MercoPress. South Atlantic News Agency

Gol and Azul engaged in merger talks

Each step needs to be carefully weighed to ensure it aligns with both companies’ strategic goals, it was explained

Less than a week after announcing a codeshare agreement for flights marketed jointly but operated separately, Brazilian carriers Gol and Azul were reported to have engaged in talks that could lead to a full-size merger that would reshape the entire gameboard for the aviation industry in the region.

The São Paulo-based Gol is very much in need of new strength after entering Chapter 11 bankruptcy earlier this year. The negotiations undertaken by main shareholders Abra Group Ltd with Azul were said to contemplate a capital injection to stabilize operations and repay existing debts, the codeshare agreement thus becoming the first step towards a more integrated operation.

The initiative would grant the resulting company a dominant position in the domestic market in which both airlines compete with Latam, which is also the result of a fusion between the Chilean LAN and the local TAM.

According to local media, Azul's management admitted to having held these talks but insisted that no understanding had been reached for the time being. Each step needs to be carefully weighed to ensure it aligns with both companies’ strategic goals, it was explained.

Aviation analysts believe such a merger would result in improved efficiencies and cost reductions through shared resources and operational synergies, giving the new airline stronger bargaining power in aircraft acquisitions and global partnerships that could benefit passengers while securing better environmental performances through more sustainable operations.

It is also believed that this merger could spearhead airline consolidations in the region.