Gol and Azul propose to combine their businesses in Brazil

Brazilian carriers Azul and Gol have entered into a preliminary agreement to combine their business in the Brazilian domestic and international markets. 

Under the nonbinding memorandum of understanding, the two airlines will negotiate economic terms of a tie-up. A final agreement would be subject to corporate and regulatory approvals. It would only occur after Gol, which entered Chapter 11 bankruptcy a year ago, has completed restructuring. 

Gol is majority-owned by Abra Group. Abra is also the majority owner of Colombia-based Avianca.

“As part of Abra’s strategy to bolster the Brazilian market, this is an important opportunity to further intensify our presence in Brazil and empower our global network,” Abra Group CFO Manuel Irarrazaval said in a statement.

Under the proposed combination, Gol and Azul would retain separate operating certificates and maintain their own brands. However, they would combine financially and coordinate their networks and product offerings. Together the airlines would serve more than 200 destinations in Brazil and internationally. This month, Azul is flying a combined nine U.S. routes to Fort Lauderdale and Orlando while Gol is flying a combined five routes to Miami and Orlando. 

An Azul-Gol combination would represent 61.4% of the Brazilian market share in terms of 2024 passengers, according to the Rio Times, dwarfing the next-largest operator, Latam. Gol currently has an in-service fleet of 137 Boeing 737 aircraft, while Azul has a mixed fleet of 188 planes, according to Planespotters.net.

Such a large combination is likely to receive scrutiny from antitrust authorities. The airlines contend that their combination would lead to an expansion of flights within Brazil and internationally as well as an improvement in products and services.