Transport Airlines

Azul Orders New Jets from Airbus to Prepare for Expansion to U.S.

Apr 23, 2014 10:40 am

Skift Take

Even if it’s only one flight, the return of Neeleman to U.S. airports is significant enough to get rival execs looking over their shoulders.

— Jason Clampet

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Jáder Reis  / Flickr

One of Azul's Embraer jets. Jáder Reis / Flickr


Azul Linhas Aereas, Brazil’s third-biggest airline, is set to announce a fleet expansion on Wednesday including an order for its first wide-body aircraft from European planemaker Airbus, according to two people with knowledge of the deal.

The order vaults Azul, which is controlled by JetBlue Airways Corp founder David Neeleman, into the international market with long-range jets challenging regional heavyweight Latam Airlines Group SA.

Airbus and U.S. rival Boeing Co battle intensely for such orders. Airbus recently offered deep discounts on its wide-body A330 to tempt lower-cost airlines away from Boeing’s more modern 787 Dreamliner.

Airbus and Boeing officials declined to comment on the matter. Azul announced it would hold a press conference on Wednesday but offered no details of the announcement.

Missing out on a major deal from Brazil’s fastest-growing airline would be the second big blow to Boeing since December in a key emerging market where it has been ramping up its presence.

Swedish planemaker Saab AB snagged a coveted $4.5 billion fighter jet contract with Brazil’s air force at the end of last year after news of U.S. spying on Brazilians helped derail Boeing’s chances for the deal.

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The Azul order also highlights a surge in competition for Brazil’s more lucrative international routes as domestic passenger traffic growth has cooled after more than tripling since 2000.

The TAM division of Latam Airlines, Brazil’s biggest airline, and second-largest carrier Gol Linhas Aereas have both added flights overseas while cutting domestic routes as they lost billions of dollars in recent years.

American Airlines and other foreign airlines have also boosted flights to Brazil, which is set to host the soccer World Cup starting in June and the Summer Olympic Games in 2016.

Azul is taking on those global players just six years after founder Neeleman left JetBlue and started the low-cost Brazilian airline in the country of his birth.

A takeover of rival carrier Trip in 2012 helped Azul threaten the dominance of the traditional TAM-Gol duopoly in Brazil, and the upstart airline now carries 16 percent of domestic passengers.

Still, Azul currently flies only Franco-Italian ATR turboprops seating 50 to 70 passengers and larger regional jets made by Brazil’s Embraer SA with up to 120 seats.

Last year, the company announced plans for an initial public offering estimated at up to 1 billion reais ($445 million). Plans were frozen in August amid turbulent financial markets and questions from regulators about a proposed ownership structure that would keep Neeleman in control of the airline.

Azul continues to mull an IPO, the company’s head of communications, Gianfranco Beting, told Reuters late last year, adding that Azul was confronting its most adverse environment since it began flying in 2008.

($1 = 2.245 Brazilian reais) (Reporting by Tim Hepher and Brad Haynes; Editing by Lisa Shumaker and Miral Fahmy)

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