Brazil’s Azul has clarified that it is developing a new plan to return to profitability following a media report that it was weighing options for its future, ranging from additional equity support to Chapter 11 bankruptcy protection.
The Sao Paulo-based carrier said on 29 August that several factors contributed to its dismal second-quarter loss of R3.87 billion ($687 million) including the rapid devaluation of the Brazilian real, the reduction of domestic capacity as a result flooding in the south of the country, a temporary reduction in international capacity in the first half of the year, and “significant manufacturers’ delays and supply chain constraints”.
Stakeholders have been “generally supportive”, the carrier adds, and negotiations are “progressing towards improved outcomes for all parties”.
“In addition, as the company also previously announced, it is having discussions with Avianca and Gol holding group Abra to explore possible partnerships or business combinations relating to Gol. To this date, it has not entered into or formalised an agreement, binding or otherwise,” the company says.
In May, the two airlines agreed to connect their networks through a codeshare partnership for domestic flights. At the time, Azul chief executive John Rodgerson said: “We are big fans of consolidation and that’s also something we have been pretty open about for the last five years or so. So we’ll see what happens going forward.”
Both Gol and Azul have also struggled with the closure of Salgado Filho International airport – which serves the southern Brazilian city of Porto Alegre – in the state of Rio Grande do Sul after floods in May, resulting in cancellations of scheduled flights. A partial reopening of the airport is scheduled for late October.
It comes as Brazil’s lower house, the chamber of deputies, has just passed a bill that will provide R5 billion in credits for its struggling airlines.
The Brazilian Association of Airlines (ABEAR) said on 29 August that it sees the approval “as positive” for airlines in that country. The credits will be provided by the country’s Civil Aviation National Funding (FNAC).
