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MarketScreener Homepage  >  Equities  >  Nyse  >  Azul SA (ADR)    AZUL

AZUL SA (ADR)

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Brazil lower house votes to allow foreign airlines in domestic market

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05/21/2019 | 09:28pm EDT
FILE PHOTO: People are seen at the check in area in Guarulhos international airport, near Sao Paulo

BRASILIA (Reuters) - Brazil's lower house of Congress voted on Tuesday to allow foreign-controlled airlines to operate domestic flights in Latin America's largest economy, opening the door to more competition in an increasingly concentrated market.

The chamber approved the original text of a decree issued by former President Michel Temer in December that removed the 20% limit on foreign ownership of Brazilian airlines.

However, debates continued into the night, with voting scheduled to tweak the final language of the bill that will be sent to the Senate. The upper chamber is expected to pass the measure, which would then go into effect immediately.

The removal of the restriction could lure a foreign carrier eager to jumpstart its presence in the domestic market, or open the door for foreign airlines to dramatically increase their existing stakes in the big three Brazilian carriers.

Air travel within Brazil has become more concentrated, with three carriers now controlling 92% of the flights, according to the civil aviation regulator ANAC.

Brazil's No. 4 airline, Avianca Brasil, has lost market share in recent weeks as it gave up all but six of its planes during a court-run bankruptcy reorganization.

Avianca Brasil's crisis has set off an intense fight over who will inherit the carrier's routes, including a profitable shuttle between Sao Paulo and Rio de Janeiro.

So far, Brazil's three largest airlines - Gol Linhas Aereas Inteligentes SA, LATAM Airlines Group and Azul SA - have fought for the routes.

A foreign player could potentially bid on Avianca Brasil's routes at an upcoming auction — which Brazil's antitrust regulator CADE has already called the best outcome.

Currently, Delta Air Lines Inc owns 9.4% of Gol, the leader in domestic flights in Brazil. Qatar Airways owns 10% of LATAM, Brazil's No. 2 domestic airline. United Airlines owns 8% of third-place Azul.

Spanish airline company Globalia, best known for its Air Europa brand, is "exploring" operating in Brazil, according to the agenda of a meeting to be held by ANAC on Wednesday. On Saturday, Brazil's infrastructure minister said the company would create a subsidiary in Brazil.

Adriana Simoes, a Brazilian aviation lawyer with the Mattos Filho law firm, said the approval was "excellent news" that had been long awaited by the industry. But foreign investors, she said, were still awaiting more clarity on how the law would be implemented.

(Reporting by Maria Carolina Marcello and Anthony Boadle in Brasilia; Additional reporting by Marcelo Rochabrun in Sao Paulo; Editing by Brad Haynes and Leslie Adler)

By Maria Carolina Marcello and Anthony Boadle

Stocks mentioned in the article
ChangeLast1st jan.
AZUL SA (ADR) 2.19% 35 Delayed Quote.23.69%
DELTA AIR LINES INC. 0.65% 56.03 Delayed Quote.11.56%
EURO / BRAZILIAN REAL (EUR/BRL) 0.17% 4.3212 Delayed Quote.-1.67%
GOL LINHAS AEREAS INTELIGENTES SA 3.06% 31.95 End-of-day quote.23.51%
LATAM AIRLINES GROUP SA End-of-day quote.
UNITED CONTINENTAL HOLDINGS INC 0.73% 87.4 Delayed Quote.3.63%
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Financials ($)
Sales 2019 2 854 M
EBIT 2019 487 M
Net income 2019 240 M
Debt 2019 1 907 M
Yield 2019 -
P/E ratio 2019 16,13
P/E ratio 2020 11,92
EV / Sales 2019 1,96x
EV / Sales 2020 1,53x
Capitalization 3 684 M
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Mean consensus OUTPERFORM
Number of Analysts 7
Average target price 35,8 $
Spread / Average Target 6,8%
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Managers
NameTitle
John Peter Rodgerson Chief Executive Officer
David Gary Neeleman Chairman
Alexandre Wagner Malfitani Chief Financial Officer
José Mário Caprioli dos Santos Director & Institutional Relations Officer
Sérgio Eraldo de Salles Pinto Independent Director
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