Azul to wage 'aggressive' battle for Avianca Brasil

Azul to wage 'aggressive' battle for Avianca Brasil

M&A Corporate & Sovereign Strategy Regulation Brazil US Chile Colombia

Brazilian airline Azul is expected to wage a bidding war to buy its bankrupt rival Avianca Brasil, LatinFinance has heard.

"They are probably going to compete aggressively for the business and offer the highest possible bid," said Fernando Domeyko, an analyst at the Chilean brokerage firm BCI Corredor de Bolsa.

"Azul just received a few A320s and has a very ambitious expansion plan," he added.

Azul has reentered the race to buy Avianca Brasil by offering $145m for the bankrupt airline's slots, including service between São Paulo and Rio de Janeiro. Azul had previously offered $105m for Avianca Brasil's assets, but it did not come to an agreement.

Gol and Latam Airlines were invited by Elliott Management, one of Avianca Brasil's largest creditors, to present offers to buy Avianca Brasil for at least $70m in early April. They are now likely to increase their offers to compete with Azul, Domeyko said.

Azul has the smallest market share of the three airlines competing to buy Avianca Brasil, which means it may face less regulatory scrutiny than Gol and Latam, Domeyko said.

Azul has a 19% market share in Brazil, while Gol has 36% and Latam has 32%, according to Domeyko.

Outside Brazil, Chile's JetSmart, a low-cost airline owned by the US private equity firm Indigo Partners, has been mentioned as a possible bidder for Avianca Brasil.

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