HNA to buy 23.7% stake in Brazil’s Azul for $450m

China Daily (Canada) - - LIFE - ByWANGWEN wang­wen@chi­nadaily.com.cn

Chi­nese con­glom­er­ate HNA Group is ex­pand­ing its global foot­print by ac­quir­ing a 23.7 per­cent stake in Azul Brazil­ian Air­lines, the third­largest car­rier in Brazil, for $450 mil­lion.

Fol­low­ing the stake deal, HNA will be­come the largest share­holder in Azul and also have a seat on the board of the Brazil­ian car­rier. The two sides will co­op­er­ate on flights, new routes and fre­quent flyer plans in the fu­ture, ac­cord­ing to a state­ment fromHNA.

Azul has 145 air­craft fly­ing to more than 100 des­ti­na­tions in Brazil and the United States.

“With this trans­ac­tion, Azul has be­come the high­est­car­rier in Brazil, at about 7 bil­lion reais ($1.89 bil­lion),” said David Neele­man, Azul’s chief ex­ec­u­tive, who is also founder of Jetblue, a ma­jor low-cost car­rier in the US.

Neele­man, who founded Azul in 2008, said the deal will ben­e­fit the car­rier in var­i­ous ways, such as im­proved cap­i­tal flow, a con­tin­ued re­newal of its fleet, and bet­ter prod­ucts and ser­vices for clients.

The Chi­nese con­glom­er­ate de­cided to in­vest in Azul as it is con­vinced about the long-term po­ten­tial of the car­rier, he said.

In ad­di­tion, it also eases pres­sure on the Brazil­ian com­pany to raise cap­i­tal through a pub­lic float, said Neele­man, adding that the car­rier had de­ferred listing plans in New York and Sao Paulo sev­eral times since 2013.

Tan Xiang­dong, pres­i­dent of HNA, said: “HNA is work­ing on ex­pand­ing its busi­ness in the avi­a­tion sec­tor and is in­vest­ing in pow­er­ful com­pa­nies glob­ally.”

The huge pas­sen­ger flows be­tween China and Brazil, which are strong trad­ing part­ners, also played a sig­nif­i­cant role in fa­cil­i­tat­ing the trans­ac­tion, said the state­ment.

China has

With this trans­ac­tion, Azul has be­come the high­est-val­ued car­rier in Brazil...”

been

Brazil’s largest trad­ing part­ner for years and in the first half of 2015, bi­lat­eral trade reached about $34.24 bil­lion.

But there are no direct flights from China to Brazil yet due to the long dis­tance in­volved, and most Chi­nese trav­el­ers trans­fer via Europe or the US.

Hainan Air­lines, the sub­sidiary of HNA Group, is ramp­ing up ef­forts to ex­pand its net­work in the US and Europe and its in­ter­na­tional net­work could ex­tend to South Amer­ica through the stake deal, some an­a­lysts said.

Li Lei, deputy di­rec­tor of Minzu Se­cu­ri­ties Co Ltd, said South Amer­ica is still vir­gin ter­ri­tory for most Chi­nese car­ri­ers, but that the co­op­er­a­tion be­tween HNA and Azul will help both sides save on fleet main­te­nance costs, as they are clients of Brazil­ian air­craft maker Em­braer SA.

HNA has al­ready showed its am­bi­tion in the global avi­a­tion mar­ket with sev­eral ini­tia­tives.

It set up AfricaWorld Air­lines in Ghana with some other in­vestors in 2012 and ac­quired a 48 per­cent stake in Aigle Azur in France in 2012.

It is also a share­holder of Co­mairhe in South Africa and myCARGO Air­lines in Tur­key.

Chen Wenli, vice-pres­i­dent of HNA, said: “HNA will be­come a to­tal in­vestor in the fu­ture and look for suit­able tar­gets for its var­i­ous busi­ness units, such as avi­a­tion, tourism, lo­gis­tics and fi­nance.”

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