Key Points
- Airline chief Willie Walsh says Azul and Gol did the appropriate factor by shelving their merger whereas Azul continues to be in heavy restructuring.
- The deal, backed in Brasília, would have created a dominant service with about 60% of Brazil’s home market and severe competitors worries.
- Real consolidation is now coming from market-driven teams like Abra’s regional community, whereas Azul focuses on cleansing up its steadiness sheet.
When Willie Walsh, head of the International Air Transport Association (IATA), says a deal shouldn’t go forward, individuals in aviation pay attention.
In Geneva, he argued that Azul and Gol have been proper to desert plans for a merger since you can’t responsibly glue two airways collectively whereas one continues to be combating by means of a deep restructuring in a U.S. chapter courtroom.
Back in January, Azul and Abra Group, Gol’s controlling shareholder, signed a memorandum to discover combining their Brazilian companies.
The plan was to create a “nationwide champion” controlling roughly 60% of home seats, leapfrogging LATAM. Ministers in Brasília cheered the thought as a repair for a fragile sector and a solution to defend jobs and hold tickets reasonably priced.
But the numbers informed a harsher story. Gol had solely simply emerged from Chapter 11 in June with about $900 million in liquidity and Abra holding round 80% of its capital. Azul then entered Chapter 11 in May, with complete debt near $9.6 billion.
Its courtroom plan goals to chop greater than $2 billion of that burden, backed by $1.6 billion in particular financing and as much as $950 million in recent fairness, partly supported by American Airlines and United.
Azul expects to exit by early 2026, after shrinking its fleet by roughly a 3rd and pruning routes. Trying to set a justifiable share break up, negotiate with Brazil’s antitrust watchdog and combine networks whereas Azul’s worth, fleet and capital construction are nonetheless transferring could be a chance.
Regulators and shopper teams have been already warning {that a} merged Azul–Gol may management dozens of routes alone, pushing up fares and weakening service over time.
Instead, consolidation is taking a distinct form. Abra is increasing its regional household by bringing Chile’s low-cost Sky Airline alongside Avianca, Gol and Wamos, constructing a 300-aircraft group serving about 140 locations and 70 million passengers a yr.
That is a slower, extra incremental solution to achieve scale, with out turning Brazil’s home market right into a near-monopoly. For vacationers and expats, this issues as a result of it retains three severe opponents in Brazil somewhat than one outsized big and one distant rival.
For buyers and taxpayers, it reveals that monetary self-discipline and clear competitors guidelines are safer than politically pushed grand tasks that promise every little thing and infrequently ship increased costs and future bailouts.
