In a recent Reuters interview, Brazil's ports and airports minister highlighted the potential benefits of a merger between Brazilian airlines Gol and Azul. Silvio Costa Filho emphasized the move as crucial for strengthening the aviation sector and ensuring job security. The merger aims to create a leading carrier in Latin America's biggest economy, with a projected 60% domestic market share, surpassing LATAM Airlines.
Concerns have been raised regarding competition and airfare costs, with remarks from LATAM's Brazil head Jerome Cadier signaling the need for stringent antitrust measures. While some industry experts like Gesner Oliveira caution against reduced competition impacting consumers negatively, Costa Filho stressed the merger as a vital step towards financial stability, job preservation, improved credit accessibility, and enhanced connectivity.
The aviation industry in Latin America has been grappling with financial challenges exacerbated by the COVID-19 crisis. Gol and Azul have faced their own financial hurdles, with Gol undergoing bankruptcy reorganization and Azul restructuring obligations for equity. Despite concerns over potential price impacts, Costa Filho expressed confidence that a careful regulatory review process overseen by CADE and other stakeholders would ensure mutual benefits for the airlines and consumers.
With a possible conclusion by early 2026, both airlines are advocating for the merger, focusing on volume-driven profitability rather than price hikes. Government support for the merger, including President Luiz Inacio Lula da Silva's endorsement, underscores the importance of preserving a vital airline in the country. JPMorgan analysts view the merger favorably, citing the minimal network overlap between Azul and Gol as a positive factor despite their significant domestic market share.