The Administrative Council for Economic Defense (Cade) gave its approval on Wednesday (7) for the acquisition of a minority stake by American Airlines in Azul. This transaction involves an investment of US$ 100 million, which is equivalent to about R$ 530 million in the Brazilian company.
The acquired stake represents approximately 8% of Azul's share capital and is part of the financial restructuring process of the Brazilian airline, which is under Chapter 11 proceedings in the United States. However, the finalization of this decision is tied to the formalization and fulfillment of a Concentration Control Agreement (ACC).
Conditions to mitigate competition risks
This agreement provides safeguards intended to reduce potential competitive risks that could arise due to American Airlines' presence in Azul's governance and corporate structure. A crucial point of scrutiny is the possibility of exchanging strategic information regarding routes connecting Brazil and the United States.
Considering that American Airlines and Azul operate in the same international market, and given that the American company has corporate ties with other industry players, Cade assessed the risk that this minority stake could facilitate access to or exchange of sensitive data from a competitive standpoint.
As part of the protective measures, representatives of American Airlines must be prevented from participating in certain discussions whenever topics such as pricing, flight capacity, offers, or commercial strategies related to routes between the two countries are on the agenda. Furthermore, Azul must maintain a detailed record of the topics considered sensitive and the restrictions applied during meetings for future oversight purposes.
Initially, the operation had already received approval from Cade's technical department but was contested by Abra, which controls Gol and Avianca. The holding company's main concern related to American's governance rights in Azul and the danger of accessing strategic information in a market where the companies compete directly.
During its analysis, Cade focused on competition conditions on routes between Brazil and the United States. Data presented in the process shows that American Airlines, United Airlines, and Azul hold a significant combined share in certain connections. For example, on the São Paulo–Miami route, the three companies together account for between 50% and 70% of the market, according to data from Cade's General Superintendence. On the São Paulo–Orlando route, the joint participation varies between 30% and 50%, justifying the imposition of safeguards even with the investment approval.
Previous movements in the sector
American Airlines' entry follows another movement involving a U.S. airline. In February, the Cade Tribunal authorized the increase of United Airlines' stake in Azul, raising it from 2.02% to about 8%, also within the context of the Brazilian company's financial restructuring. This operation also involved an injection of US$ 100 million (approximately R$ 530 million).
With the approval of American Airlines' investment, two of the largest U.S. airlines now hold minority stakes in Azul. Although American Airlines had already committed to the US$ 100 million injection as part of the restructuring, the completion of the operation depended on the competitive clearance.
The decision made on Wednesday paves the way for the effective realization of this investment, provided that all conditions stipulated in the agreement with Cade are strictly observed.