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 newsTweets

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 CEST

--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
08/18 JETBLUE AIRWAYS : Doubles Number of Daily Flights in Atlanta with New Nonstop Se..
08/18 JETBLUE AIRWAYS : Doubles Number of Daily Flights in Atlanta with New Nonstop Se..
08/18 JETBLUE : New Fort Lauderdale-to-Atlanta nonstop service to launch March 8
08/17 JETBLUE AIRWAYS : Orlando airport adding first JetBlue route to Atlanta
08/17 JETBLUE AIRWAYS : says crew members sickened by nail polish remover
08/17 JETBLUE : Doubles Number of Daily Flights in Atlanta with New Nonstop Service to..
08/16 JETBLUE AIRWAYS : The JetBlue Foundation and the Organization of Black Aerospace..
08/11 JETBLUE AIRWAYS : cuts short flight after crew members become ill
08/11 JETBLUE AIRWAYS : Strange odor prompts JetBlue flight from Boston to make emerge..
08/11 JETBLUE AIRWAYS : Sen. Schumer Urges JetBlue to Establish More Routes in Upstate..
More news
News from SeekingAlpha
08/17 UNITED CONTINENTAL : Pullback Play
08/11 U.S. air fares break higher in July
08/10 JetBlue updates on traffic, unit revenue
08/10 Are Investors Still Feeling The LUV?
08/09 The Hidden Side Of Airline Profits
Financials ($)
Sales 2017 7 102 M
EBIT 2017 1 163 M
Net income 2017 675 M
Debt 2017 972 M
Yield 2017 -
P/E ratio 2017 9,99
P/E ratio 2018 9,21
EV / Sales 2017 1,08x
EV / Sales 2018 0,98x
Capitalization 6 670 M
Chart JETBLUE AIRWAYS CORPORATIO
Duration : Period :
JetBlue Airways Corporatio Technical Analysis Chart | JBLU | US4771431016 | 4-Traders
Technical analysis trends JETBLUE AIRWAYS CORPORATIO
Short TermMid-TermLong Term
TrendsBearishNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 15
Average target price 26,1 $
Spread / Average Target 29%
EPS Revisions
Managers
NameTitle
Robin Hayes President, Chief Executive Officer & Director
Joel C. Peterson Chairman
Jeffrey L. Martin Executive Vice President-Operations
Stephen J. Priest Chief Financial Officer & Executive Vice President
Eash Sundaram Chief Information Officer & Executive VP
Sector and Competitors
1st jan.Capitalization (M$)
JETBLUE AIRWAYS CORPORATION-9.55%6 670
DELTA AIR LINES, INC.-3.37%34 984
RYANAIR HOLDINGS PLC28.95%26 055
UNITED CONTINENTAL HOLDINGS INC-11.16%19 699
AIR CHINA LTD.29.17%17 899
INTERNATIONAL CONSOLIDATED AIRLINES GROUP38.69%16 406