Azul sells stake to HNA Group

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By TESTCustomwebLP TESTCustomwebLP November 24, 2015 23:00

Azul sells stake to HNA Group

Azul Linhas Aéreas Brasileiras has sold a 23.7% stake to HNA Group for $450 million. The deal follows the airline raising $200 million from the Industrial and Commercial Bank of China in May 2015 to boost capital.

Azul also sold a 5% stake to United Airlines for $100 million in June. Plans are understood to be continuing for an initial public offering of the airline once market conditions improve, according to the airline.

HNA Group will assume the role of single largest shareholder of Azul, and will appoint new members to the board of directors.

Through the partnership, the companies will cooperate in the development of code sharing, new route development, and expand the loyalty participation programs.

This global partnership joins together two of the largest players in two of the fastest-growing aviation markets in the world. Azul is the largest airline in Brazil by number of cities served, offering more than 900 daily flights to more than 100 destinations. With a fleet of 145 aircraft Azul operates approximately one-third of the daily departures of the Brazilian aviation market. HNA Group owns the fourth largest airline group in terms of fleet size in the People’s Republic of China and operates a fleet of 561 aircrafts. It operates scheduled domestic and international service on more than 630 routes from locations throughout the People’s Republic of China and internationally.

Bravia Capital and UBS Investment Bank served as financial advisor to HNA Group. Seabury Securities, Seabury Group’s investment banking unit, served as financial advisor to Azul.

“HNA Group is committed to expanding in the airline industry through strategic investments in companies with strong market positions and excellent management teams. We are pleased to partner with Azul in order to bring more choice and convenience to our customers traveling to and from Brazil. We eagerly look forward to working with Azul founder David Neeleman and his team for the mutual benefit of both airlines,” said Adam Tan, President of HNA Group.

David Neeleman, CEO of Azul, said: “HNA Group sees in Azul a solid investment with high growth potential. The USD $450 million investment, considering Brazil’s current macroeconomic situation, demonstrates that we have a winning business model and that the HNA Group, as a large investor, has absolute confidence in Azul’s team. Moreover, this investment makes Azul the airline with the highest valuation in the Brazilian market, at more than R$ 7.0 billion.”

Bharat Bhise, CEO of Bravia Capital, said “China and Brazil are important trading partners, and Azul and HNA Group each have very strong positions as passenger carriers in their respective markets. Bravia is pleased to bring to HNA Group an opportunity for strategic expansion into the largest economy in Latin America.”

This is a great deal for Azul and gives the airline the time to wait-out the Latin American market’s hard times caused by currency movements. Azul is now reasonably well insulated should fuel prices increase (a remote possibility but nevertheless with war on the horizon surely fuel can only go one way from here). With the shareholders in place, any IPO should do well.

See the Azul finance team at Airline Economics Growth Frontiers Dublin 2016 in January and members on stage during our airline panel on 19th January.

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By TESTCustomwebLP TESTCustomwebLP November 24, 2015 23:00