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dcajet
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Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 6:51 am

Azul issued a note to the markets on Monday evening, confirming the end of the partnership with LATAM and saying that the company is in a position of strength to lead a consolidation process in the Brazilian airline industry. The airline has hired advisors and is actively looking at opportunities in the region.

Image
Keep calm and wash your hands.
 
alohashirts
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 7:09 am

I’m glad they’re ending the codeshare with LATAM. Never been a fan of major airlines codesharing within the same country. That’d be like like AA having a partnership with someone like B6 or AS in the United States. Oh wait...
 
DaCubbyBearBar
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 7:15 am

alohashirts wrote:
I’m glad they’re ending the codeshare with LATAM. Never been a fan of major airlines codesharing within the same country. That’d be like like AA having a partnership with someone like B6 or AS in the United States. Oh wait...

I agree...should not be allowed
I am me and no one else...so my opinions are mine
 
onwFan
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 11:05 am

dcajet wrote:
Azul issued a note to the markets on Monday evening, confirming the end of the partnership with LATAM and saying that the company is in a position of strength to lead a consolidation process in the Brazilian airline industry. The airline has hired advisors and is actively looking at opportunities in the region.

Image

I wonder whether they mean consolidation within Brazil (or) broader South America. I think the best partner to merge would be Avianca.
 
ScottB
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 1:19 pm

alohashirts wrote:
I’m glad they’re ending the codeshare with LATAM. Never been a fan of major airlines codesharing within the same country. That’d be like like AA having a partnership with someone like B6 or AS in the United States. Oh wait...


FWIW it appears the opposite is the case, according to the news release: LATAM chose to end the codeshare, rather than Azul.
 
edu2703
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 1:51 pm

onwFan wrote:
dcajet wrote:
Azul issued a note to the markets on Monday evening, confirming the end of the partnership with LATAM and saying that the company is in a position of strength to lead a consolidation process in the Brazilian airline industry. The airline has hired advisors and is actively looking at opportunities in the region.

Image

I wonder whether they mean consolidation within Brazil (or) broader South America.


Consolidation, according to market experts, would mean that Azul plans to buy another airline.

Since the codeshare agreement, it has always been highly speculated that Azul plans to buy Latam Brasil. Even if this went ahead, it would be extremely unlikely that the Brazilian trade regulatory agency would approve the purchase.

This statement from Azul sounds more like a provocation than something concrete for me.
 
RCS763AV
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 2:30 pm

Interesting news. I'm glad they're stepping it up as LATAM was becoming too dominant of a player in the region and more competition should always be welcome (nothing against LATAM but they are the No. 1 player in four markets in the sub-continent, with nearly monopolistic dominant positions in Peru and Chile). I would agree that Azul could seek to merge with Avianca (it's been talked about before, and AV, just like LA, is under Ch. 11 and needs new investors).

Or heck, maybe they'll go and merge with LATAM and create a new 800lb gorilla, which wouldn't be too favorable to competition though.
 
chonetsao
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 2:31 pm

Unfortunately due to Covid, some countries may forgo the competition principles and try to accommodate consolidation in aviation market to ensure the survival of its airlines and the longer term prosperity of its aviation market. Not every country can afford forced competition consideration by forbidding airlines to consolidate. It is better to have 2 surviving airlines than 5 totally bankrupt airlines. We have to recognise that for some countries the most important factor for airline consolidation is to ensure the best fit to survive rather than how many airlines they have in order to create a false sense of competition.
 
usflyer msp
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 2:35 pm

RCS763AV wrote:
Interesting news. I'm glad they're stepping it up as LATAM was becoming too dominant of a player in the region and more competition should always be welcome (nothing against LATAM but they are the No. 1 player in four markets in the sub-continent, with nearly monopolistic dominant positions in Peru and Chile). I would agree that Azul could seek to merge with Avianca (it's been talked about before, and AV, just like LA, is under Ch. 11 and needs new investors).

Or heck, maybe they'll go and merge with LATAM and create a new 800lb gorilla, which wouldn't be too favorable to competition though.


LATAM is now #3 in Brazil.
 
nickpo
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 2:41 pm

RCS763AV wrote:
Interesting news. I'm glad they're stepping it up as LATAM was becoming too dominant of a player in the region and more competition should always be welcome (nothing against LATAM but they are the No. 1 player in four markets in the sub-continent, with nearly monopolistic dominant positions in Peru and Chile). I would agree that Azul could seek to merge with Avianca (it's been talked about before, and AV, just like LA, is under Ch. 11 and needs new investors).

Or heck, maybe they'll go and merge with LATAM and create a new 800lb gorilla, which wouldn't be too favorable to competition though.


That Avianca and Azul merge wouldn't be a bad move for the whole South American airline environment, both are linked to United and also, it will help a lot the Star Alliance presence in the continent.
LatinAirliner
 
SJPBR
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 4:15 pm

Latam Brazil today is a shadow of its past. Completely lost in business losing marketshare every day. The Cuetos never knew how to make money in Brazil and made several mistakes in the past few years. I have an feeling that Azul will buy Latam or it will dye.

edit for typo
 
MIflyer12
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 4:51 pm

edu2703 wrote:
Consolidation, according to market experts, would mean that Azul plans to buy another airline.


It could just as well mean that Azul would be acquired.

I love Corporate Communications double-speak, here in the form of 'They terminated the codeshare but we're the party in the position of strength.'
 
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dabpit
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 5:16 pm

If they are looking at consolidating in Latin America of course Avianca makes sense, but what if they take the approach of buying multiple airlines? It would be a challenge and risk but a possible move.
*Avianca operates in Colombia, Ecuador, El Salvador, Honduras, Costa Rica, and Guatemala with a fleet Airbus 319/320/321/330s and Boeing 787s. They also have a cargo division flying A330 freighters.
*JetSmart is an ULCC with a fleet of Airbus planes operating in Chile and Argentina with plans to start Peru operations (already approved).
*Amaszonas operating in Bolivia (and formerly Uruguay ceased in January 2021) with a mixed fleet of CRJ200s, Dash 8-200s, and E190s.
*Paranair operating in Paraguay with a fleet of CRJ100/200s.
*EasyFly operating in Colombia with a fleet of ATRs.
*Andes operating in Argentina with a fleet of MD83s, not sure how viable they would be as an acquisition.
*Sky Airlines is an ULCC with a fleet of A320neos operating in Chile and Peru.
*Viva Air is an ULCC with a fleet of A320/320neos operating in Colombia and Peru.
*Star Peru operates in Peru with a fleet of 737s and Q400s, not sure how viable they would be as an acquisition.
*flybondi operates in Argentina with a fleet of 737s, not sure how viable they would be as an acquisition.
*TAME did operate in Ecuador prior to being liquidated in 2020, not sure if their certificate would be able to be Acquired.

Acquiring Avianca makes sense if they want a strong hold on Colombia, Ecuador, and Central America but gives them no footing in Argentina, Chile, or Peru which are far bigger markets than Central America. The more likely option is they acquire an airline like JetSmart and EasyFly to give them a good platform for wider expansion into South America before aiming to apply for an AOC in other countries such as Ecuador, Paraguay, Uruguay, and Bolivia.
Carpe Diem
 
jbs2886
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Re: Azul ends codeshare with LATAM; looks at consolidation

Tue May 25, 2021 5:32 pm

ScottB wrote:
alohashirts wrote:
I’m glad they’re ending the codeshare with LATAM. Never been a fan of major airlines codesharing within the same country. That’d be like like AA having a partnership with someone like B6 or AS in the United States. Oh wait...


FWIW it appears the opposite is the case, according to the news release: LATAM chose to end the codeshare, rather than Azul.


Yeah this thread title really needs to be revised. LATAM cancelled this, not Azul as it states.

usflyer msp wrote:
RCS763AV wrote:
Interesting news. I'm glad they're stepping it up as LATAM was becoming too dominant of a player in the region and more competition should always be welcome (nothing against LATAM but they are the No. 1 player in four markets in the sub-continent, with nearly monopolistic dominant positions in Peru and Chile). I would agree that Azul could seek to merge with Avianca (it's been talked about before, and AV, just like LA, is under Ch. 11 and needs new investors).

Or heck, maybe they'll go and merge with LATAM and create a new 800lb gorilla, which wouldn't be too favorable to competition though.


LATAM is now #3 in Brazil.


I believe LATAM is bringing back some A321s to Brazil that were previously disposed of - I wonder if LATAM sees opportunity in Brazil. They wouldn't cancel this proactively without a plan. But, market share really isn't that important, if the airline is profitable and serving its target market effectively, then #3 works.
 
Wingtips56
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 12:42 am

dabpit wrote:
If they are looking at consolidating in Latin America of course Avianca makes sense, but what if they take the approach of buying multiple airlines? It would be a challenge and risk but a possible move.
*Avianca operates in Colombia, Ecuador, El Salvador, Honduras, Costa Rica, and Guatemala with a fleet Airbus 319/320/321/330s and Boeing 787s. They also have a cargo division flying A330 freighters.
*JetSmart is an ULCC with a fleet of Airbus planes operating in Chile and Argentina with plans to start Peru operations (already approved).
*Amaszonas operating in Bolivia (and formerly Uruguay ceased in January 2021) with a mixed fleet of CRJ200s, Dash 8-200s, and E190s.
*Paranair operating in Paraguay with a fleet of CRJ100/200s.
*EasyFly operating in Colombia with a fleet of ATRs.
*Andes operating in Argentina with a fleet of MD83s, not sure how viable they would be as an acquisition.
*Sky Airlines is an ULCC with a fleet of A320neos operating in Chile and Peru.
*Viva Air is an ULCC with a fleet of A320/320neos operating in Colombia and Peru.
*Star Peru operates in Peru with a fleet of 737s and Q400s, not sure how viable they would be as an acquisition.
*flybondi operates in Argentina with a fleet of 737s, not sure how viable they would be as an acquisition.
*TAME did operate in Ecuador prior to being liquidated in 2020, not sure if their certificate would be able to be Acquired.

Acquiring Avianca makes sense if they want a strong hold on Colombia, Ecuador, and Central America but gives them no footing in Argentina, Chile, or Peru which are far bigger markets than Central America. The more likely option is they acquire an airline like JetSmart and EasyFly to give them a good platform for wider expansion into South America before aiming to apply for an AOC in other countries such as Ecuador, Paraguay, Uruguay, and Bolivia.

I'm surprised nobody has mentioned GOL. Wouldn't they be a candidate for consolidation, or is there too much overlap?
Worked for WestAir, Apollo Airways, Desert Pacific, Western, AirCal and American Airlines (Retired). Flight Memory: 181 airports, 92 airlines, 78 a/c types, 403 routes, 58 countries (by air), 6 continents. 1,119,414 passenger miles.

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dabpit
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 12:45 am

Wingtips56 wrote:
dabpit wrote:
If they are looking at consolidating in Latin America of course Avianca makes sense, but what if they take the approach of buying multiple airlines? It would be a challenge and risk but a possible move.
*Avianca operates in Colombia, Ecuador, El Salvador, Honduras, Costa Rica, and Guatemala with a fleet Airbus 319/320/321/330s and Boeing 787s. They also have a cargo division flying A330 freighters.
*JetSmart is an ULCC with a fleet of Airbus planes operating in Chile and Argentina with plans to start Peru operations (already approved).
*Amaszonas operating in Bolivia (and formerly Uruguay ceased in January 2021) with a mixed fleet of CRJ200s, Dash 8-200s, and E190s.
*Paranair operating in Paraguay with a fleet of CRJ100/200s.
*EasyFly operating in Colombia with a fleet of ATRs.
*Andes operating in Argentina with a fleet of MD83s, not sure how viable they would be as an acquisition.
*Sky Airlines is an ULCC with a fleet of A320neos operating in Chile and Peru.
*Viva Air is an ULCC with a fleet of A320/320neos operating in Colombia and Peru.
*Star Peru operates in Peru with a fleet of 737s and Q400s, not sure how viable they would be as an acquisition.
*flybondi operates in Argentina with a fleet of 737s, not sure how viable they would be as an acquisition.
*TAME did operate in Ecuador prior to being liquidated in 2020, not sure if their certificate would be able to be Acquired.

Acquiring Avianca makes sense if they want a strong hold on Colombia, Ecuador, and Central America but gives them no footing in Argentina, Chile, or Peru which are far bigger markets than Central America. The more likely option is they acquire an airline like JetSmart and EasyFly to give them a good platform for wider expansion into South America before aiming to apply for an AOC in other countries such as Ecuador, Paraguay, Uruguay, and Bolivia.

I'm surprised nobody has mentioned GOL. Wouldn't they be a candidate for consolidation, or is there too much overlap?

I would think to much overlap. That is why I left GOL and LATAM off that list. The regulators in Brazil would be absolutely insane to allow any combination of Azul, GOL, or LATAM to merge in Brazil. That would be like saying any combination of Delta, American, or United would be allowed to merge in the United States.
Carpe Diem
 
dcajet
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 1:19 am

This is, IMO, a purely domestic play. Azul emerges from the pandemic as the best managed airline in Brazil - and the market leader with the a product and a balance sheet streets ahead from the rest. Whether this involves the Cueto Bros. unloading LATAM Brasil or GOL, the new arrival ITA Itapemirim or perhaps Passaredo, all options are on the table.
Keep calm and wash your hands.
 
jbs2886
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 1:35 am

dcajet wrote:
This is, IMO, a purely domestic play. Azul emerges from the pandemic as the best managed airline in Brazil - and the market leader with the a product and a balance sheet streets ahead from the rest. Whether this involves the Cueto Bros. unloading LATAM Brasil or GOL, the new arrival ITA Itapemirim or perhaps Passaredo, all options are on the table.


I’m confused; based on Azul’s release it is LATAM that cancelled the agreement, but you’re praising Azul for it?
 
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ojjunior
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 2:50 pm

onwFan wrote:
dcajet wrote:
Azul issued a note to the markets on Monday evening, confirming the end of the partnership with LATAM and saying that the company is in a position of strength to lead a consolidation process in the Brazilian airline industry. The airline has hired advisors and is actively looking at opportunities in the region.

Image

I wonder whether they mean consolidation within Brazil (or) broader South America. I think the best partner to merge would be Avianca.



AFAIK Avianca Brasil is no more...

For this announcement, no news.
They huged each other in tough times, both always knew that this would be a relationship with an expiry date since the beginning.
Now the market is recovering and they can fill up own metal with own pax. So love is gone.
Simple like that.

Does anyone remember in the past a similar JV between the deceased Varig and former TAM? I do.
Mid 00's I believe.
Lasted pretty much the same than this.
 
nickpo
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 2:50 pm

Azul looking to buy bankrupt LATAM Airlines' Brazil operation, source says

https://www.reuters.com/business/aerosp ... 021-05-26/
LatinAirliner
 
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LAXintl
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 7:42 pm

Guess LATAM can go back to being LAN again

While the LAN-TAM merger made sense in many ways, it seems the not only has the integration been difficult, but many external factors including the Brazilian economy and now COVID created challanges.
From the desert to the sea, to all of Southern California
 
Detroit313
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 8:02 pm

The whole thing worked out perfectly for IAG, AA and oneworld.

Had LATAM stayed in oneworld and the JV with AA and BA/Iberia been approved, now they'd be left without a partner in Brazil, the most important market, and the Air Europa deal would not have happened.

Now IAG was able to buy Air Europa, completely own Madrid and AA still has a partner in Brazil with a very big domestic network and feed (GOL), something that LATAM Brazil couldn't offer in the first place.
 
onwFan
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 9:29 pm

ojjunior wrote:
onwFan wrote:
dcajet wrote:
Azul issued a note to the markets on Monday evening, confirming the end of the partnership with LATAM and saying that the company is in a position of strength to lead a consolidation process in the Brazilian airline industry. The airline has hired advisors and is actively looking at opportunities in the region.

Image

I wonder whether they mean consolidation within Brazil (or) broader South America. I think the best partner to merge would be Avianca.



AFAIK Avianca Brasil is no more...

For this announcement, no news.
They huged each other in tough times, both always knew that this would be a relationship with an expiry date since the beginning.
Now the market is recovering and they can fill up own metal with own pax. So love is gone.
Simple like that.

Does anyone remember in the past a similar JV between the deceased Varig and former TAM? I do.
Mid 00's I believe.
Lasted pretty much the same than this.

I wasn’t talking about O6, but the parent AV. Either way, based on today’s news that Azul’s intentions are to pursue the LA Brazil operation itself.

It appears that Azul’s intentions are to become a true global player in Brazil. They already serve the most destinations domestically and I think it makes sense; but I would assume that if they want to enter GRU in a big way, they would need to give up a lot at VCP.
 
dcajet
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 9:56 pm

jbs2886 wrote:
dcajet wrote:
This is, IMO, a purely domestic play. Azul emerges from the pandemic as the best managed airline in Brazil - and the market leader with the a product and a balance sheet streets ahead from the rest. Whether this involves the Cueto Bros. unloading LATAM Brasil or GOL, the new arrival ITA Itapemirim or perhaps Passaredo, all options are on the table.


I’m confused; based on Azul’s release it is LATAM that cancelled the agreement, but you’re praising Azul for it?


LATAM Brasil cancelled the agreement upon learning that Azul is out to buy them (or other competitor), although their "official reason" is that the codeshare was not performing. I am not praising nor criticizing one or the other, just stating facts. Again this is purely a domestic consolidation driven by Azul, by far, the leader in the BR market. I don´t think for a moment that Avianca Holdings is a viable candidate for a merger with Azul,
Keep calm and wash your hands.
 
Seat1F
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 9:57 pm

Incredible to think Azul might end up purchasing LATAM's Brazil operation. The Brazil commercial aviation market has always been so challenging. I lived in Sao Paulo between 2004 and 2007. The two main carriers were TAM and GOL although a tiny version of Varig was still around initially. It quickly got absorbed by GOL. Azul didn't start up until after I had moved back to the US. Prior to living in Brazil, I traveled there frequently for about 25 years. So many aviation names I have seen disappear: Varig, Transbrasil, VASP, Cruzeiro, Avianca, others.

As an aside, I never though the TAM/LAN merger was a good idea. Two very different carriers with different cultures. Personally I did not see the synergies between the two. Also, I felt the merged airline name of LATAM was a poor choice. They should have gone with a completely new name for everyone to rally around.

In any case, I wish the best of luck to AZUL in their future pursuits.
 
jbs2886
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 10:06 pm

Seat1F wrote:
Incredible to think Azul might end up purchasing LATAM's Brazil operation.


Wait what is the source for this? Azul said consolidation, nothing that it would buy LATAM Brazil.
 
dcajet
Topic Author
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 10:17 pm

jbs2886 wrote:
Seat1F wrote:
Incredible to think Azul might end up purchasing LATAM's Brazil operation.


Wait what is the source for this? Azul said consolidation, nothing that it would buy LATAM Brazil.


Reuters

https://www.reuters.com/business/aerosp ... 021-05-26/
Keep calm and wash your hands.
 
A320B737NGCapt
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 10:21 pm

jbs2886 wrote:
Seat1F wrote:
Incredible to think Azul might end up purchasing LATAM's Brazil operation.


Wait what is the source for this? Azul said consolidation, nothing that it would buy LATAM Brazil.


Did you read the Reuters article posted further up in the thread by nickpo? If not here it is again.

https://www.reuters.com/business/aerosp ... 021-05-26/
 
jbs2886
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Re: Azul ends codeshare with LATAM; looks at consolidation

Wed May 26, 2021 10:55 pm

A320B737NGCapt wrote:
jbs2886 wrote:
Seat1F wrote:
Incredible to think Azul might end up purchasing LATAM's Brazil operation.


Wait what is the source for this? Azul said consolidation, nothing that it would buy LATAM Brazil.


Did you read the Reuters article posted further up in the thread by nickpo? If not here it is again.

https://www.reuters.com/business/aerosp ... 021-05-26/


dcajet wrote:
jbs2886 wrote:
Seat1F wrote:
Incredible to think Azul might end up purchasing LATAM's Brazil operation.


Wait what is the source for this? Azul said consolidation, nothing that it would buy LATAM Brazil.


Reuters

https://www.reuters.com/business/aerosp ... 021-05-26/


Whoops mea culpa. Unclear, but does it mean the domestic operation or LATAM Brazil (including int'l longhaul)? I'm also curious how this impacts DL, does it go back to GOL with its tail(fin) between its legs (although AA got a codeshare with GOL)?
 
n9801f
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Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 12:18 am

jbs2886 wrote:
Whoops mea culpa. Unclear, but does it mean the domestic operation or LATAM Brazil (including int'l longhaul)? I'm also curious how this impacts DL, does it go back to GOL with its tail(fin) between its legs (although AA got a codeshare with GOL)?

In all seriousness, maybe DL ends up odd-man out.

If you're Gol, wouldn't you rather be with AA and the access it enables to/via MIA?
 
Seat1F
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Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 2:09 am

n9801f wrote:
jbs2886 wrote:
If you're Gol, wouldn't you rather be with AA and the access it enables to/via MIA?

One would think so...but let's see how it plays out.
 
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dabpit
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Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 2:13 am

If Azul acquires LATAMs Brasil arm wouldn’t that be bad for consumers and a major regulatory hurdle?
Carpe Diem
 
n9801f
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Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 2:46 am

dabpit wrote:
If Azul acquires LATAMs Brasil arm wouldn’t that be bad for consumers and a major regulatory hurdle?

Theoretically yes.

Yet in extreme cases such mergers are sometimes approved nonetheless.

For instance if the company being acquired is near collapse, regulators will sometimes approve such a merger. In that case there really isn't any competition to preserve anyway since the acquiree will otherwise completely vanish.
 
usflyer msp
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Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 3:55 am

dabpit wrote:
If Azul acquires LATAMs Brasil arm wouldn’t that be bad for consumers and a major regulatory hurdle?


It would be almost guaranteed that they would have to divest some assets. Brazil is not going to let one airline control 65% of the domestic market.
If this actually occurs, the new Itapemirim airline may be in a great position to get some of LATAM's or Azul's assets.
 
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dabpit
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Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 2:12 pm

n9801f wrote:
dabpit wrote:
If Azul acquires LATAMs Brasil arm wouldn’t that be bad for consumers and a major regulatory hurdle?

Theoretically yes.

Yet in extreme cases such mergers are sometimes approved nonetheless.

For instance if the company being acquired is near collapse, regulators will sometimes approve such a merger. In that case there really isn't any competition to preserve anyway since the acquiree will otherwise completely vanish.

Is LATAM Brasil near collapse though?

usflyer msp wrote:
dabpit wrote:
If Azul acquires LATAMs Brasil arm wouldn’t that be bad for consumers and a major regulatory hurdle?


It would be almost guaranteed that they would have to divest some assets. Brazil is not going to let one airline control 65% of the domestic market.
If this actually occurs, the new Itapemirim airline may be in a great position to get some of LATAM's or Azul's assets.

If (big if) Azul and LATAM Brasil are allowed to merge then I agree with you that Itapemirim would make out great from the divested assets. There would need to be a lot of assets divested in a number of cities.
Carpe Diem
 
RCS763AV
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Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 2:25 pm

onwFan wrote:
ojjunior wrote:
onwFan wrote:
I wonder whether they mean consolidation within Brazil (or) broader South America. I think the best partner to merge would be Avianca.



AFAIK Avianca Brasil is no more...

For this announcement, no news.
They huged each other in tough times, both always knew that this would be a relationship with an expiry date since the beginning.
Now the market is recovering and they can fill up own metal with own pax. So love is gone.
Simple like that.

Does anyone remember in the past a similar JV between the deceased Varig and former TAM? I do.
Mid 00's I believe.
Lasted pretty much the same than this.

I wasn’t talking about O6, but the parent AV. Either way, based on today’s news that Azul’s intentions are to pursue the LA Brazil operation itself.

It appears that Azul’s intentions are to become a true global player in Brazil. They already serve the most destinations domestically and I think it makes sense; but I would assume that if they want to enter GRU in a big way, they would need to give up a lot at VCP.


Again, AV was never the parent of O6. O6 was an independent airline operatign under a franchise agreement, which happened to be owned by the same guy who was (is) the controlling shareholder oh AV holdings.

usflyer msp wrote:
dabpit wrote:
If Azul acquires LATAMs Brasil arm wouldn’t that be bad for consumers and a major regulatory hurdle?


It would be almost guaranteed that they would have to divest some assets. Brazil is not going to let one airline control 65% of the domestic market.
If this actually occurs, the new Itapemirim airline may be in a great position to get some of LATAM's or Azul's assets.


Never say never. Perú and Chile (arguably much smaller markets) had LATAM controlling close to 70% of their domestic markets for years before the pandemic. Colombia (also smaller) had AV control a 50-60% share of the market for decades, which has decreased to ~45% during the pandemic.
 
Capricorn
Posts: 196
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Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 3:21 pm

usflyer msp wrote:
dabpit wrote:
If Azul acquires LATAMs Brasil arm wouldn’t that be bad for consumers and a major regulatory hurdle?


It would be almost guaranteed that they would have to divest some assets. Brazil is not going to let one airline control 65% of the domestic market.
If this actually occurs, the new Itapemirim airline may be in a great position to get some of LATAM's or Azul's assets.


In normal times I would have agreed, but after the KE OZ merger, I guess nothing is impossible anymore. Still Brazilian consumes would be the big looseres if this were to happen.
 
n9801f
Posts: 364
Joined: Tue Apr 13, 2004 8:29 am

Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 3:45 pm

dabpit wrote:
Is LATAM Brasil near collapse though?

It's hard for me to know. Though I really hope not.

Access to additional cash (from LAN? someone else?) can quickly change the picture, too, so even if things are desperate now they could still improve suddenly.

There have been many large airline shutdowns in Brazil. The absence of a successful reorganization under local bankruptcy law (that I know of) seems ominous for any illiquid Brazilian airline.

Both TAM and LAN are terrific airlines. I wish them well in these unprecedented times.
 
onwFan
Posts: 641
Joined: Wed Feb 03, 2016 4:02 am

Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 5:26 pm

RCS763AV wrote:
onwFan wrote:
ojjunior wrote:


AFAIK Avianca Brasil is no more...

For this announcement, no news.
They huged each other in tough times, both always knew that this would be a relationship with an expiry date since the beginning.
Now the market is recovering and they can fill up own metal with own pax. So love is gone.
Simple like that.

Does anyone remember in the past a similar JV between the deceased Varig and former TAM? I do.
Mid 00's I believe.
Lasted pretty much the same than this.

I wasn’t talking about O6, but the parent AV. Either way, based on today’s news that Azul’s intentions are to pursue the LA Brazil operation itself.

It appears that Azul’s intentions are to become a true global player in Brazil. They already serve the most destinations domestically and I think it makes sense; but I would assume that if they want to enter GRU in a big way, they would need to give up a lot at VCP.


Again, AV was never the parent of O6. O6 was an independent airline operatign under a franchise agreement, which happened to be owned by the same guy who was (is) the controlling shareholder oh AV holdings.

I am aware of the ownership story, but did not want to be that pedantic; nor was I even suggesting O6 to start with. Irrespective of that, since Avianca Brazil already went out of business a few years ago, I did not think there would be a confusion on what ‘Avianca’ refers to now.
 
User avatar
dabpit
Posts: 965
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Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 5:57 pm

n9801f wrote:
dabpit wrote:
Is LATAM Brasil near collapse though?

It's hard for me to know. Though I really hope not.

Access to additional cash (from LAN? someone else?) can quickly change the picture, too, so even if things are desperate now they could still improve suddenly.

There have been many large airline shutdowns in Brazil. The absence of a successful reorganization under local bankruptcy law (that I know of) seems ominous for any illiquid Brazilian airline.

Both TAM and LAN are terrific airlines. I wish them well in these unprecedented times.

If a cash injection is needed wouldn’t that more than likely come from Delta as a possibility? Given DL took a 20% stake in LATAM I doubt they would want the Brasil division to collapse and I doubt DL would want to give Azul the opportunity to take away their Brasil feed.
Carpe Diem
 
dcajet
Topic Author
Posts: 5000
Joined: Sun Aug 01, 2004 9:31 am

Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 5:57 pm

dabpit wrote:
Is LATAM Brasil near collapse though?


The short answer is no. But taking a more nuanced look at the Group, one can see they have enough fires burning around the whole group that may make them consider a sale of its challenging Brazilian business to save the rest of the group. While on paper LAN´s merger with TAM made a lot of sense, other has been the story in practice.

True, I agree that the CADE (Conselho Administrativo de Defesa Econômica) will certainly put some caveats to a potential Azul + LATAM union in Brazil, but, lets not forget that there are new entrants coming to the Brazilian market (ITA) so a merger of these 2 does not mean Brazil is going to a strict duopoly between Azul and Gol.
Keep calm and wash your hands.
 
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Polot
Posts: 11886
Joined: Thu Jul 28, 2011 3:01 pm

Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 6:05 pm

dabpit wrote:
n9801f wrote:
dabpit wrote:
Is LATAM Brasil near collapse though?

It's hard for me to know. Though I really hope not.

Access to additional cash (from LAN? someone else?) can quickly change the picture, too, so even if things are desperate now they could still improve suddenly.

There have been many large airline shutdowns in Brazil. The absence of a successful reorganization under local bankruptcy law (that I know of) seems ominous for any illiquid Brazilian airline.

Both TAM and LAN are terrific airlines. I wish them well in these unprecedented times.

If a cash injection is needed wouldn’t that more than likely come from Delta as a possibility? Given DL took a 20% stake in LATAM I doubt they would want the Brasil division to collapse and I doubt DL would want to give Azul the opportunity to take away their Brasil feed.


Delta is not really in a position to be giving out large cash injections. Especially so soon after receiving CARE funds (I’m not sure when those restrictions end). Even if able the optics wouldn’t be great.
 
dcajet
Topic Author
Posts: 5000
Joined: Sun Aug 01, 2004 9:31 am

Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 6:05 pm

dabpit wrote:
n9801f wrote:
dabpit wrote:
Is LATAM Brasil near collapse though?

It's hard for me to know. Though I really hope not.

Access to additional cash (from LAN? someone else?) can quickly change the picture, too, so even if things are desperate now they could still improve suddenly.

There have been many large airline shutdowns in Brazil. The absence of a successful reorganization under local bankruptcy law (that I know of) seems ominous for any illiquid Brazilian airline.

Both TAM and LAN are terrific airlines. I wish them well in these unprecedented times.

If a cash injection is needed wouldn’t that more than likely come from Delta as a possibility? Given DL took a 20% stake in LATAM I doubt they would want the Brasil division to collapse and I doubt DL would want to give Azul the opportunity to take away their Brasil feed.


I doubt Delta is in a position to sink more money in LATAM, having had to write off their whole investment as a result of LA´s bankruptcy, Additionally, this week the US DOT came back asking for a lot more information in order for them to consider Delta´s and LATAM´s petition for a JV. Basically the DOT is saying that their application was done assuming a pre COVID scenario, and they want to see what happens on a post COVID world and if the benefits LA and DL say a JV would bring to the consumer still hold true. So back to the drawing board it is.
Keep calm and wash your hands.
 
Corpsnerd09
Posts: 633
Joined: Tue Mar 30, 2004 2:05 pm

Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 9:10 pm

jbs2886 wrote:
A320B737NGCapt wrote:
jbs2886 wrote:

Wait what is the source for this? Azul said consolidation, nothing that it would buy LATAM Brazil.


Did you read the Reuters article posted further up in the thread by nickpo? If not here it is again.

https://www.reuters.com/business/aerosp ... 021-05-26/


dcajet wrote:
jbs2886 wrote:

Wait what is the source for this? Azul said consolidation, nothing that it would buy LATAM Brazil.


Reuters

https://www.reuters.com/business/aerosp ... 021-05-26/


Whoops mea culpa. Unclear, but does it mean the domestic operation or LATAM Brazil (including int'l longhaul)? I'm also curious how this impacts DL, does it go back to GOL with its tail(fin) between its legs (although AA got a codeshare with GOL)?


GOL said they were very happy to get back on with AA since they preferred their old pre-LATAM arrangement and DL didn't offer much of a network from Brazil like AA did... and AA would fight tooth and nail to keep GOL happy and on their side since if and when this Azul purchase occurs GOL will become very very valuable.

Though I wouldn't be surprised to see DL try to move back onto them, but considering the stuff the was said in Sept of 2019 by GOL and DL about each other, who knows... It's business after all not high school.
 
jbs2886
Posts: 3149
Joined: Wed Apr 01, 2015 9:07 pm

Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 9:42 pm

Corpsnerd09 wrote:
It's business after all not high school.


A fact a lot of posters here don't understand. Money talks and when it comes to large corporations, grudges rarely hold. But, I'm hopeful that LATAM Brazil stays independent and a strong DL relationship is created.
 
n9801f
Posts: 364
Joined: Tue Apr 13, 2004 8:29 am

Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 10:58 pm

jbs2886 wrote:
Corpsnerd09 wrote:
It's business after all not high school.


A fact a lot of posters here don't understand. Money talks and when it comes to large corporations, grudges rarely hold. But, I'm hopeful that LATAM Brazil stays independent and a strong DL relationship is created.

Yes, money does talk.

But it's hard for me to imagine the Delta Board approving another large acquisition while its company is doing poorly and every single overseas investment I'm aware of (Virgin Atlantic, LATAM, AeroMexico) has soured.

As noted above, the route synergies between Delta and Gol are much weaker (for both partners) than between American and Gol. This plus Delta's suddenly-much-weaker financial position make it hard for me to imagine Delta somehow outbidding American in a contest for Gol..

Sure, American's not in a great financial position. But Delta isn't anymore, either. And if I were a bank, I'd be much keener to loan to American-Gol since I'd see bigger upside there.

As noted above, it's not 2019 anymore. Perhaps new times call for new ideas and approaches.
 
jbs2886
Posts: 3149
Joined: Wed Apr 01, 2015 9:07 pm

Re: Azul ends codeshare with LATAM; looks at consolidation

Thu May 27, 2021 11:06 pm

n9801f wrote:
jbs2886 wrote:
Corpsnerd09 wrote:
It's business after all not high school.


A fact a lot of posters here don't understand. Money talks and when it comes to large corporations, grudges rarely hold. But, I'm hopeful that LATAM Brazil stays independent and a strong DL relationship is created.

Yes, money does talk.

But it's hard for me to imagine the Delta Board approving another large acquisition while its company is doing poorly and every single overseas investment I'm aware of (Virgin Atlantic, LATAM, AeroMexico) has soured.

As noted above, the route synergies between Delta and Gol are much weaker (for both partners) than between American and Gol. This plus Delta's suddenly-much-weaker financial position make it hard for me to imagine Delta somehow outbidding American in a contest for Gol..

Sure, American's not in a great financial position. But Delta isn't anymore, either. And if I were a bank, I'd be much keener to loan to American-Gol since I'd see bigger upside there.

As noted above, it's not 2019 anymore. Perhaps new times call for new ideas and approaches.


Don't forget, DL has a large interest in Korean Air and a decent share of China Eastern (as well as AF/KLM, although not in great shape). No doubt, however, that its flagship investments flopped (it is possible DL gets equity interests on the carriers' bankruptcy exit though based on its debt).

To clarify, I don't think DL would buy more than a minimal share of an airline like GOL that it partners with in the near-term. In my mind, AA is a better fit for GOL. And with DL probably not throwing cash around, it would have to be creative to sway GOL away from AA.
 
Corpsnerd09
Posts: 633
Joined: Tue Mar 30, 2004 2:05 pm

Re: Azul ends codeshare with LATAM; looks at consolidation

Fri May 28, 2021 2:10 am

jbs2886 wrote:
n9801f wrote:
jbs2886 wrote:

A fact a lot of posters here don't understand. Money talks and when it comes to large corporations, grudges rarely hold. But, I'm hopeful that LATAM Brazil stays independent and a strong DL relationship is created.

Yes, money does talk.

But it's hard for me to imagine the Delta Board approving another large acquisition while its company is doing poorly and every single overseas investment I'm aware of (Virgin Atlantic, LATAM, AeroMexico) has soured.

As noted above, the route synergies between Delta and Gol are much weaker (for both partners) than between American and Gol. This plus Delta's suddenly-much-weaker financial position make it hard for me to imagine Delta somehow outbidding American in a contest for Gol..

Sure, American's not in a great financial position. But Delta isn't anymore, either. And if I were a bank, I'd be much keener to loan to American-Gol since I'd see bigger upside there.

As noted above, it's not 2019 anymore. Perhaps new times call for new ideas and approaches.


Don't forget, DL has a large interest in Korean Air and a decent share of China Eastern (as well as AF/KLM, although not in great shape). No doubt, however, that its flagship investments flopped (it is possible DL gets equity interests on the carriers' bankruptcy exit though based on its debt).

To clarify, I don't think DL would buy more than a minimal share of an airline like GOL that it partners with in the near-term. In my mind, AA is a better fit for GOL. And with DL probably not throwing cash around, it would have to be creative to sway GOL away from AA.


Yes, it seems like it isn't just a grudge but also from this basic perspective, AA+GOL does seem much stronger than DL+GOL in a hypothetical "JJ becomes AD and goes STAR" situation. If JJ stays independent or AD pulls some sort of play and heads over to OW or SkyTeam (unlikely with their fingers in the TAP golden pot with Star) then yeah DL would really need to make a shocking "LATAM style" play to save itself in Brazil and AA would need to counter. GOL may also see a huge benefit in OW as maybe OW or OW Connect because of IB... It may not be TAP with direct access to Portugal but it's still a feature DL may not be as attractive with with AF, less backtracking and more access to secondary Portugal on IB over AF.
 
dcajet
Topic Author
Posts: 5000
Joined: Sun Aug 01, 2004 9:31 am

Re: Azul ends codeshare with LATAM; looks at consolidation

Sat May 29, 2021 1:36 am

More problems for LATAM.

Markets did not react well to the news of a potential sale of LATAM´s Brazilian business to Azul. Shares of LATAM fell 22.9% in one day, forcing the Santiago Exchange to stop trading LATAM´s papers.

https://www.americaeconomia.com/negocio ... -sufrir-un
Keep calm and wash your hands.
 
Detroit313
Posts: 668
Joined: Thu Dec 14, 2017 2:56 pm

Re: Azul ends codeshare with LATAM; looks at consolidation

Sat May 29, 2021 2:36 pm

LATAM was insane in the first place to leave the alliance that controls Madrid and Miami, the two most important hubs for Latin America outside of it.

One bad decision after another.

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