Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos) has announced it has decided not to pursue a commercial agreement with the Brazilian postal service, Correios, over the creation of an integrated logistics solutions company.

Under the original partnership plan, Azul would have owned a 50.01% stake while Correios would have owned the remaining 49.99%. The joint venture would have offered an integrated logistics platform across road and air with Azul providing its two B737-400(F)s to the service.

However, in a stock market disclosure, Azul said it had decided against the tie-up given stronger than expected returns from its own cargo business in 2018, around the time that talks with Correios first started. As such, Azul said it would be in its best interests to have the flexibility to enter other more favourable commercial agreements and to participate in future Correios tenders for the distribution of domestic air mail.

"Although we could not reach a mutual commercial agreement with Correios, we are excited with the growth potential of our cargo division," John Rodgerson, CEO of Azul, said. "Going forward, we expect to continue expanding our customer base, which already includes major e-commerce companies, retailers, and manufacturers in Brazil, such as Mercado Livre, Pague Menos, and Samsung, who value our reliable and far-reaching door-to-door logistic solution. With the addition of next-generation aircraft to our fleet that have a larger cargo compartment, we expect to see significant margin contribution coming from Azul's cargo business for many years to come."

For its part, Correios said in a separate statement that it will continue to partner its wholly-owned investment subsidiary CorreiosPar in developing alternatives to air cargo transportation as well as other package delivery methods.