This Week’s Featured Link
CEO de Azul al todo o nada por Latam Airlines: “Si compramos nos quedaremos con todo el grupo, no solo con Brasil” – Diario Financiero
If you don’t speak Spanish, fear not, that’s what Google Translate is for. But in short, Azul is now gunning to take over all of LATAM, not just the Brazilian part. It says it has a plan it will submit to creditors when the exclusivity period ends. That should be happening on November 23… in theory. (Actually, update, looks like it’s November 26. Either way… it’s gonna be interesting.)
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Two for the Road
U.S. Senate panel plans airline oversight hearing after worker cuts – Reuters
If I had any faith that Congress could get anything done, this would be a good sign that action was coming. But there won’t be any, so… nothing to see here.
New airline aha! to offer flights from Palm Springs to Reno starting next year – Desert Sun
This is an interesting gamble. There is a growing local population in the Palm Springs area but I find it hard to believe they’d provide much demand for a trip to Reno. Instead, this looks to be the first attempt to do something that’s more for the Reno traveler. Flights leave Reno in the morning with a mid-day return.
Your read into this latest move by aha! makes a lot of sense. And the timing is such that they clearly have people looking for warm weather in mind as opposed to skiers from PSP headed north. As an aside, what’s aha!’s ad campaign going to be like? Allow me to suggest a tagline of “Take On Me” with the passenger being turned into a cartoon as they’re pulled into the plane. :)
My understanding is that both Palm Springs & Reno have some very nice golf courses, resorts, seasonal homes, and events, in addition to the local markets, so I could see how there could be some potential demand for travel between the two… There’s also the difference in climate between the two areas, and the interest in ski/summer trips.
Given that aha! is only putting 150 seats per week in each direction between the two cities, I could see how this route would be worth trying, and it will be interesting to see how successful it is.
I read about Azul’s desire to take over LATAM a few days ago. The proposal raises a number of questions. I wonder if Brazilian regulators really want one airline to have a 70% share of that country’s capacity. Even if there are required divestitures, does the Brazilian government really want to create an airline duopoly? Then there are Chilean regulators who recently approved the LATAM/Delta joint venture. I seriously doubt Delta wants to be frozen out of Brazil, especially considering its investment in LATAM. I also wonder where United fits in, as it has a relationship with Azul. I have no inside information on the dynamics of the Brazilian or South American aviation market, of course. But, playing Captain Obvious (even though what seems obvious could be wrong), I’m pretty sure an Azul/LATAM merger would create a dominant airline in much of South America, which is what Chilean regulators feared with an American/LATAM hookup.
The other interesting angle that someone on Twitter raised (Robert Mann maybe?): win or lose, Azul wins. If they win, they’re the dominant carrier. If they don’t, they’ve bid up the price for LATAM, burdening LATAM with more debt that they’ll have to pay off, and distracted LATAM while they try to both recover from the pandemic and get out of bankruptcy. Presumably a quick “heck no” signal from regulators could derail Azul’s bid and save LATAM, but LAN + TAM wasn’t that long ago and the regulators allowed that.
Question for someone who knows the market better: is this even a good idea for Azul? They’ve got their VCP hub, lots of point to point, would it even make sense for them to take on LATAM’s network that’s built around GRU/BSB?
I don’t know how bankruptcy courts work in Brazil, but the high bidder doesn’t always win in bankruptcy (or even out of it for that matter). I offer the case of the Milwaukee Road, which was purchased out of bankruptcy by the second high bidder, The Soo Line (which was owned by the Canadian Pacific). The judge ruled that the high bidder, the Chicago and North Western, would be burdened by the purchase price it offered (the C&NW wasn’t in good financial shape itself at the time). In a more recent example, The Canadian Pacific is now in the process of buying (via a merger) the Kansas City Southern. The Surface Transportation Board ruled that rival bidder, Canadian National, couldn’t set up a trust to merge with KCS, even though it made a higher offer than Canadian Pacific. There are other dynamics at work here, but it goes to show that the high bid doesn’t always win when dealing with regulators. For an airline example, look no further than US Airways’ attempt to merge with Delta during the latter’s bankruptcy (yes, the “Perfect Airline” was bankrupt in the not-too-distant past). That attempt failed (which was a good thing, by the way, as that merger would have been a disaster IMHO) in spite of the extremely high price US Airways offered.