Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nasdaq  >  JetBlue Airways Corporation    JBLU

SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector news 

Azul, Trip To Merge As Rival Brazil Airlines Consolidate

share with twitter share with LinkedIn share with facebook
share via e-mail
0
05/29/2012 | 12:12am CET

--Azul Trip formed by tie-up of 3rd and 5th largest Brazil airlines

--Combined companies to have revenue of BRL4.2 billion in 2012

--Azul Trip see regional aviation continuing to drive growth as bigger rivals shrink

By Paulo Winterstein

Of

David Neeleman, founder of JetBlue Airways Corp. (>> JetBlue Airways Corporation), is expanding in Brazil, with the first major deal by his local start-up venture Azul Linhas Aereas, as he seeks a larger share of the world's fourth-largest aviation market.

Azul, Brazil's third-largest airline in the domestic market, unveiled plans Monday to merge with Trip Linhas Aereas SA, the fifth-largest airline, creating a company with nearly 15% market share and estimated revenues this year of 4.2 billion Brazilian reais ($2.1 billion). That puts it in a better position to go up against the industry's two dominant players, TAM SA (TAM, TAMM4.BR) and GOL Linhas Aereas Inteligentes SA (GOLL4.BR, GOL).

"There are some things we couldn't do without this association," Neeleman said, pointing to the extensive reach of Trip's routes. "It's better for Brazil than having two separate companies."

It is the latest merger in the Brazilian market, which has been through a number of evolutions since the collapse of the Brazilian flagship airline, Varig, some seven years ago. GOL, which took over the Varig operations in 2007, recently purchased a smaller rival, Webjet Linhas Aereas Economicas, putting it on a par in the domestic market with TAM. Both airlines have around 40% market share.

TAM, meanwhile, is in the final stages of merging with Chile's LAN SA (LFL, LAN.SN), which will create Latin America's largest airline.

Yet while its two biggest rivals have seen profitability decline, prompting cuts in service, Azul Trip executives see no reason to stop growing. According to civil-aviation agency Anac, while TAM flew 6% less in April than the year-earlier month, and Gol grew just 1%, Azul expanded operations by 41% and Trip flew 69% more passengers.

That is partly because both Azul and Trip focus on regional flights, using a fleet that is mostly made up of aircraft with fewer than 90 seats produced by Brazil's Embraer SA (ERJ, EMBR4.BR) and France's ATR. Smaller planes can land at airports the larger aircraft operated by TAM and GOL can't serve, and the new company is planning to keep adding to the fleet.

"We have more planes arriving in 2013, 2014 and 2015," said Neeleman, who, having been born in Brazil, got around restrictions on foreign ownership of Brazilian airlines. "We think there will be lots of passengers to put on those planes."

For analysts, the merger could help rein in the overeager expansion of routes in Brazil. In the midst of competition between carriers, supply expanded too quickly last year, leaving many seats empty and pulling down returns.

"The consolidation process can bring more discipline," UBS analyst Victor Mizusaki wrote in a note. Azul may also be able to help Trip, which saw profitability decline over the past year, he said.

Azul's shareholders will own two-thirds of the new company, while Trip's owners will own the other one-third. The airlines plan to merge operations once they secure regulatory approvals, but are still studying whether to extinguish one of the brands.

Neeleman also discarded the possibility of an initial public offering in the near term. Though the eventual goal is to list the airline's shares, current investors are "patient" and "have deep pockets," so there is no urgent need for cash, Neeleman said.

The deal with Azul also ends Trip's talks with other potential partners. TAM had agreed last year to buy a 31% stake in Trip, but that agreement expired in January; Trip also recently bought back a 26% stake it had sold to SkyWest Inc. (SKYW), Caprioli said.

-By Paulo Winterstein, Dow Jones Newswires; 55-11-3544-7073;

paulo.winterstein@dowjones.com

Stocks mentioned in the article : JetBlue Airways Corporation
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on JETBLUE AIRWAYS CORPORATIO
12/09 JETBLUE AIRWAYS : News Digest DOT 153-16
12/08 2016-2017 Airline Food Study
12/08 JETBLUE AIRWAYS : Launches in Havana - Its 100th Destination - on Historic First..
12/08 JETBLUE AIRWAYS : to Webcast Investor Day Presentation
12/07 JETBLUE AIRWAYS : Mother settles JetBlue lawsuit after son flown to wrong city
12/07 JETBLUE AIRWAYS : Mother settles JetBlue lawsuit after son flown to wrong city
12/06 JETBLUE AIRWAYS : Phoenix opens first phase of modernized Sky Harbor terminal
12/05 JETBLUE : Offers Customers Generous Program to Earn TrueBlue Loyalty Points for ..
12/05 JETBLUE : Remains at the Top for LGBT Workplace Equality
12/02 HENNESSY ADVISORS : Today, Hennessy Advisors Inc. Sold Shares of Jetblue Airways..
More news
Sector news : Airlines - NEC
12/09 AMERICAN AIRLINES : raises fourth-quarter unit revenue forecast
12/09 DEUTSCHE LUFTHANSA : German pilots to resume talks with Lufthansa, strikes on ho..
12/08DJPostelection Rally Lifts Stocks to New Heights
12/07DJAlaska Air to Settle Consumer Lawsuit Opposing Merger
12/05 DEUTSCHE LUFTHANSA : Lufthansa pilots to decide on new pay offer next week
More sector news : Airlines - NEC
News from SeekingAlpha
12/09 Airline stocks lifted by American unit revenue forecast
12/09 WALL STREET BREAKFAST : South Korea Opens New Chapter Of Uncertainty
12/09 Will airplane mode be a thing of the past?
12/08 Alaska Airlines Now Faces Competitive, Financial, Regulatory Challenges
12/07 Airline stocks catch a bid
Advertisement
Financials ($)
Sales 2016 6 605 M
EBIT 2016 1 283 M
Net income 2016 726 M
Debt 2016 999 M
Yield 2016 -
P/E ratio 2016 10,26
P/E ratio 2017 11,13
EV / Sales 2016 1,22x
EV / Sales 2017 1,10x
Capitalization 7 090 M
More Financials
Chart JETBLUE AIRWAYS CORPORATIO
Duration : Period :
JetBlue Airways Corporatio Technical Analysis Chart | JBLU | US4771431016 | 4-Traders
Full-screen chart
Technical analysis trends JETBLUE AIRWAYS C...
Short TermMid-TermLong Term
TrendsBullishBullishNeutral
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 23,3 $
Spread / Average Target 6,4%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Robin Hayes President, Chief Executive Officer & Director
Joel C. Peterson Chairman
Jeffrey Martin Executive Vice President-Operations
James E. Leddy Chief Financial Officer
Eash Sundaram Chief Information Officer & Executive VP
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
JETBLUE AIRWAYS CORPOR..-3.62%7 090
DELTA AIR LINES, INC.1.30%38 778
UNITED CONTINENTAL HOL..31.19%23 850
RYANAIR HOLDINGS PLC-1.75%19 087
AIR CHINA LTD.-11.42%12 428
INTERNATIONAL CONSOLID..-27.70%11 715
More Results