Hands-off! HNA Group has no intent of selling its stake in Brazil’s Azul

China’s HNA Group made big headlines in late 2015 when it declared plans to obtain a 24% stake in fast-growing Brazilian airline Azul, and for now the company has no intention of cashing in on its investment.


Summary:

  • China’s HNA Group has “no intention” of selling interest in Brazil’s Azul Airlines.
  • Azul pleased with investment in TAP Air Portugal.
  • TAP Air Portugal is the largest operator between Europe and Brazil, according to data from CAPA – Centre for Aviation.

At the time HNA decided to invest in Azul, it was the group’s largest airline acquisition by value, and the largest outside of China. HNA also become a member of the Atlantic Gateway consortium, which purchased 45% of TAP Portugal in 2016. Azul’s founder and chairman David Neeleman is Atlantic Gateway’s leader. He was also founder of US low cost hybrid airline jetBlue, and both Azul and jetBlue have commercial relationships with TAP.

Recently, Azul’s management explained HNA became an investor “during the crisis [Brazil’s economic downturn], when we needed it, and we are grateful to them”. HNA has two members that sit on the airline’s board.

“They [HNA] are very happy with their investment, actually the value has increased significantly since they made the investment”, said Azul. “Traditionally, they are long-term holders of companies, and they said they have no intention of selling any shares”.  

While HNA aims to hold onto its investment in Azul for the foreseeable future, “we do not need them on a day-to-say basis,” the airline stressed. However, Azul has a “good relationship” with HNA and views the group as “valuable members of our team going forward”.

Azul is also pleased with its investment in TAP. “Revenue is just booming over there big time” Azul concluded. Azul calculates it has handled more than 100,000 connecting passengers on TAP’s flights to Brazil. TAP is the largest operator between Europe and Brazil, according to data from CAPA.

The airline holds a 27% seat share between the two regions, followed by LATAM Airlines Brazil with a 15% share. Azul operates seven weekly flights from its Campinas hub to TAP’s hub in Lisbon. TAP has estimated it handled 65,000 customers from its codeshare with jetBlue between Jan-2017 and Jul-2017.

Azul acknowledges much work remains in restructuring TAP’s costs to catch up with airline’s revenue performance. “We are working close with the unions, and we are very pleased with what is going on at TAP”. Azul expects TAP to turn a profit in 2017, and grow profits in the years to come.