May 29, 2012
Credit: Photo: airteamimages.com
The Brazilian airline started by JetBlue’s founder took control of a smaller rival on Monday, locking up third place in a market that has seen a wave of consolidation prompted by high fuel costs and cooling demand.
David Neeleman, who founded JetBlue Airways and then left the airline in 2008, will run the holding company that controls his Brazilian venture, Azul Linhas Aéreas Brasileiras, and rival carrier Trip, according to a joint statement by both firms.
In under four years Neeleman has expanded Azul, his fourth airline, from a $200 million startup into a credible challenger to Brazil’s dominant airlines, TAM and Gol Linhas Aéreas, which control about 80% of the market.
“A third force in Brazilian aviation is being born,” said Trip Chairman Renan Chieppe at a press conference in São Paulo.
The airlines carried 14% of domestic Brazilian air traffic in April and expect combined annual revenue of 4.2 billion reais ($2.1 billion) and a fleet of 122 planes by the end of this year.
Azul’s owners will hold two-thirds of the company combining Azul and Trip’s operations, Chieppe said. A share swap will consolidate the companies, with no cash changing hands. The deal is pending approval from Brazil’s antitrust and civil aviation authorities.
The deal deepens the industry’s consolidation after Chile’s LAN Airlines announced plans in 2010 to take over TAM, Brazil’s No. 1 carrier. Airlines are joining forces to better cope with rising fuel and operational costs and a slowing economy that is pinching demand for travel.
Azul’s deal spells the end of TAM’s preliminary agreement to buy 31% of Trip, although a codesharing accord with TAM will remain in effect, Trip’s Chief Executive José Mario Caprioli told reporters.
Trip’s controllers also bought back a 26 percent stake that had been sold to U.S. regional carrier Skywest Airlines , Chieppe said. NEW ROUTES, NO LAYOFFS