Airlines Strategy
GOL and Azul Merger Talks Collapse Amid Bankruptcy and Regulatory Challenges
GOL and Azul end merger talks due to Azul’s bankruptcy and regulatory hurdles, impacting Brazil’s aviation market consolidation.
The recent termination of merger discussions between Brazil’s two major Airlines, GOL and Azul, marks a pivotal moment in South America’s aviation sector. On September 25, 2025, Abra Group, GOL’s controlling shareholder, officially ended talks for a potential business combination with Azul Linhas Aéreas Brasileiras. The decision was attributed primarily to Azul’s ongoing focus on its Chapter 11 bankruptcy proceedings. This move concludes what could have been a transformative merger, potentially creating Brazil’s largest airline group and reshaping the competitive dynamics of Latin American aviation.
The collapse of these talks highlights the intricate interplay of financial distress, regulatory scrutiny, and strategic challenges within Brazil’s airline industry. As three carriers currently control virtually the entire domestic market, the failed merger raises broader questions about consolidation strategies in emerging markets, particularly when both parties are facing significant financial headwinds and close regulatory oversight. This article examines the events leading up to the merger’s collapse, the financial and regulatory factors at play, and the implications for Brazil’s aviation sector moving forward.
Merger discussions between GOL and Azul began in January 2025, when both airlines signed a non-binding Memorandum of Understanding. This agreement outlined a framework for creating Brazil’s dominant aviation entity, a merger driven more by necessity than by traditional growth ambitions. Unlike typical consolidations where a stronger carrier absorbs a weaker one, this proposed merger involved two airlines of similar scale, both navigating a challenging operating environment.
The plan was for both airlines to retain their distinct operational identities, including separate Air Operating Certificates and brands. Industry analysis suggested that about 90% of their combined route networks were complementary, not overlapping, indicating potential for network synergies without extensive duplication. Had the merger proceeded, the combined group would have commanded over 61% of Brazil’s domestic market share, serving a population of 220 million and handling approximately 110 million annual domestic flights.
Azul CEO John Rodgerson promoted the merger as a way to strengthen Brazil’s aviation sector, expand service to over 200 cities, and enhance nationwide connectivity. The combined fleet would have comprised 327 Commercial-Aircraft, surpassing LATAM Airlines Brasil’s 163 aircraft. The timing of these discussions coincided with major financial challenges for both airlines, GOL had entered Chapter 11 bankruptcy protection in early 2024, while Azul was facing its own liquidity constraints, leading to its Chapter 11 filing in May 2025. Thus, the merger was seen as a “merger of necessity,” reflecting the severity of Brazil’s airline operating environment.
“The merger was fundamentally driven by survival instincts rather than traditional growth strategies, reflecting the challenging operating environment both airlines faced in Brazil’s competitive but concentrated market.”
Financial distress was central to both the initiation and ultimate termination of the merger talks. GOL reported a net loss of R$1.42 billion ($258 million) for May 2025, with a negative EBITDA of R$650 million and debt obligations totaling R$30.7 billion ($5.58 billion). Despite these challenges, GOL completed its Chapter 11 restructuring by June 2025, securing $1.9 billion in exit financing and improving its liquidity position to around $900 million. The restructuring included converting up to $1.6 billion of pre-restructuring debt and extinguishing up to $850 million of other obligations.
Azul’s financial picture was even more complex. The airline filed for Chapter 11 bankruptcy protection in May 2025, aiming to eliminate over $2 billion in debt and rationalize its fleet. Azul, despite maintaining R$1.6 billion in liquidity, faced approximately R$30 billion in total debt. Its Chapter 11 process included $1.6 billion in debtor-in-possession financing and up to $300 million in potential equity investments from major U.S. carriers. The restructuring required extensive negotiations with bondholders, lessors, and strategic partners, consuming management resources and attention.
This divergence in financial restructuring timelines led to a misalignment of priorities. While GOL emerged from Chapter 11 and shifted focus to operational recovery, Azul was still deeply engaged in its own restructuring process. This misalignment was a primary reason for the merger’s collapse, as Azul’s management was unable to prioritize merger discussions amidst ongoing bankruptcy proceedings. Brazil’s regulatory landscape, particularly the role of the competition authority CADE, presented significant hurdles for the merger. The combined airline would have controlled 61.4% of the domestic market, raising concerns about market concentration and potential anticompetitive effects. CADE had already intervened to block a codeshare agreement between GOL and Azul in May 2024, citing risks of “market division and cartel behavior.”
Historical context is important: CADE’s previous analysis of airline mergers, such as GOL’s acquisition of Webjet and Azul’s merger with Trip, resulted in increased seat availability but also regulatory conditions to mitigate anticompetitive risks. The scale of the GOL-Azul merger would have required even more significant remedies. Additionally, CADE had investigated the three major airlines in 2019 for potential algorithmic pricing coordination, ultimately finding no explicit collusion but highlighting the risks of tacit coordination in a concentrated market.
CADE’s vigilance reflects broader concerns about consumer welfare in a market where three carriers control nearly all domestic capacity. While the agency found no evidence of unlawful concerted practices, it noted that average ticket prices had been rising, attributing this trend to high market concentration. The Regulations environment thus remains a formidable barrier to future consolidation attempts.
“CADE’s concerns about airline consolidation were not theoretical but grounded in practical experience with previous airline partnerships and mergers.”
Brazil’s domestic aviation market is highly concentrated, with LATAM, GOL, and Azul collectively controlling virtually all capacity and passenger traffic. As of 2024, LATAM held 38% of seats, GOL 32%, and Azul 30%. This oligopolistic structure creates unique competitive dynamics, including high-frequency service on major routes like São Paulo–Rio de Janeiro, which operates 51 daily flights on average, among the highest in the world.
Despite the concentration, the market has shown resilience. In 2024, Brazil transported 93.4 million passengers, a 2.2% increase over 2023, though still below pre-pandemic levels. In May 2025, domestic demand surged by 18.3%, resulting in a record 8.2 million boardings. However, Brazil’s propensity to fly remains low at 0.5 trips per capita annually, compared to 2.5 in the U.S., suggesting both economic constraints and growth potential.
The financial challenges facing all three carriers, particularly GOL and Azul, have implications for service levels and market growth. While LATAM maintains the strongest position, the recent restructurings of GOL and Azul introduce uncertainty into long-term competitive dynamics. The sector’s development will depend on how each airline leverages its strengths and navigates ongoing financial and regulatory pressures.
Chapter 11 bankruptcy proceedings fundamentally altered the strategic priorities of both GOL and Azul. Azul’s filing in May 2025 shifted its focus to internal restructuring, with management attention directed toward negotiations with creditors and lessors. The airline secured $1.6 billion in debtor-in-possession financing and equity commitments up to $950 million, but also undertook significant fleet rationalization, including returning several aircraft to lessors.
The governance implications of Chapter 11 were significant. Upon emerging from bankruptcy, Azul’s creditors were expected to own a majority of the equity, altering the company’s ownership and decision-making structure. This would have complicated any merger integration, as terms would need to be renegotiated to reflect the new balance of power. GOL, having completed its restructuring earlier, was ready to pursue growth initiatives, but the timing mismatch with Azul’s ongoing process made a merger unfeasible. Both airlines were forced to maintain normal operations during restructuring, but uncertainty around fleet and route networks posed challenges for long-term planning. The simultaneous termination of their codeshare agreement eliminated even limited cooperation.
With the merger off the table, Brazil’s aviation sector remains dominated by three major carriers. Both GOL and Azul have emerged from bankruptcy with improved liquidity and deleveraged balance sheets, but the structural challenges that led to their financial distress, high costs, intense competition, and regulatory hurdles, persist. GOL plans to expand its fleet from 138 to 167 aircraft by 2029 and projects annual net revenue between R$22.1 billion and R$22.7 billion for 2025, reflecting confidence in market recovery.
Azul’s post-restructuring strategy has yet to be fully detailed, but its strength in serving regional markets and smaller cities may provide a competitive edge. Regulatory scrutiny will remain intense, with CADE likely to continue blocking any moves perceived as reducing competition. International Partnerships, such as Azul’s potential equity investments from United Airlines and American Airlines, may offer alternative growth paths that avoid domestic antitrust concerns.
Brazil’s aviation sector is showing signs of robust demand growth, with domestic passenger traffic reaching record highs in May 2025. Market forecasts suggest continued expansion, driven by rising demand, infrastructure investments, and fleet modernization. The competitive landscape may evolve through organic growth rather than consolidation, with each carrier pursuing its own strategic positioning. Environmental Sustainability and technology investments are also expected to shape the sector’s future trajectory.
“The market’s demonstrated resilience, evidenced by record-breaking passenger numbers in May 2025, provides a foundation for optimism about long-term prospects.”
The termination of merger talks between GOL and Azul underscores the complexities of airline consolidation in emerging markets. The collapse was primarily due to the timing misalignment created by Azul’s Chapter 11 proceedings, which diverted management attention and resources away from merger negotiations. This episode highlights the importance of financial stability and regulatory compliance in executing major strategic transactions within the aviation industry.
Going forward, Brazil’s aviation sector will continue to grapple with high operational costs, regulatory scrutiny, and concentrated market dynamics. Both GOL and Azul have emerged from bankruptcy with stronger balance sheets, but the underlying industry challenges remain. The sector’s future will likely be shaped by organic growth, technological innovation, and evolving regulatory frameworks, rather than further consolidation. The resilience shown in recent passenger traffic growth offers hope for a more stable and competitive aviation market in Brazil.
Why did the GOL-Azul merger talks collapse? What would the merger have meant for Brazil’s aviation market? How did Chapter 11 bankruptcy impact both airlines? What is the current structure of Brazil’s aviation market? What are the prospects for future mergers in Brazil’s airline industry?
GOL-Azul Merger Collapse: Analysis of Brazil’s Airline Consolidation Challenges and Market Implications
Background on the Merger Discussions
Financial Challenges Driving the Decision
Regulatory Environment and Market Concentration Concerns
Current Market Structure and Competitive Landscape
Impact of Chapter 11 Proceedings on Strategic Planning
Future Outlook for Brazil’s Aviation Sector
Conclusion
FAQ
The talks collapsed primarily because Azul was focused on its Chapter 11 bankruptcy proceedings, preventing meaningful progress on merger discussions. Regulatory concerns and timing misalignments also played significant roles.
The merger would have created Brazil’s largest airline group, controlling over 61% of the domestic market. This raised concerns about market concentration and potential anticompetitive effects.
Both GOL and Azul used Chapter 11 restructuring to address significant debt burdens and liquidity issues. GOL completed its process earlier, while Azul’s ongoing restructuring diverted management attention from merger talks.
The market is highly concentrated, with LATAM, GOL, and Azul controlling nearly all domestic capacity. This oligopolistic structure creates unique competitive dynamics and regulatory challenges.
Given strong regulatory scrutiny and high market concentration, future mergers are likely to face significant hurdles. Organic growth and international partnerships may be more viable paths forward.
Sources
Photo Credit: Aviacionline
Airlines Strategy
CADE Approves United Airlines $100M Investment in Azul Brazilian Airlines
Brazil’s CADE approves United Airlines’ $100 million investment in Azul, increasing its stake to 8% with antitrust safeguards amid Azul’s restructuring.
This article summarizes reporting by Investing.com and official regulatory filings from CADE and Azul S.A.
Brazil’s antitrust authority, the Administrative Council for Economic Defense (CADE), has granted final approval for United Airlines to invest $100 million in Azul Brazilian Airlines. The decision, handed down on February 11, 2026, clears a major regulatory hurdle for the Brazilian carrier as it navigates the final stages of its Chapter 11 financial restructuring.
According to regulatory filings and reporting by Investing.com, the transaction will increase United Airlines’ equity stake in Azul from approximately 2% to roughly 8%. This capital investment serves as a “strategic anchor” for Azul’s broader plan to raise up to $950 million in new equity and eliminate over $2 billion in debt.
The approval comes with strict conditions designed to preserve competition in the Latin American aviation market, specifically addressing United’s simultaneous interests in other regional carriers.
The path to approval faced a temporary suspension in January 2026 following a challenge by the consumer advocacy group IPSConsumo (Institute for Research and Studies of Society and Consumption). The group raised concerns regarding United Airlines’ minority stakes in both Azul and the Abra Group, the parent company of Azul’s primary domestic rival, Gol.
To resolve these concerns, CADE’s tribunal conditioned its unanimous approval on the establishment of a rigorous “Antitrust Protocol.” As detailed in the regulatory decision, this protocol is designed to prevent the exchange of competitively sensitive information between United, Azul, and other carriers in United’s investment portfolio.
Key governance measures include:
This investment is a critical component of Azul’s recovery strategy following its Chapter 11 bankruptcy filing in the United States in May 2025. The airline has been working to restructure its balance sheet and secure long-term viability through debt reduction and fresh capital.
To facilitate the $100 million investment and the broader equity raise, Azul launched a primary public offering of common shares and American Depositary Shares. Due to the massive volume of new shares required for the restructuring, numbering in the trillions, shareholders approved a reverse stock split at a ratio of 75:1 to normalize the share price and count. According to the timeline outlined in Azul’s “Material Fact” disclosure, the financial settlement for the share offering is scheduled for February 20, 2026. This settlement is expected to pave the way for Azul to exit Chapter 11 protection shortly thereafter.
United Airlines’ increased stake reinforces its strategy of maintaining a strong footprint in Latin America through minority investments rather than full mergers. By holding stakes in Avianca, Copa Airlines, and now a larger portion of Azul, United secures traffic feeds into its U.S. hubs while mitigating the operational risks associated with cross-border acquisitions.
While United has secured regulatory clearance, a similar $100 million investment commitment from American Airlines remains in the pipeline. Reports indicate that American’s deal has not yet been submitted to CADE. Azul’s strategy appears to prioritize finalizing the United transaction first to avoid complicating the antitrust analysis, with the American Airlines review likely to follow.
The approval by CADE signals a pragmatic approach by Brazilian regulators: allowing foreign capital to stabilize domestic carriers while enforcing strict behavioral remedies to protect competition. For United, this is a low-risk consolidation play. By securing an 8% stake, they ensure Azul remains a loyal partner in the Star Alliance ecosystem (or at least a non-aligned partner favoring United) without the headache of managing a Brazilian subsidiary. The “Antitrust Protocol” is a standard remedy, but its effectiveness will depend on rigorous internal compliance, especially given the complex web of ownership involving the Abra Group.
When will the United Airlines investment be finalized? Does this give United Airlines control over Azul? Why was the deal challenged? Sources: Investing.com
Regulatory Approval and Antitrust Protocols
The “Antitrust Protocol”
Financial Restructuring Context
Share Offering and Settlement
Strategic Implications for Latin America
American Airlines’ Pending Investment
AirPro News Analysis
FAQ
The financial settlement is scheduled for February 20, 2026.
No. CADE explicitly stated that this deal does not transfer control. United’s stake will increase to approximately 8%, and strict protocols prevent them from influencing competitive strategy vis-à-vis rivals like Gol.
A consumer group feared that United’s investments in both Azul and Gol’s parent company (Abra Group) could lead to anti-competitive information sharing. CADE resolved this by mandating an antitrust protocol.
Photo Credit: Montage
Airlines Strategy
JetBlue and United Launch Sales Integration in Blue Sky Partnership
JetBlue and United Airlines begin sales integration allowing booking across both platforms with loyalty points and cash, expanding connectivity in 2026.
This article is based on an official press release from JetBlue.
On February 10, 2026, JetBlue and United Airlines officially activated the sales integration phase of their strategic “Blue Sky” partnership. According to a joint announcement from the carriers, customers can now book flights operated by either airline directly through the other’s website or mobile app. This development marks a significant milestone in the agreement first announced in May 2025, designed to enhance connectivity in the Northeast and offer reciprocal loyalty benefits.
The launch allows travelers to utilize cash, JetBlue TrueBlue points, or United MileagePlus miles to book eligible flights across both networks. While the partnership deepens the commercial ties between the two major U.S. carriers, the airlines emphasized that this is a strategic interline agreement rather than a merger or a traditional codeshare, allowing both entities to maintain independent pricing and marketing operations.
The core feature of this rollout is the ability to access United’s global network via JetBlue’s digital storefronts and vice versa. For example, a customer can now log into JetBlue.com to book a United Airlines flight to an international destination using TrueBlue points. Similarly, United customers can book JetBlue’s domestic flights through United.com.
In a statement regarding the launch, JetBlue President Marty St. George highlighted the value for loyalty members:
“This move gives our members even more ability to earn and redeem points to exciting destinations around the world, while United customers gain access to JetBlue’s network across the Americas and Europe.”
Andrew Nocella, Chief Commercial Officer at United, echoed these sentiments, noting that the milestone provides customers with “more choice, flexibility and a better overall booking experience.”
While the integration significantly streamlines the booking process, the airlines clarified that the current system functions as a reciprocal storefront. As of the February 10 launch, customers cannot yet book a “mixed itinerary”, such as an outbound flight on United and a return flight on JetBlue, on a single ticket. The carriers have indicated that single-ticket mixed itineraries are planned for a future update.
The “Blue Sky” partnership is being rolled out in distinct phases. Following the activation of loyalty reciprocity in October 2025 and the current sales integration, the airlines have outlined the following upcoming milestones: This partnership represents a critical strategic pivot for both airlines in the wake of recent regulatory shifts. For JetBlue, the “Blue Sky” agreement offers a lifeline for global connectivity following the dissolution of the Northeast Alliance (NEA) with American Airlines and the blocked merger with Spirit Airlines. By partnering with United, JetBlue gains virtual access to a massive long-haul international network without the capital expenditure required for widebody fleet expansion.
For United Airlines, the deal signifies a calculated return to JFK, a key market the carrier exited in 2015. This re-entry allows United to compete more aggressively with Delta Air Lines in the New York City area without the heavy cost of acquiring new infrastructure from scratch. By structuring the deal as an interline agreement, where flight numbers remain distinct and pricing remains independent, the carriers appear to be navigating the regulatory landscape carefully to avoid the antitrust hurdles that dismantled previous alliances.
Is the “Blue Sky” partnership a merger?
No. This is a strategic interline agreement. Both JetBlue and United remain independent companies with separate operations, crews, and pricing structures.
Can I use my United miles to book a JetBlue flight?
Yes. As of February 10, 2026, you can use United MileagePlus miles to book eligible JetBlue flights via United’s website or app. Conversely, you can use JetBlue TrueBlue points to book United flights.
Do I get elite benefits like free bags or upgrades yet?
Not yet. Reciprocal elite benefits for Mosaic and Premier members, such as priority boarding and preferred seating, are scheduled to launch in Spring 2026.
Why can’t I book a flight that connects from United to JetBlue? Currently, the system allows you to book a pure United itinerary on JetBlue’s site or vice versa. “Mixed itineraries” involving connections between the two airlines on a single ticket are planned for a future update.
Sources: JetBlue Press Release
JetBlue and United Airlines Launch Sales Integration in “Blue Sky” Partnership
A New Standard for Interline Booking
Current Functionality and Limitations
Strategic Roadmap and Future Phases
AirPro News Analysis: The Strategic Pivot
Frequently Asked Questions
Photo Credit: JetBlue
Airlines Strategy
Sabre and WestJet Renew Partnership to Advance Airline Retail Tech
Sabre and WestJet extend their partnership, maintaining SabreSonic while preparing for AI-driven Offer and Order retailing with SabreMosaic.
This article is based on an official press release from Sabre Corporation.
Sabre Corporation and WestJet Airlines have officially announced a multi-year renewal of their long-standing technology partnership. The agreement ensures WestJet’s continued use of the SabreSonic Passenger Service System (PSS) while laying the groundwork for a transition to modern “Offer and Order” retailing through Sabre’s AI-driven SabreMosaic platform.
According to the press release issued today, this renewal extends a relationship that has spanned more than 25 years. The deal is critical for WestJet as it seeks to maintain operational stability through the SabreSonic system,which manages reservations, ticketing, and check-in,while simultaneously upgrading its IT infrastructure to support personalized, e-commerce-style selling.
For Sabre, the agreement represents a significant vote of confidence in its strategic pivot toward modular, cloud-native technology. As the airline industry moves away from legacy ticketing standards, technology providers are racing to offer solutions that allow carriers to bundle flights, ancillaries, and third-party services into single, dynamic offers.
The core of the renewed agreement focuses on two distinct but complementary technology tracks: maintaining current operations and preparing for future retail models.
WestJet will continue to rely on the SabreSonic PSS as the backbone of its daily operations. This system handles the essential logistics of airline management, including inventory control, passenger reservations, and departure control. By renewing this component, WestJet ensures continuity for its fleet of nearly 200 aircraft and its expanding network focused on Western Canada and leisure destinations.
A key highlight of the announcement is WestJet’s commitment to utilizing SabreMosaic. This platform is designed to facilitate the industry-wide shift toward “Offer and Order” retailing. Unlike traditional systems that rely on static pricing and fragmented records (such as separate tickets and miscellaneous documents for baggage), SabreMosaic utilizes artificial intelligence to create personalized bundles for travelers.
In the company statement, WestJet Chief Information Officer Tanya Foster emphasized the forward-looking nature of the deal: “We’re delighted to extend our collaboration with Sabre, our trusted technology partner for more than 25 years. With this latest agreement, we’re thinking about the needs of our business and our customers both today and tomorrow.”
The partnership renewal comes at a time when the global aviation industry is undergoing a massive digital transformation. The International Air Transport Association (IATA) has set a goal for the industry to transition to “Offer and Order” systems by 2030. This shift aims to replace decades-old EDIFACT standards with modern digital retailing similar to Amazon or other e-commerce giants.
Under the new model, the concept of a “Passenger Name Record” (PNR) and an “Electronic Ticket” is replaced by a single “Order.” This unification allows airlines to:
Darren Rickey, SVP of Airline IT Sales and Services at Sabre, noted the strategic importance of this shift for WestJet:
“As WestJet advances its expansion and growth plans, the airline will require increasingly sophisticated retailing capabilities… This multi-year renewal reflects a strong vote of confidence in Sabre’s vision for the future of airline retailing.”
This renewal reinforces the financial stability of Sabre Corporation (NASDAQ: SABR) as it executes its turnaround strategy. According to Sabre’s Q3 2025 financial results, the company reported revenue of $715 million and an Adjusted EBITDA of $141 million, signaling improved operational efficiency. The company has been aggressively paying down debt and investing in SabreMosaic to compete with rivals like Amadeus in the next-generation technology space.
For WestJet, the deal supports its strategic refocus on affordability and efficiency. As a private company owned by Onex Corporation, WestJet has concentrated its efforts on dominating the Western Canadian market and expanding its leisure offerings. The efficiency gains promised by Sabre’s technology are essential for maintaining the low cost base required for this business model.
The renewal between Sabre and WestJet is more than a standard contract extension; it serves as a bellwether for the adoption of “Offer and Order” technology among mid-sized carriers. While global giants like Lufthansa have led early experimentation with modern retailing, WestJet’s commitment indicates that the technology is maturing enough for broader market adoption.
Furthermore, this deal validates Sabre’s heavy R&D investment in the SabreMosaic platform. Securing a long-term commitment from a major North-American carrier helps Sabre demonstrate market viability to other potential customers who may be hesitant to migrate away from legacy systems. It suggests that a “hybrid” approach,keeping the lights on with legacy PSS while experimenting with modular retailing tools,is the likely path forward for most airlines over the next five years.
What is a Passenger Service System (PSS)? What is “Offer and Order”? How long have Sabre and WestJet been partners?
Sabre and WestJet Renew Technology Partnership to Drive Retail Modernization
Bridging Legacy Operations and Future Retailing
The SabreSonic Foundation
Transitioning to SabreMosaic
Industry Context: The Shift to Offer and Order
Financial and Strategic Implications
AirPro News Analysis
Frequently Asked Questions
A PSS is the central IT system for an airline, managing critical functions such as flight schedules, ticket reservations, and passenger check-in.
It is a modern retailing standard where airlines dynamically create offers (bundles of flights and services) and manage them as a single order record, replacing the complex web of legacy tickets and reservation codes.
The companies have partnered since 1998, a relationship spanning over 25 years.
Sources
Photo Credit: Westjet
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