Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos) and Abra Group have begun discussions to explore business opportunities which could include a merger with GOL Linhas Aéreas Inteligentes (G3, São Paulo Congonhas), the two companies have said in security filings.

“The company announces that it is having independent discussions with Abra to explore opportunities, but to the date herein, it has not entered into or formalised an agreement, binding or otherwise, regarding any partnership or business combination relating to GOL or its controlling shareholders, apart from the codeshare agreement,” said Azul on May 29.

GOL Linhas Aéreas, currently under a Chapter 11 reorganisation process in the United States, and Azul recently announced a domestic non-overlapping codeshare.

Both carriers have been linked to a possible merger since March when Azul was reportedly working with Citigroup and Guggenheim Partners to study the possibility of buying its rival. Its chief executive, John Rodgerson, said management had an obligation to shareholders to consider the opportunities presented in the market.

The company “is constantly following the strategic dynamics of the airline industry and potential opportunities for partnerships, and as a regular practice may hire consultants to support the company in these efforts,” Azul explained in its latest filing.

Separately, GOL announced on May 28 that it will hold a competitive process to evaluate exit financing proposals and possible alternative transactions, “including opportunities presented by potential sources of equity and debt capital.” However, the process has not yet commenced and the carrier is not holding negotiations with any third parties, it added.

The Brazilian financial newspaper Valor Econômico claimed this week, citing sources, that behind the scenes Azul and GOL have been looking to join forces to create a company that would also have Abra Group as a shareholder. Abra is the majority shareholder in GOL Linhas Aéreas and avianca airlines (AV, Bogotá) and recently announced it had agreed to acquire shares in Wamos Air (EB, Madrid Barajas).

Any possible merger would have to be approved by Brazil's antitrust authority (CADE).

The ch-aviation fleets module shows that GOL currently operates a Boeing-only fleet comprising 138 aircraft. Azul has a more diverse fleet which includes airframes manufactured by Airbus, Embraer, ATR - Avions de Transport Régional, and Cessna Aircraft Company as well as Boeing, and as of March 31 it operated 183 aircraft. Together, as of April 2024, they held over 61% of Brazil's domestic market, according to data from the country's civil aviation authority (Agência Nacional de Aviação Civil - ANAC).