< Reveal sidebar

A TwoFlex C208B in São José do Rio Preto, Brazil. (Photo: Alex Pelicer)

Azul Signs Agreement to Acquire Major Commuter Airline in Brazil

Azul, Brazil’s third-largest airline, announced this Tuesday it reached an agreement with Two Táxi Aéreo, by which it acquires the latter in a transaction worth BRL123 million — equivalent to 29.761 million dollars in current values. The partnership is pending a further sale contract and regulatory approvals.

Two Táxi Aéreo, branded as TwoFlex, is one of the largest commuter operators in the country, with operations throughout all regions of Brazil. Although the company started up and grew by transporting cargo, it recently started to transport passengers in partnership with GOL.

Currently, the airline transports cargo and passengers to 39 regular destinations in Brazil, competing with Azul in only three domestic markets. TwoFlex’s fleet is composed solely of Cessna 208, with two units of the C208 Caravan and 14 of the 208B Grand Caravan, according to Aeromuseu.

In a press release, Azul’s CEO, John Rodgerson, stated that “the Cessna Caravans will be the most adequate way to reach smaller cities and communities. TwoFlex acquisition will help Azul to increase customers demand, for it will be able to take air service to places that are not served today.”

The airline’s most valuable asset, however, is arguably its 14 daily slots in São Paulo/Congonhas Airport, Brazil’s most premium airport, with huge slots restrictions and very rare slot distributions. Two’s slots are operated at Congonhas’ auxiliary runway, which is shorter.

News outlet Folha de São Paulo reports that Azul will try to use its ATRs 72-600 at TwoFlex’s slots in Congonhas, citing John Rodgerson. “Initially we will maintain the name TwoFlex, but the tendency is the brand changes its name [to Azul]. At first, we will maintain all routes of the airline,” told Rodgerson to Folha.

A TwoFlex C208B in São José do Rio Preto, Brazil. (Photo: Lucas Loreto | @aviacaosbsr)

The takeover of TwoFlex and therefore all its routes by Azul is also a huge loss for GOL, which has a partnership with the commuter carrier.

Multiple states in Brazil concede tax exemptions from the fuel to airlines that operate regional flights connecting smaller cities of the state.

What GOL does is use TwoFlex’s Cessnas to fly these flights while exclusively selling the tickets, so it can benefit from the tax exemptions. While GOL may make a loss by operating these flights, which mostly have very low load-factors, the tax discounts over the other flights surpass by far this small cost.

GOL currently does this operation with Two in seven different states, and Two’s sale to Azul means that GOL’s tax discounts over the fuel, which may make the difference between loss and profit, will end in such states. Rodgerson reported to Folha that Two’s partnership with the orange airline will be maintained for now, but should be revised soon.

Finally, the deal should help further strengthen Azul’s cargo branch, Azul Cargo Express, that is already experiencing a large growth with the airline’s fleet upgauge. “Some of TwoFlex’s aircrafts are 100 percent dedicated to cargo transport and this will help us in this segment,” Rodgerson told Folha de São Paulo.

After the announcement, Azul’s stock gains accelerated in both markets. At the NYSE, Azul ended the day up 1.57 percent, while at São Paulo’s BVMF the airline stock grew 1.53 percent.

João Machado
João Machado
Related Stories

Peruvian Government Announces Restart of Flights with a Duration Up to Eight Hours

The Peruvian President, Martín Vizcarra, announced on Oct. 21 in a press conference that international flights allowed to enter the…

Southwest Looks to Network Diversification in Third Quarter Results

On Oct. 22 Southwest Airlines announced the company’s third-quarter financial results. As expected the airline posted a large loss and…

Alaska Reports Traffic Jump in Third Quarter Results

Alaska Airlines joined American Airlines and Southwest Airlines in announcing their third-quarter financial results on Sept. 22. The Seattle-based carrier…