Brazil’s Azul Is Interested In Acquiring LATAM

Azul Linhas Aereas CEO, John Rodgerson, said the company is interested in buying the whole of Chile’s LATAM Airlines Group. He added that the Brazilian carrier is ready to make an offer if creditors fail to agree on a restructuring plan. This is the latest development as Azul is upping the ante, as it previously had only shown interest in acquiring LATAM Brazil. Let’s investigate further.

Tam and Azul Airlines
Azul is interested in acquiring LATAM Airlines Group. Photo: Getty Images

Azul wants the whole pie

A few months back, Azul’s management pointed out that it could be interested in buying LATAM Brazil.

The airline’s CEO, John Rodgerson, argued that the Brazilian government should look into the possibility of merging both carriers. He said that other countries have carriers with over 70% of the domestic share, and that is not harmful. “Instead, we should look at the opportunities,” he added.

Now, the Brazilian airline is behaving more boldly. In an interview with the Chilean newspaper Diario Financiero, Rodgerson said,

“We know exactly what we will offer. We would buy the whole asset. I believe that the group has a lot of value, and we’re not thinking of splitting or selling divisions.”

Simple Flying reached LATAM for comment; the airline declined to comment on Neeleman’s interview.

David Neeleman, Breeze Airways, Future Flying Forum
David Neeleman and John Rodgerson have a plan ready to acquire LATAM Airlines Group. Photo: Getty Images

How would Azul be able to get LATAM?

LATAM is currently in a Chapter 11 process in the US. Unlike its peers, Avianca and Aeromexico, LATAM still hasn’t officially presented its Plan of Reorganization. Last week, the judge of the Southern District Court of New York approved a new request for an extension of the exclusivity period to present its Plan of Reorganization until November 26.

LATAM stated,

“Said request enables the continued progress in the negotiations with the interested parties for the purpose of agreeing on the financial terms and submitting its Plan of Reorganization for approval. This will allow the group to successfully emerge from the Chapter 11 process.”

While LATAM has this exclusivity period, no one can present a plan to LATAM’s creditors. Nevertheless, the time is running out on the airline, and David Neeleman is ready to engage. He said that on November 23, we will all know more about Azul’s plan to acquire LATAM.

He said,

“If LATAM gets to an agreement with its creditors, then there wouldn’t be an Azul plan, but there are signs telling us that they are not reaching an agreement, that’s why they are still requesting extensions of the exclusivity period. If LATAM’s management doesn’t want Azul, the easiest way to do it is to give the creditors what they want, which is to recover as much as possible.”

LATAM Argentina
LATAM doesn’t want Azul; the airline has denied any merging plans. Photo: Getty Images.

LATAM doesn’t want Azul

In the past, LATAM’s management has categorically denied that it will put a fraction or the whole company on sale.

Instead, LATAM has said it intends to compete in Brazil and other markets aggressively. The company doesn’t have the intention of selling or breaking apart its Brazilian or any other branch. Moreover, the company has not received any acquisition proposal.

LATAM Brazil’s CEO, Jerome Cadier, has previously said that a merger between Azul and LATAM wouldn’t benefit anyone. Instead, it would increase the average ticket price in Brazil (and most likely, in South America). He added that Azul already has a monopoly of routes, and to get LATAM would increase said monopoly.

What’s your take on the subject? Do you believe creditors should sell LATAM to Azul? Would it benefit the South American aviation market? Let us know in the comments below.