Azul intends to make a purchase offer for the entire LATAM group

The Brazilian airline’s CEO told a Chilean newspaper that he thinks it is unlikely that the rival will be able to approve the plan with its creditors

Azul, the airline founded by David Neeleman, intends to make an offer to buy LATAM, not just for the Brazilian division, but for the entire Chilean group.

The plan was revealed by the Wall Street Journal and confirmed by John Rodgerson, the company’s CEO, to the Chilean newspaper Diario Financiero.

In an interview published on Monday, the CEO was categorical in stating that he does not believe that LATAM will be able to reach an agreement with its creditors to remove it from “Chapter 11”, the judicial reorganization process to which the company joined in the US in the last year.

The newspaper published a photo of Rodgerson as David Neeleman, but the conversation indicates that it took place with the president of the Brazilian carrier.

Rodgerson explained the fact that Azul has not yet submitted a proposal to LATAM’s creditors. “Some have asked me where my plan is, why I haven’t filed it, but legally I can’t make an offer to the judge for now. That doesn’t mean we’re not interested ​​or that we won’t. It’s likely that Latam will continue to ask for extensions, but the exclusivity has a legal limit on November 23 and by that date they will definitely know more about our plan,” he said.

John Rodgerson credited as David Neeleman by Diario Financiero

Azul’s boss acknowledges having talked with some creditors and believes that the repeated requests for extensions made by LATAM’s management are a sign that they are not reaching an agreement with them – recently the company managed to extend the presentation of the plan to the US courts for November 26th.

John Rodgerson again insisted that consolidation is the best way out of falling demand. The company bets on its huge network with 130 destinations against 45 for LATAM as one of the reasons to believe in an improvement in connectivity. He cited the case of JetSmart’s deal with American Airlines and the potential merger between Sky and Avianca as positive examples.

LATAM Boeing 787 (LATAM)

In his view, the combination of the two companies’ operations would increase the group’s market value, creating synergies and enabling a better recovery for creditors. The president of Azul, however, denied that the proposal by the group as a whole is aimed only at keeping the Brazilian division (inherited from TAM) and selling the rest.

Azul also does not fear a possible reluctance by the Brazilian antitrust authority to approve a possible merger between the two companies. He recalled that LAN, when it bought TAM, had 85% of the Chilean aviation market and now faces competition from JetSmart and Sky.

LATAM issued the following statement at the request of the website:

“LATAM is not for sale and does not comment on Azul’s intentions.

The company is preparing to deliver its reorganization plan in the context of Chapter 11 and is expected to exit later this year, getting back on its feet with more efficiency and leaner costs in its domestic and international operations.”


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