Abra, the holding company that controls Gol Linhas Aereas and Avianca, filed an appeal on Tuesday against Brazilian antitrust regulator Cade's approval of a deal between Azul and American Airlines. In July, Cade's General Superintendency approved without restrictions American's acquisition of a minority stake and certain governance rights in Azul.
Abra, which had been recognized as an interested third party in the case, asked Cade to review the decision. Through Gol, Abra competes directly with Azul, while at the same time maintaining a current and growing partnership with American Airlines.
Abra's objections
In its appeal, Abra rejected the General Superintendency's conclusion that its competitive concerns were essentially private in nature.
Abra said its concerns stem from the fact that American's proposed acquisition of a stake in Azul, along with significant influence and governance rights, would create shared forums, Azul's Strategic Committee and Board of Directors, in which two competing airlines, United Airlines and American Airlines, would sit together.
The company argued that the deal would let these forums be made up of two of the most significant competitors in scheduled air travel between Brazil and the United States, including through the direct participation of senior commercial executives from both airlines.
Abra said these forums could become a setting for decisions and interactions involving competitively sensitive information, as well as active discussions of commercial direction and strategic views on Brazil-U.S. air travel.
Abra said its role as an interested third party in the case was meant to protect free competition and the welfare of Brazilian consumers, not private interests.
The company said Cade's tribunal needed to address this analytical inconsistency and, in assessing the likelihood of market power resulting from the deal, should not treat United as an effective rival of the companies involved but instead as a player integrated into the arrangement.
Abra also noted that in February this year, when reviewing the deal between United and Azul, Cade's tribunal had already flagged competitive concerns about that transaction.
Details of the Azul-American deal
The transaction between Azul and American Airlines involves the American carrier acquiring a stake in the Brazilian airline.
American will hold a minority stake of approximately 8% of Azul's share capital, along with the right to appoint a representative to Azul's Board of Directors and Strategic Committee, with terms running until February 2028 and February 2029, respectively.
The companies notified antitrust authorities of the deal in early April, about two months after Cade's full tribunal approved an increase in United Airlines' minority stake in Azul, which rose from 2.02% to approximately 8%.
Azul's financial context
For Azul, the deal represents an opportunity to recapitalize the company, which emerged earlier this year from Chapter 11 bankruptcy protection proceedings in the United States.
