After Denouncing Protectionist Rivals, Azul to Leave Brazilian Airlines Association

By Xiu Ying, Contributing Reporter

RIO DE JANEIRO, BRAZIL – Azul airline announced on Wednesday that it has decided to leave the Brazilian Association of Airlines (Abear), an organization created in 2012 by the largest companies in the sector.

The exit arises after Azul has accused Gol and Latam of protectionism and after the company has given up on the offer for the purchase of part of Avianca’s operations, which is under judicial reorganization.

In a statement, Azul stated that it recognizes Abear’s important contributions to the sector in this period, but understands that from now on, it prefers to represent its interests directly.

“We are excited about our future. We will pursue our plan to develop more and more cities, markets and fleet, stimulating access to air transportation so that more Brazilians can fly through Brazil and around the world,” Azul president John Rodgerson said in a statement, refraining from naming rivals.

Abear was created in 2012 by Avianca, Azul, Gol, Tam (now Latam) and Trip.

The dispute for Avianca triggered conflict

After announcing, on April 18th, the withdrawal of the purchase offer of a part of Avianca’s operations, Azul’s president accused Gol Latam of acting to avoid the competition on the São Paulo-Rio de Janeiro air bridge, the most coveted in the country.

In March, Azul signed a US$105 million non-binding agreement to purchase Avianca Brasil’s assets, including slots in Congonhas and leasing contracts of the rival’s planes.

The purchase would allow Azul to expand its presence in Congonhas, but the proposal ended up being set aside after one of Avianca’s biggest creditors, Elliott Associates LP, closed a deal with Gol and Latam Brasil, which agreed to make offers of at least US$70 million each for at least one of the seven company’s slices that will be sold on an auction scheduled for May 7th, according to the judicial reorganization plan approved by the courts.

In addition to the offer by UPI, the two companies undertook to grant a loan to Avianca Brasil. The two companies have already lent R$188.7 million to Avianca Brasil, according to “Valor Econômico”.

In practice, both of the companies moves barred Azul’s attempt to get 20 pairs of slots, the most coveted of Avianca Brasil’s assets, highlights Reuters.

In an interview with Globo News early in April, John Rodgerson, president of Azul, classified the proposal to divide Avianca Brasil into seven parts as a competitor’s attempt to avoid greater participation of Azul in Congonhas, considered the ‘filet mignon’ of Brazilian airports.

According to the latest news from Brazilian media outlets, Azul could now bid for Avianca Brasil’s assets after all.

The airline has registered to participate in a bankruptcy auction for the assets of struggling carrier Avianca Brasil scheduled for next week, potentially walking back a previous decision not to participate.