer of 30 aircraft, 70 slots at the main airports, and the air carrier authorization provided by the Brazilian government.
In bankruptcy protection since December 2018, Avianca has a million-dollar debt with leasing companies and tries in court to prevent them from retaking their planes. Despite this, some A320 have already been returned and three of them ended up being leased by Azul itself.
Negotiation, however, depends on some steps required by Brazilian law. The first involves investing resources in Avianca to keep it active while forming a healthy airline division, known as the “isolated production unit”, thus preventing Azul from taking over Avianca’s debts.
The process is expected to take about three months to complete.
On equal terms
Azul and Avianca, third and fourth largest airlines in Brazil, have similarities in their operations. The two companies have their fleet based on the A320 and A330 aircraft, although Azul has a much larger flight network thanks to the use of the Brazilian E195 jets.
The two airlines have also started international flights in recent years, however, Avianca had to give up routes to the US for being loss-making.
However, Avianca today has a much larger presence in the largest airports in Brazil, both in the city of Sao Paulo, the largest in the country. With no space at Congonhas and Guarulhos airports, Azul concentrates its hub at a secondary airport, Viracopos, about 100 km (62 miles) from Sao Paulo. It is these flight times that interest the company founded by David Neeleman, also creator of JetBlue.
If the agreement succeeds, Azul should equate with the two largest Brazilian airlines, Gol Linhas Aéreas and LATAM.