Thu, Nov 26, 2015 - Page 15 News List

Brazilian airline Azul sells 23.7% stake to HNA Group

NY TIMES NEWS SERVICE, SAO PAULO, Brazil

JetBlue founder David Neeleman has turned to China to raise funds for his Brazilian airline Azul Linhas Aereas Brasileiras.

The airline on Tuesday announced that it had sold a 23.7 percent stake to HNA Group (海航集團) for US$450 million.

HNA — which earlier this year bought Swissport International for US$2.8 billion — owns China’s Hainan Airlines Co (海南航空). It is also active in hospitality, retail and financial services. It had about US$28 billion in revenue last year.

It is Azul’s second time turning to China for capital this year. In May, it raised US$200 million from the Industrial and Commercial Bank of China (ICBC, 中國工商銀行), and a company spokeswoman said that it planned to raise an additional US$200 million from Chinese banks before the end of the year.

Chinese companies might be ramping up their interest in Brazil. Petrobras signed a deal in May for US$10 billion in funding from the Chinese banks, then arranged another US$2 billion last month.

In addition, utility company China Three Gorges Corp (中國長江三峽集團) is expected to bid in a multibillion-dollar auction of electricity generation concessions scheduled for yesterday morning.

“We are seeing significant inbound acquisition opportunities into Brazil in recent months from Chinese entities and investors and expect this to continue as Chinese companies look to expand their influence around the globe,” said Shearman & Sterling partner Stuart Fleischmann, who acted for Azul on the HNA investment.

Azul is not just looking to China. The company also sold a 5 percent stake to United Airlines for US$100 million in June, and a spokeswoman on Tuesday said the company still plans to hold an initial public offering, already delayed three times, when market conditions improve.

Neeleman, an American born in Brazil while his father was a journalist there, founded Azul in 2008. The airline has received funding from private equity firms TPG Growth, Weston Presidio, Bozano, Fidelity, Zweig-DiMenna and Peterson Partners.

It has since grown to become Brazil’s third-largest airline, but after years of rapid growth in the sector, Brazil’s recession has finally started to take a toll on airline passenger transport, which in August started to decline.

However, Neeleman has been using Azul as a base to expand internationally.

The deal with HNA “might result in the company entering the Asian market through interline and code-share agreements,” Neeleman said in a statement.

Azul’s only current international destination is the US. It operates daily flights from Brazil to Orlando and Fort Lauderdale.

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