Azul Eyes Mergers To Revive Latin American Airlines


(MENAFN- The Rio Times) John Peter Rodgerson, CEO of Azul (AZUL4), emphasizes consolidation as essential for addressing challenges faced by Latin American airlines.

He explained in an interview with Bloomberg that merging operations can reduce capital costs and enhance customer service.

The CEO did not comment on current merger and acquisition activities. Reports suggest Azul is exploring a merger with Gol, with ongoing negotiations involving Gol's controlling shareholder.

Since the pandemic, Latin American airlines have struggled significantly due to minimal government support.

In 2020, Avianca Holdings SA, Latam Airline Group SA, and Grupo Aeromexico SAB filed for bankruptcy.



In late January, Brazilian airline Gol sought creditor protection after numerous debt exchanges.

Rodgerson met with Brazilian President Luiz Inácio Lula da Silva to discuss a plan using public funds as collateral for loans, providing financial relief to airlines.

The government understands the necessity of debt relief and is actively working on a solution that is expected within a few months.

The CEO highlighted that lower capital costs for credit would enable cheaper fares and the purchase of more aircraft. These issues are crucial in discussions with the Brazilian government.

Despite challenges, Rodgerson reaffirmed Azul's EBITDA forecast for the year. Brazilian airlines face obstacles such as currency devaluation, rising fuel costs, and devastating floods in southern Brazil.
Azul's Challenges and Financial Outlook
The state of Rio Grande do Sul, which accounts for about 8% of Azul's network, has two-thirds of its operations offline due to heavy rains.

These rains have caused at least 140 deaths. Porto Alegre's airport remains submerged, with no set reopening date.

Azul's profit before certain items is expected to reach approximately R$6.5 billion (US$1.3 billion) in 2024, a 25% increase from last year.

The company's net debt is projected to decrease to about three times EBITDA from the current 3.7 times over the past 12 months.

Azul plans to pay off a $68 million bond maturing in the fourth quarter with cash.

Rodgerson noted that the airline is twice the size it was before the pandemic in terms of revenue. Although Azul has more debt, it is a much larger airline today.

This strategic focus on consolidation and financial stability underscores Azul's efforts to navigate the complex landscape of the Latin American aviation industry.

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The Rio Times

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