Azul, GOL Enter Historic Merger Discussions

DALLAS — In a significant development for South American aviation, Brazilian carriers Azul Brazilian Airlines (AD) and GOL Linhas Aéreas (G3) announced on January 15, 2024, that they had signed a non-binding agreement to explore a potential merger. The proposed combination would create Brazil's largest airline group, overtaking LATAM Brasil's (JJ) market leadership.

This consolidation comes when Brazil's domestic air travel market shows substantial growth potential in the post-pandemic era. As per the announcement, the intended structure resulting from the combination of the two airlines "will position Brazil at an increased level of global strength in a highly globalized sector."

The prospective merger would maintain both airlines' distinct identities, with each carrier keeping its separate Air Operating Certificate (AOC) and brand.

A report by aerotime.aero notes that this structure appears particularly advantageous given that approximately 90% of their routes are complementary, with minimal network overlap.

What Would a AD-G3 Merger Look Like?

The combined operation would command 61.4% of Brazil's domestic market share—which serves a population of 220 million and handles approximately 110 million annual domestic flights—based on 2024 figures showing the two airlines collectively transported 57.4 million passengers.

The merged fleet would comprise 327 aircraft, significantly surpassing JJ's fleet of 163 aircraft. AD contributed 290,100 passenger flights in 2024, primarily operating regional aircraft on high-frequency routes, while G3 operated 204,300 departures.

Azul CEO John Rodgerson emphasized the merger's potential to strengthen Brazil's aviation sector, highlighting plans to expand service to over 200 Brazilian cities and enhance connectivity nationwide. The deal could benefit GOL, which entered Chapter 11 bankruptcy protection in early 2024 amid financial challenges.

The completion of the merger remains subject to several conditions, including an economic terms agreement, due diligence, definitive agreements, and regulatory approvals from Brazilian antitrust authorities.

"Azul was created with the aim of expanding the Brazilian airline market, seeking to increase Brazilians' access to air travel, regardless of where they are in the country, through expanded connectivity. This combination of forces would provide the opportunity to strengthen the sector, increasing the number of flights on offer, reaching more than 200 cities served in Brazil and the ability to compete in a highly globalized sector," says Azul's CEO, John Rodgerson.

The CEO added, "Increased connectivity and job creation are some of the many positive results expected from this agreement, while also delivering high quality service and the search for the best value for money for the consumer," he adds.

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