Market Roundup: What would a merger between Gol and Azul look like?

Business opportunities between Gol and Azul

The Abra Group, the parent company controlling South American giant airlines Gol and Avianca, finally confirmed this week that it has opened conversations with Gol’s Brazilian competitor Azul to “explore” possible business “opportunities.” 

The announcement came after a flurry of reports about Azul potentially taking over Gol — which prompted a query from B3, the company that runs the São Paulo stock exchange. It also came days after the two Brazilian airlines announced a codeshare agreement.

Context. Gol filed for bankruptcy protection in the U.S. late in January, reporting debts amounting to more than BRL 20 billion (USD 3.84 billion). Almost two months later, Azul, which completed a broader restructuring in 2023, reportedly hired financial advisors to explore a possible takeover of Gol.

• “If Azul really is interested in buying Gol, it would have to negotiate with Abra Group, which in addition to being the controller, is also the airline’s largest creditor,” Ygor Bastos, an analyst at Genial Investimentos, tells The Brazilian Report.
• Among Brazil’s big three airlines, Gol is in the worst shape. Besides the BRL 20 billion in liabilities by the end of last year, the company posted a recurring net loss of BRL 130.2 million in Q1 2024.

Why it matters. It remains unclear what could result from all this “exploration” — an acquisition, a merger, or even a joint venture. One way or another, Gol and Azul have a combined 60 percent...