- Last month, rumors began to circulate about a possible acquisition of Latam Brasil, which has filed for bankruptcy protection, by Azul, or a merger of the two carriers;
- Azul also revealed it had reached an agreement with its aircraft lessors that would help it save some BRL 3.2 billion.
Brazilian airline Azul announced on Wednesday (12) the start of a codeshare agreement it has recently reached with Latam Airlines in Brazil. The deal provides for codeshare for 64 routes in the country, in addition to points given to loyalty programs of both companies, according to Valor Econômico.
The agreement was announced in June and illustrates how the airline industry is trying to optimize its structure to cope with the impact of the Covid-19 pandemic on the sector.
Of 35 routes that are already being sold, 23 are served by Azul, while the other 12 are operated by Latam. By the end of August, the companies will also start joint selling other 29 routes of the agreement, 12 of which operated by Azul and 17 by Latam.
“The beginning of this agreement will help our industry to offer more options for flights, schedules and destinations to our customers, being an important solution to more quickly recover internal demand affected by the pandemic,” said Abhi Shah, vice president of revenue at Azul.
Last month, rumors began to circulate about a possible acquisition of Latam Brasil by Azul, or a merger of the two carriers, which Azul’s CEO, John Rodgerson, said was “not impossible”. “Our current focus is on integrating flights. There is nothing concrete”, he said at that time. Rodgerson also stated that Latam is in a “complicated phase”, after filing for bankruptcy protection under U.S. law in a New York court.
Azul reaches deal to cut aircraft leasing costs
Azul also revealed it had reached an agreement with its aircraft lessors that would help it save some BRL 3.2 billion ($594.61 million) in working capital through 2021 and be repaid beginning in 2023.
The airline has been in negotiations with lessors as the coronavirus crisis derailed Latin America’s air travel industry in March. Azul hired a restructuring firm when the crisis set in and said it was renegotiating its debts out of court to avoid a potential Chapter 11 bankruptcy filing, as Latam did.
The airline now says its new agreements cover 98% of the company’s leasing liabilities and has managed to reduce its rental costs by 77% between April and December of this year.
Azul said it would compensate for these discounts by paying “slightly higher” leasing costs starting in 2023.