Two Brazilian airlines, Azul SA (AZUL.N) and Avianca Brasil, are targets for expansion in the new alliance between United Continental Holdings Inc (UAL.O), Avianca Holdings AVT_p.CN and Copa Airlines (CPA.N) on U.S.-Latin America routes, an Avianca executive said.
There was little reference to Brazil, by far Latin America’s largest market, when the joint venture was announced on Friday, but Avianca Holdings’ Executive Vice President for Business Units, Gerardo Grajales, told Reuters on Monday that the partners already had in mind Azul and Avianca Brasil, which operates independently of Colombia-based Avianca Holdings.
“The two airlines complement each other in the Brazilian market,” Grajales said. “From the beginning we thought that Brazil should be covered by our agreement. However, no partnership would be authorized if it did not have an Open Skies agreement.”
The Open Skies agreement between Brazil and the United States was signed into law in May, when discussions among the three airlines were already advanced, he said.
Azul said in a statement that it was “monitoring the negotiations between the companies and evaluating its options.”
The airline agreement mimics a partnership between American Airlines (AAL.O) and Chile’s Latam Airlines (LTM.SN) which has been mired in regulatory scrutiny.
Like its main U.S. rivals, No. 3 U.S. carrier United has been eyeing untapped potential for leisure and business travelers in Latin America, where many still travel long distances by car and bus.
The announcement between the United Airlines parent, Avianca and Panama’s Copa capped off almost two years of negotiations. United will loan Avianca’s majority shareholder almost $500 million to be spent on ventures outside of the airline…
