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2019 Brazilian Airlines in Review: What Will 2020 Bring?

An overview of Congonhas, Brazil’s most premium airport. (Photo: Thiago Trevisan | @trevisan26_aviation)

2019 was a hectic year for the Brazilian aviation industry, with plenty of ups and downs. Even though the economy is doing good, with the country steadily recovering from the largest recession in its history, Brazilian airlines have faced several challenges this year.

Each company faced its very own arduous conditions. However, all of them could count on a crucial tailwind; the Brazilian economy is back to a sustainable path, which heats the demand after years of continued struggles.

Brazil’s economic background in 2019

The year started with a new administration, led by President Jair Bolsonaro. While he accumulated several controversies on multiple occasions, the economic performance of Brazil has been one of the highlights of his office in 2019, taking momentum from the reforms of the previous government.

Bolsonaro and the National Congress finally passed the Pensions Reform, which is set to contain the public debt trajectory in the years to come. In a no-reform scenario, Brazil would be a few years away from insolvency. The Reform, in this sense, brought confidence to investors and to the markets, which will prove beneficial to the air transportation demand in the country.

Brazil has finally recovered from the 2015 recession. The GDP is set to grow 1.17 percent this year and 2.30 in 2020, according to the latest Focus research. However, even though the confidence is at a high, several factors kept the Brazilian currency – the Real – devaluated, which is negative not just for the international demand (Brazilian travelers tend to travel abroad less when the dollar is expensive), but also for the airlines, with most of its costs dollarized.

Avianca Brasil

Despite the positive economic trend, 2019 started with a serious crisis at Brazil’s fourth-largest carrier, Avianca Brasil – which, although sharing the brand with the Colombian airline, is a separate entity with common shareholders. In December 2018, after defaulting payments to lessors, a judge determined the repossession of 14 aircraft – about 30 percent of its fleet – to its owners.

To protect itself from the repossession, Avianca Brasil requested entering the “judicial recovery” process, similar to the Chapter 11 process in the U.S. However, the point of no-return was already past, and from then on, the airline quickly disintegrated in a domino effect.

Avianca was the only Airbus A318 operator in Brazil. (Photo: AirlineGeeks | João Machado)

Various interests were at stake. Avianca owned a reasonable number of slots in São Paulo’s high-profile Congonhas Airport, used by corporate passengers, which were superbly valuable given Congonhas’ huge slots restrictions.

Elliott Management hedge fund, by a large margin Avianca’s largest creditor, proposed the airline’s assets (six parts with slots and one with the airline’s Amigo frequent-flyer program) were divided into seven and auctioned thereafter.

Azul, on the other hand, presented an offer to buy most of Avianca Brasil’s assets, including the Congonhas slots. Elliott, Gol and LATAM were opposed to Azul’s proposal, which was dismissed twice – even when they increased the bid.

In the end, Avianca’s downfall was quick. On May 24, Brazil’s National Agency of Civil Aviation determined that Avianca Brasil paralyzed all its operations.

Although an auction was conducted later in the year, Anac determined the slots in Congonhas should be distributed – selling slots is illegal in Brazil, and the auction was considered virtually a selling. Azul took most of the slots, with regional carriers Passaredo, MAP and TWOflex taking the rest.

An Avianca Brasil Airbus A320 taxiing in Porto Alegre. (Photo: AirlineGeeks | João Machado)

Avianca Brasil never came back to operating since Anac’s decision in May, and although its bankruptcy was denied some weeks ago, it is very unlikely that it will ever see the skies again. Most of its fleet now operates for Azul and LATAM Brasil.

Generally, Avianca Brasil’s downfall brought some relief to other airlines in Brazil. The overcapacity Avianca offered brought fares down, overall reducing margins and caused a headache for Gol and LATAM, which were the airlines who directly competed with the deceased company.


Overall, this was a year for Azul to remember. It has grown significantly, benefitting from its fleet upgauging strategy. 19 Airbus A320neo were delivered to the airline, more than doubling the new-generation narrowbody fleet.

Their upgauge strategy is simple: new A320neos are allocated on routes where the Embraer 190/195-E1 is not efficient and for that reason lack profitability. The A320neo CASM (cost per seat per mile) is 29 percent lower than the CASM of the E195, the overall cost per flight being only 5 percent higher. The Airbus can also carry 56 more passengers – 174 versus 118.

An Azul A320neo landing in Porto Alegre. (Photo: AirlineGeeks | João Machado)

Add the increased cargo capacity to this equation and what Azul has in hand is a cash cow. The airline is able to increase capacity while dramatically reducing relative costs, boosting the rest of its hub-and-spoke network each time it adds an Airbus to its fleet. In every opportunity, the airline executives stressed the effects of the A320neo.

Also this year, Azul’s first A321neo of an order of 13 arrived in Brazil. The A321, with 214 seats — 40 more than the A320 — should further reduce Azul’s unit costs on select, high-density routes, mostly connecting the Southern half of Brazil to the Northern half of the country.

Although increasing capacity made up the bulk of Azul’s strategy in 2019, the lower capacity of the Embraer is still a very valuable asset for Azul. To fill this gap, this year the airline received its first next-generation Embraer E195-E2, a considerable leap in comparison to the E1.

The E2 CASM is close to that of the A320neo, the aircraft having 136 seats compared to the E195-E1’s 118. Because of the increased number of seats the overall trip cost is 14 percent lower, while the CASM is 26 percent reduced.

Azul’s new Embraer E195-E2, PR-PJN. (Photo: AirlineGeeks | João Machado)

According to Azul, the E2 strategy is very straightforward: to replace the non-efficient E195-E1s. At first, most of the E2 flights are high-demand, high-frequency, corporate routes linking Azul’s hubs in Viracopos and Belo Horizonte (Confins) to state capitals and other major cities.

Routes flown by Azul’s E2 in the week between Dec. 26, 2019 and Jan. 1, 2020. Charter operations not included. (Photo: AirlineGeeks | João Machado, created with Great Circle Mapper)

For margins to grow quickly, Azul has a very aggressive replacement plan, hoping to have no E1s by 2023. Currently, the airline operates 55 first-generation Embraers, according to Airfleets. As of Jan. 1st, 2020, Azul has four operative E195-E2.

Another big news for Azul this year was the launch of its “Ponte Aérea” operations connecting Rio de Janeiro (Santos Dumont) and São Paulo (Congonhas) airports, after obtaining the Congonhas slots from Avianca Brasil. The airline now connects both cities around 16 times a day, being the “Ponte Aérea” the most prestige route in the country.

On the international operations side, Azul is known for its conservative approach, preventing overcapacity and trying not to emulate the mistakes that ultimately led to Avianca Brasil’s folding. However, in 2019 Azul started a shy but sensible international expansion.

Azul took delivery of its first A330-900neo from an order of five in May, also bringing in an A330-200 from Avianca Brasil. It increased some of its long-haul flights and also launched two new long-haul routes, one connecting its hub in Campinas to Porto, Portugal, the other from the Belo Horizonte/Confins hub to Fort Lauderdale. For 2020, the airline expects to launch a new long-haul destination.

2019 ended with Azul’s capacity growing about 23 percent in the domestic market and around 12 percent in the domestic operations, according to the latest forecasts. In 2020, Azul hopes to keep the momentum going, benefitting from the good macroeconomic scenario and a more rationalized capacity in the Brazilian market.

Azul’s fleet projections for the years to come, extracted from an investor’s presentation in Oct. 2019. “A330” includes the A330neo. (Photo: Azul)

A major happening at the airline set to happen in 2020 is the joint-ventures with international carriers. In 2019, the airline signed an agreement with TAP Air Portugal, set to take effect this year. The airline has also confirmed it is in discussions with Avianca, Copa Airlines and United Airlines about entering the joint-venture outlined by the three companies.


What could have been a nightmare year to GOL because of the 737 MAX grounding turned into a solid one, at least in financial terms. GOL benefitted from the positive economic trend of Brazil and also of Avianca Brasil’s folding to strongly improve its operational results.

A GOL 737-800 landing in Porto Alegre. (Photo: AirlineGeeks | João Machado)

Most third quarter financial metrics have improved in comparison to the same period of 2019. RPK (revenue pax per kilometer) has been up 12.8 percent, while the operating profit has grown 186.7 percent to 691.9 million reais – 171.88 million dollars as of January 2, 2019.

Revenue with passengers, in turn, has grown 29.5 percent to 3.501 billion reais — 869.73 million dollars — and RASK (revenue per seat per kilometer) is up 19.2 percent to 27.67 real cents — 6.9 dollar cents.

These solid results must be put into perspective; it was not long ago that GOL was accumulating huge losses quarter after quarter. A huge restructuring process took place, aiming at the corporate passenger, and these changes starting paying off just recently.

Not for nothing, GOL registered the biggest growth in corporate sales this year, further increasing its leadership. According to Abracorp, the Brazilian agency of corporate travel agencies, GOL’s corporate sales to its associates in the third quarter counted up to 452.3 million reais (112.37 million dollars), a growth of 22.5 percent, while Azul grew 19 percent and LATAM Brasil grew 14.9.

All these numbers get even more impressive when the 737 MAX 8 grounding is considered. The MAX CASM is about 15 percent lower than that of the 737NG, so at a time with no grounding, GOL’s operational performance could be even better. At the time of the grounding, GOL had seven new-generation 737s, which meant about 5.8 percent of the fleet stopped operations.

A GOL 737 MAX at Paine Field (Photo: AirlineGeeks | Katie Bailey)

The 737 MAX was especially important on GOL’s international growth. Flights connecting its hubs in Brasília and Fortaleza to Florida, the flight from Brasília to Cancún, Mexico, as well as the flight from Guarulhos to Quito, Ecuador, all needed the MAX to operate.

Operated by the 737-800NG, now the flights to Florida need a refueling stop in Punta Cana, the operation to Cancún needs to stop in Manaus and the flight to Quito has severe performance restrictions, given Quito’s high altitude.

GOL’s international routes operated by the 737 MAX 8 before the grounding. (Photo: AirlineGeeks | João Machado, created with Great Circle Mapper)
GOL’s international routes which needed the 737 MAX 8, after the grounding of the MAX, now have performance restrictions. (Photo: AirlineGeeks | João Machado, created with Great Circle Mapper)

To address this issue and comply with its 2019 capacity plan, GOL rushed and leased 737NGs from various sources — according to Airfleets, 17 737-800s and a 737-700 were brought after the grounding.

In 2019, GOL also started flights to six new regional destinations – all already served by Azul. GOL also partnered with two regional operators – Passaredo and TwoFlex – to connect its network to smaller destinations, hinting an attack on Azul’s gold mine: its exclusive, regional destinations.

GOL’s new regional destinations in 2019, all served from Guarulhos. (Photo by AirlineGeeks | João Machado, created with Great Circle Mapper)

In a way or another, 2020 for GOL should be overall a satisfying year financially, despite the continued issues with the 737 MAX; the last forecast, published on the third-quarter results presentation, says GOL will have 32 MAXs by the end of the year, while starting a slow phase-out of the 737NGs.

GOL’s fleet plan for the following years. (Photo: GOL)

Another story to watch this year is GOL’s negotiations with the U.S. airlines, after Delta ended its partnership due to the shocking announcement it was engaging in a long-term plan with LATAM. Sources stated the airline is in talks with American Airlines and United Airlines.

The trend suggests American would be the perfect fit, since AA also ended up without a South American partner after the LATAM-Delta news, and because United has already strong links with Azul. Nevertheless, the developments of these negotiations will be interesting to watch in 2020.

LATAM Brasil

2019 started looking like a weak year for LATAM Brasil. According to Abracorp data, during the last few years the airline lost the edge in the corporate market, falling from first place in corporate market share to third place, being overtaken by GOL and even Azul.

A LATAM Brasil A350 landing in São Paulo (Guarulhos). (Photo: AirlineGeeks | João Machado)

However, LATAM did not stand still and used this year to heavily invest in regaining the trust of the corporate passengers, both by improving efficiency and improving the overall passenger experience.

Over the course of 2019, LATAM in Brazil shifted its network strategy, creating more point-to-point connections, after years of boosting its hubs and cutting direct flights. However, at the same time, these new flights did not weaken the capacity of the hubs.

This strategy translated into a considerable increase in capacity of about 9.8 percent in the third quarter when compared to the same period of 2018. Additionally, the RASK grew impressive 22.7 percent in the same time frame, to 7.4 dollar cents. These figures were also boosted by Avianca Brasil’s crisis since they competed directly on many routes.

A LATAM Brasil A321 rockets out of Porto Alegre. Almost four years after the official rebranding, many aircraft still sport the LAN and TAM brands. (Photo: AirlineGeeks | João Machado)

LATAM Brasil’s international growth that took place in recent years, on the other hand, was contained. The flight from São Paulo to Rome was canceled and sales for the new operation between São Paulo and Munich were stopped before the flight commenced. Overall, LATAM Airlines Group’s international capacity in 2019 was expected to grow a mere 2 percent, as of the last forecast.

The airline mentioned it identified an excess of capacity on the Brazil-Europe market, also spotting a bad pricing environment in the Brazil-U.S. market, which led to these capacity adjustments.

Apart from the network changes, in 2019 LATAM Brasil invested millions of dollars on revamping both its short-haul and long-haul cabins, adding comfort and convenience for passengers.

Overall, the new cabins on international aircraft are being replaced in a fast pace. The 777-300s previously had a Jurassic 2-3-2 configuration with angled seats, mostly avoided by passengers. LATAM’s new configuration puts the 777 product on par with the competition, with all-aisle access 1-2-1, lie-flat seats.

New Premium Business seats in LATAM’s 777-300. (Photo: AirlineGeeks | João Machado)

Likewise, the domestic product is being changed, with new leather seats on the A320 family, which also puts the short-haul fleet parallel to the competition.

Finally, the domestic onboard service, which was fully buy-on-board, was abruptly interrupted in August. While LATAM plans what it will offer in the future – most likely to be a mixed paid and free service, as GOL currently does – it is offering a courtesy service of soft drinks and a snack. On select, premium routes, LATAM already started offering “LATAM Primetime” service, with hot appetizers and even beer during the happy hour frame time.

A LATAM Brasil A320 landing in São Paulo (Congonhas). (Photo: AirlineGeeks | João Machado)

Another important happening in 2019 was the consolidation of LATAM’s frequent-flyer programs: Multiplus/LATAM Fidelidade, from the TAM years, and LATAM Pass, from LAN, consolidated into a single brand, LATAM Pass, with 38 million members.

As 2019 approached its end, Delta Air Lines dropped shocking news: it would buy a 20 percent stake in LATAM Airlines Group. This means a long process of integration will follow for the next years, and that will potentially be LATAM’s mantra on the news in 2020. It was already announced that LATAM will leave oneworld alliance on Oct. 1st, 2020 while it drifts away from its then-partner American Airlines in order to get closer to Delta.

Bottom Line

Overall, 2019 was an intense year in Brazil’s commercial aviation. While losing an airline is always upsetting, the competitors quickly absorbed the demand. Indeed, the quick capacity drop allowed Azul, LATAM and GOL to improve their pricing and thus financial health, an important positive externality from such a negative loss.

With Brazil’s steady recovery and a rational capacity environment, 2020 has it all to be an even better year for the three airlines. Azul further increasing its fleet efficiency, GOL hoping to have the MAX back, strongly improving its cost structure and LATAM consolidating its strategy to bring back the corporate traveler while starting to benefit from the Delta partnership.

João Machado


  • João Machado

    João has loved aviation since he was six-years-old when he started visiting his home airport in Porto Alegre, southern Brazil. As he always loved writing, in 2011, at age 10 he started his very own aviation blog. Many things have happened since then, and now he is putting all his efforts into being an airline executive in the future.

    View all posts

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