Brazilian Airlines Merger Strengthens Aviation Sector, Says Minister
Planned merger between Azul and Gol would consolidate the sector and prevent potential failures, according to Brazil's ports and airports minister.
Government Support
The minister expressed government support for the potential merger, citing its potential to preserve the aviation sector and protect jobs. The combined entity would create a dominant player in the Brazilian aviation market, capturing approximately 60% share.
Competition Concerns
Concerns have been raised about reduced competition and potential fare increases. However, the minister believes the merger would enhance connectivity and lower operating costs, ultimately benefiting consumers.
Latin American Airline Struggles
Latin American airlines have faced financial challenges due to high debt and the impact of the COVID-19 pandemic. Gol is currently undergoing Chapter 11 bankruptcy reorganization, while Azul has restructured its obligations with lessors.
Regulatory Approval
The merger is subject to regulatory approval by Brazil's antitrust watchdog CADE. The regulator will closely examine competitive conditions and potential impacts on consumers.
Airline Executives' Perspective
Both Azul and Gol have emphasized their focus on volume growth over pricing, suggesting the potential for reduced fares in the long term. The merged firm would continue to operate under separate brands.
Presidential Support
Brazilian President Lula da Silva reportedly supports the merger to prevent airline closures in the country. Analysts believe the low network overlap between Azul and Gol favors the deal despite their combined market share.