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Azul proposes JV with TAP to shareholders
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Azul proposes JV with TAP to shareholders

Brazil’s low-cost carrier Azul has proposed to shareholders a joint venture with Portuguese flag carrier TAP Air Portugal as it looks to gain a greater foothold in the transatlantic travel market, the company says in its investor update on 7 November.

While the two airlines have spoken of plans for a joint venture as early as 2017, they had yet to take steps to formalise the alliance. David Neeleman, Azul’s founder and chairman, says the company is excited to bring the collaboration between the two airlines into a new phase which will benefit both the airlines as well as its passengers across the vast South American country.

Since Neeleman’s Atlantic Gateway consortium took a share in TAP in 2015, the Portuguese airline has undergone a dramatic restructuring, including an extensive fleet renewal and network expansion across the Atlantic. TAP is currently the leading operator of scheduled services between Europe and South America.

“TAP is going through the same kind of fleet transformation as we are,” Neeleman says. “We are really excited about our investment and the strategic value of the joint venture. There will be huge synergies, we will be able to coordinate schedules and fares, but also as an investment.”

Neeleman also praised the new government in Brazil, elected in October 2018, for putting processes in place that have already made a positive impact on aviation in what is generally believed to be an underserved country in terms of air travel. Taxes have been reduced and investment in airport infrastructure across the country have contributed to a what is believed to be the beginning of a new era for the industry.

“There is newfound optimism in the country, the ministers are doing all the right things and Brazil is headed in the right direction,” Neeleman says. “We are adding this capacity before Brazil takes off, we think it will grow again in the next couple of years and are poised to take advantage of that growth.”

On 7 November, Azul reported a 26% rise in overall revenue during the third quarter as the effects of the company’s cost-saving measures as well as increased passenger demand and more efficient aircraft made themselves felt.

Revenue rose to R3 billion ($733 million), from R2.4 billion in the same period last year, as the Sao-Paulo-based airline continues to transition to newer, more fuel-efficient aircraft like the Embraer 195-E2. Azul operates one of the youngest fleets in Latin America, with an average age of about 6.4 years, according to Cirium fleets data…

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