ALTA: Azul and Trip step closer to merger

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Brazilian carriers Azul and Trip began codesharing in September, taking a key step towards completing a merger between the two airlines first unveiled six months ago.

The codeshare agreement will allow Azul and Trip to jointly offer more than 100 destinations to customers. Azul will market flights on both carriers, even though Trip will continue ticket sales through its existing channels. This comes as the two airlines move towards using Azul as the merged carrier's single brand. Trip's brand will be dropped but the merged carrier's new colour scheme will resemble Trip's.

The two carriers first announced intentions to merge in May, creating an airline with a 15% share of domestic passenger traffic in Brazil. The merger is still awaiting final approval from Brazilian authorities, but is expected by year-end.

Azul is already Brazil's third-largest carrier behind TAM and GOL. The merger will result in a holding company, Azul Trip SA, in which Azul will hold two-thirds of the shares and Trip the remainder. Azul founder David Neeleman will be chief executive of the new holding company.

The fast-growing carriers are both based in Campinas in Sao Paulo state, which will help to make the merger less complex. Azul and Trip also operate similar aircraft; the two airlines will operate a combined fleet of more than 115 Embraer regional jets and ATR turboprops by the end of the year.

Together they will have a combined network of more than 300 routes with over 830 daily flights. These represent at least 29% of total daily departures in Brazil, the carriers have said. The two airlines are expected to have combined revenues of more than R4 billion ($1.97 billion) by the end of 2012.

The carriers point to current networks overlapping in only 15% of the markets they serve, giving the combined carrier plenty of room to expand. On the radar are medium-sized cities and destinations that can be served more efficiently with their combined fleet.

"We have the right aircraft size for growth, which is coming from cities with limited air service. We have a fleet that goes up to a hundred-plus seats, and we are better sized for this," says Azul Trip director of branding, product and communications Gianfranco Beting.