LATAM rebukes Azul's consolidation interest
May 27, 2021 |
Chilean airline, which filed for bankruptcy protection last year, is weary about its Brazilian competitor's intentions
Chile's LATAM Airlines has reacted bitterly to a statement from Brazilian carrier Azul, one of its main competitors, that referred to "consolidation opportunities" in the airline industry in the region.
"LATAM intends to compete aggressively in Brazil and other markets and has no intention to sell or carve out its Brazilian or other parts of its business," the company said in a statement.
LATAM filed for bankruptcy, including its business in Brazil, and secured $900 million in debtor-in-possession (DIP) financing in May last year and added a second DIP loan for $1.3 billion in July.
Azul, however, is said it have approached some of LATAM's creditors, which include Qatar Airways and US investment manager Oaktree Capital Management, to inquire about acquiring control of the Chilean airline.
LATAM said it has not received any offers to acquire LATAM Brasil, while Azul only said it has "hired consultants and is actively considering consolidation opportunities in the industry."
Both airlines ended a codeshare agreement on Monday, but LATAM said it was not related to a takeover offer.
"LATAM is a very interesting asset in the airline industry thanks to its presence in Brazil," said André Castellini, a partner at the US management consulting firm Bain & Company. "There would be several potential bidders, including some its shareholders, like Qatar Airways. Azul would definitely have a very strong investment thesis... in terms of management value creation and revenue and cost synergies."
LATAM is the result of the merger between Chile's flag carrier LAN Airlines and Brazil's TAM in 2010. LATAM Brasil is the second domestic and the largest international airline in Brazil. LATAM Argentina, however, closed down in June last year.
Shares in Azul jumped 11.3% to close at BRL46.76 ($8.80) on Wednesday.