#United buys 5% of #Azul Brazilian Airlines and step in #Brazil

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NEWS FLASH – United is stepping in the huge brazilian airline market thru the acquisition of a 5% stake in Azul (Brazilian Airlines), the third largest airline in Brazil, after TAM and Gol.

This new partnership will allow a more integrated code sharing that will increase the connections of United in Brazil, and on the other hand allow Azul passengers to have more connections thru United in North America and worldwide network. Also United and Azul will expand their frequent flyer loyalty agreement. MileagePlus and TudoAzul members will have reciprocal benefits to earn and redeem miles system wide on both airlines.

OR you can also read these news as Azul is opening a big window to north american high income market aligned with his expansion strategy out of Brazil.

Competition is good, and this looks like will help Azul to have a greater financial backup to start growing faster in the near (very near – keep reading!) future, while at the same time targets a huge (in-bound/out-band) market as North America could be. So the focus of these news should spotlight on Azul’s strategy to growth. 

The south american airline market has been heating up after the merger of Lan/Tam (LatAm Airlines Group / 2010) and the acquisition of TACA (Central America) by Avianca (Colombia) in 2013, making them two big players in dispute of this latin big market.

AzulLABAzul, with its consolidated position in Brazil, one of the biggest markets in the region, is not staying quiet and is gaining grounds abroad of Latin America. On June 11th 2015, David Neeleman (founder of JetBlue and owner of Azul Linhas Aéreas) and Humberto Pedrosa (owner of Barraqueiro Group) won the privatization of TAP Portugal. As a result they bought a 61% stake in the Portuguese flag carrier. This deal was just signed on 24 June 2015. So, now, they have a huge bridge connection to Europe thru Portugal, Brazil’s motherland, that in conjunction with this United partnership is setting up Azul for the International market, but with a different focus beyond Latin America. Clever move, David, clever move!

Official News Release:

SAO PAULO and CHICAGO, June 26, 2015 /PRNewswire/ — United Airlines and Azul Brazilian Airlines today announced a new strategic partnership in which United will acquire an approximate 5 percent stake in Azul, Brazil’sthird-largest airline, paving the way for the carriers to cooperate on a range of customer benefits including codesharing of flights (subject to government approval), expanded connection opportunities on routes between the United States and Brazil, in addition to other points in North and South America, and joint loyalty-program participation.

Through a wholly owned subsidiary, United will invest $100 million for its economic stake in Azul, which includes one seat on Azul’s board of directors.

More Choice and Convenience

Azul serves more destinations in Brazil than any other Brazilian carrier, including more than 50 daily flights from Sao Paulo’s Guarulhos International Airport. This new partnership will offer customers more flight choices and convenient connections for travel between the United States and destinations in Brazil. In addition, the partnership will enable United and Azul to provide an improved transfer process at Guarulhos for timely connections for customers and their baggage. The airlines announced plans for United to place its code on flights in Azul’s extensive network from Guarulhos to key destinations throughout Brazil, as well as on Azul’s flights to Florida; Azul plans to place its code on United routes throughout North America and the Caribbean, pending government approval.

Brazil is an important market in United’s global route network and this partnership with Azul further strengthens our ties to the region,” said Jim Compton, United’s vice chairman and chief revenue officer. “Together we will offer our mutual customers more choice and convenience when traveling to and from destinations across Brazil.”

“This will be great for customers,” said David Neeleman, founder and CEO of Azul. “Through this partnership, Brazilians will have access to destinations in United’s worldwide route network, while U.S. customers will be able to fly conveniently to famous destinations in Brazil such as Belo Horizonte, Iguazu Falls and the Amazon.”

Enhanced Loyalty Program Benefits

As a result of the partnership, United and Azul will expand their frequent flyer loyalty agreement.

MileagePlus and TudoAzul members will have reciprocal benefits to earn and redeem miles systemwide on both airlines. “It is important to highlight that customers will be able to use their TudoAzul points to fly to any destination served by United worldwide,” said David Neeleman.

As their partnership grows, the carriers will work to expand the offerings for loyalty program members.

Barclays served as exclusive financial advisor to United.

United In Brazil

United began serving Brazil in 1992, with flights to both Rio de Janeiro and Sao Paulo. The airline currently operates five daily flights to Brazil from its Chicago, Houston, New York/Newark and Washington/Dulles hubs.

About Azul

Azul, the largest airline in Brazil by number of cities served, offers more than 900 daily flights to over 100 destinations. With a fleet of 145 aircraft and more than 10,000 crewmembers, the company operates approximately one third of the daily departures of the Brazilian aviation market.  The quality of its services has been attested by many national and international awards. In 2015 Azul was named by Skytrax World Airline Awards, for the fifth time in a row, as the “Best low-cost airline in South America.” The company also received the FlightStats Award as the “Airline with best on-time performance in South America,” and was recognized as the most on-time airline in Brazil, in 2014, according to Infraero criteria. That same year, the company was named the “Best low-cost carrier in the world” by CAPA – Centre for Aviation. For more information visit www.voeazul.com.br.

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