United Airlines plans to invest about $100 million in Azul, creating the foundation for a new strategic partnership between the carriers.

Chicago-based United will take a 5% stake in the Brazilian carrier, which it plans to forge a deep codeshare and frequent flier alliance with, they say in a joint announcement today. The deal is subject to regulatory and board approval.

“Brazil is an important market in United’s global route network and this partnership with Azul further strengthens our ties to the region,” says Jim Compton, vice-chairman and chief revenue officer of United, in a statement.

David Neeleman, founder and chief executive of Azul, adds: “Through this partnership, Brazilians will have access to destinations in United’s worldwide route network, while US customers will be able to fly conveniently to famous destinations in Brazil such as Belo Horizonte, Iguazu Falls and the Amazon.”

Under the new agreement, United will initially place its code on Azul’s flights in Brazil from Sao Paulo Guarulhos International airport as well as on its flights to Florida from 1 October. Azul will place its code on United flights throughout North America and the Caribbean.

The codeshare will build on the interline agreement that Azul and United signed in January 2014.

Asked whether the carriers plan to form an immunised joint venture between Brazil and the USA once open-skies is implemented on 1 October, United says they will “explore” the possibility once the open-skies regime is in place.

Azul and United may offer their customers additional connecting points in the near future. The Brazilian carrier has plans to add New York City service in the future and could consider using Newark Liberty International airport – a major United hub – as its gateway to the region.

In addition, United asked the US Department of Transportation on 22 June to allow it to delay the use of seven US-Brazil frequencies that it holds to “examine market opportunities”. United could use these frequencies to launch service from one of its hubs – Houston Intercontinental is its primary gateway to Latin America – to Azul’s main hub at Viracopos Campinas International airport before open skies is fully implemented.

United says that it has immediate plans to change its schedules to Brazil. It serves Rio de Janeiro Galeao from Houston and Sao Paulo Guarulhos from Chicago O'Hare, Houston, Newark and Washington Dulles.

Azul and United will also offer their frequent fliers reciprocal earning and redemption benefits under their new partnership.

The news of the partnership comes a day after Star Alliance chief Mark Schwab said that the alliance was “in discussions with a second airline in Brazil” – widely understood to be Azul – regarding membership.

United is a founding member of Star.

The partnership also fills the gap in United's global partner network left by TAM when it moved to the Oneworld Alliance from Star in March 2014.

United’s investment is not unprecedented. Delta Air Lines invested $100 million in Gol in 2011 and has since formed a close codeshare partnership with the carrier.

Source: Cirium Dashboard