John Peter Rodgerson, CEO of Azul (AZUL4), emphasizes consolidation as important for addressing challenges confronted by Latin American airways.
He defined in an interview with Bloomberg that merging operations can scale back capital prices and improve customer support.
The CEO didn’t touch upon present merger and acquisition actions. Studies counsel Azul is exploring a merger with Gol, with ongoing negotiations involving Gol’s controlling shareholder.
Because the pandemic, Latin American airways have struggled considerably resulting from minimal authorities help.
In 2020, Avianca Holdings SA, Latam Airways Group SA, and Grupo Aeromexico SAB filed for chapter.
Azul Eyes Mergers to Revive Latin American Airways. (Picture Web copy)
In late January, Brazilian airline Gol sought creditor safety after quite a few debt exchanges.
Rodgerson met with Brazilian President Luiz Inácio Lula da Silva to debate a plan utilizing public funds as collateral for loans, offering monetary reduction to airways.
The federal government understands the need of debt reduction and is actively engaged on an answer that’s anticipated inside a couple of months.
The CEO highlighted that decrease capital prices for credit score would allow cheaper fares and the acquisition of extra plane. These points are essential in discussions with the Brazilian authorities.
Regardless of challenges, Rodgerson reaffirmed Azul’s EBITDA forecast for the 12 months. Brazilian airways face obstacles resembling forex devaluation, rising gasoline prices, and devastating floods in southern Brazil.
Azul’s Challenges and Monetary Outlook
The state of Rio Grande do Sul, which accounts for about 8% of Azul’s community, has two-thirds of its operations offline resulting from heavy rains.
These rains have brought about at the least 140 deaths. Porto Alegre’s airport stays submerged, with no set reopening date.
Azul’s revenue earlier than sure gadgets is anticipated to succeed in roughly R$6.5 billion (US$1.3 billion) in 2024, a 25% enhance from final 12 months.
The corporate’s internet debt is projected to lower to about 3 times EBITDA from the present 3.7 instances over the previous 12 months.
Azul plans to repay a $68 million bond maturing within the fourth quarter with money.
Rodgerson famous that the airline is twice the dimensions it was earlier than the pandemic by way of income. Though Azul has extra debt, it’s a a lot bigger airline right this moment.
This strategic deal with consolidation and monetary stability underscores Azul’s efforts to navigate the complicated panorama of the Latin American aviation trade.
