Sao Paulo, Brazil, aviation headquarters are fueled with the news of alliance between, Azul and Avianca united airlines. An Avianca executive said that there are high chances of alliance between United Continental Holdings Inc ( UAL.O), Avianca Holdings AVT_p.CN and Copa Airlines (CPA.N) on U.S. – Latin America routes.
Avianca holdings Executive Vice president for business units Gerardo Grajales told a news agency that Brazil is the largest aviation market of Latin America, so this alliance was always in mind of both the companies from day first. The airlines compliment each other in Brazilian market. He added that for this they first need to have open skies agreement to continue this collaboration further, this agreement between the countries was signed in May this year from which the discussion is fueled. He said that Azul is monitoring and the negotiation between the companies and evaluating its options. The airline agreement mimics a partnership between American airless, Chile airline and LATAM airlines which has been mired in regulatory scrutiny.
The third largest airlines of united states is eyeing on the scope to establish a relationship with these airlines and trying to tap the untapped market in Latin America. Majority of the market includes business travelers and travel for leisure, while some of the passengers are waiting for a direct carrier, other still travel through bus or cars.
The announcement between the United airlines parent, Avianca and Panama’s Copa alliance took almost 2years if negotiation, United will loan Avianca’s majority stakeholders $500 million to spent on ventures outside of the airlines.
Furthermore, United may end up collaboration with Colombian carriers, United is not investing in Copa or its affiliates. United already share 8% stake in Azul and has a code sharing agreement with Avianca Brazil, which was previously known as Ocean Air.
BlackRock which is world largest assets manager told that it had sold a stake in Azul preferred shares and kept 10% participation, shares in Azul sank almost 5% on Monday in Sao Paulo, before trimming losses around 3%.
If reports are to be believed the carrier also reveled that they are going to expand their business and make it double in size in coming five years.