Discussions regarding a potential merger between Brazil's Azul Linhas Aéreas and GOL Linhas Aéreas Inteligentes have concluded without an agreement, according to a securities filing by Azul on September 25, 2025. This decision also marks the end of a codeshare agreement between the two major Brazilian airlines, initially announced in May 2024.
The termination of these talks signals a clear strategic divergence for both carriers. Azul will now focus on its financial restructuring efforts, while GOL, through its controlling shareholder Abra Group, had indicated willingness to continue discussions.
Key Takeaways
- Azul and GOL officially ended merger talks on September 25, 2025.
- The codeshare agreement between the two airlines has also been discontinued.
- All tickets booked under the codeshare will still be honored by the airlines.
- Azul is prioritizing its financial restructuring after emerging from Chapter 11.
- The proposed merger would have created Brazil's largest domestic airline.
Merger Plans Abandoned
The non-binding agreement for a possible merger was first signed on January 15, 2025. If the merger had proceeded, it would have created a dominant airline in the Latin American market.
Combined, Azul and GOL would have operated a fleet of approximately 330 aircraft. This mega-carrier would have served nearly 300 domestic and international destinations. Such a merger would have concentrated roughly 75% of Brazil's domestic airline capacity between just two carriers, likely attracting significant attention from regulatory bodies.
Background on Merger Talks
The initial discussions between Azul and GOL aimed to explore the creation of a larger, more integrated airline entity. The goal was to consolidate market share and potentially achieve operational efficiencies.
However, the complexities involved, particularly with Azul's ongoing financial restructuring, proved to be significant hurdles. The non-binding nature of the initial agreement allowed both parties to withdraw without penalty.
Codeshare Agreement Ends
In addition to the merger talks, Azul and GOL confirmed the termination of their codeshare agreement. This agreement, disclosed on May 23, 2024, allowed passengers to book flights on one airline and connect seamlessly with the other.
The end of this partnership means travelers will no longer be able to purchase a single ticket combining flights from both Azul and GOL. Both airlines have assured customers that all tickets already issued under the codeshare agreement will be honored, ensuring no immediate disruption for existing bookings.
"The parties have not meaningfully discussed or progressed a possible business combination transaction for several months as a result of Azul’s focus on its Chapter 11 proceeding," GOL stated in its announcement.
Market Implications of Codeshare Termination
The end of the codeshare will likely increase competition on overlapping domestic routes. Previously, the codeshare allowed some level of coordinated service. Now, Azul and GOL will directly compete for passengers on these flights.
LATAM Airlines, Brazil's other major carrier, may benefit from this change. Passengers seeking seamless connectivity across routes might look to LATAM as an alternative. The market dynamics in Brazil's aviation sector are expected to shift as a result.
Airline Market Share in Brazil
- Azul is Brazil's largest airline by number of flights and cities served.
- A merger would have created an entity controlling about 75% of domestic capacity.
- LATAM Airlines is a significant competitor in the Brazilian market.
Azul's Focus on Financial Health
Azul stated its continued focus on strengthening its capital structure. The airline has been operating under Chapter 11 bankruptcy protection since May 2025. This legal process aims to reorganize its finances and reduce debt.
The airline is accelerating efforts to simplify its fleet and network. This strategy is part of its plan to emerge from restructuring by early 2026. Simplifying operations is critical for Azul's long-term financial stability.
GOL's Perspective and Financial Status
GOL, through its indirect controlling shareholder Abra Group, expressed its availability to continue merger discussions. Abra Group indicated that talks could happen even while Azul was undergoing its Chapter 11 case.
GOL itself recently emerged from Chapter 11 proceedings on June 6, 2025. This has placed the airline in a stronger financial position. For the second quarter of 2025, GOL reported a net loss of $280 million (BRL 1.5 billion). While a loss, this represents an improvement from the $728 million (BRL 3.9 billion) loss reported in the previous period.
Chapter 11 Bankruptcy Protection
Chapter 11 is a form of bankruptcy that involves a reorganization of a debtor's business affairs, debts, and assets. It allows a business to continue operating while developing a plan to repay its debts over time. This process is common for large corporations facing financial challenges.
Azul's Fleet Simplification Strategy
As part of its restructuring, Azul is actively simplifying its fleet. The airline plans to return additional aircraft, primarily first-generation Embraer E195s. This is in addition to previous requests for aircraft returns.
This initiative will reduce Azul's total fleet by approximately 35%. The airline currently operates 189 aircraft. The targeted aircraft for return are models that were already out of service. This limits the impact on customer operations.
Benefits of a Streamlined Fleet
Returning these aircraft will help Azul reduce its leasing and maintenance costs. It will also improve the average utilization of its remaining fleet. A smaller, simpler fleet contributes to lower cost per available seat mile (CASM).
This strategy also allows Azul to pivot its network towards higher-margin services. Less capacity will be allocated to routes with thin profit margins. The expected benefits include better reliability and improved capital expense relief. This move is crucial for Azul's financial recovery and future profitability.
- Reduced Costs: Lower leasing and maintenance expenses.
- Improved Efficiency: Higher utilization of active aircraft.
- Network Optimization: Focus on more profitable routes.
- Financial Health: Supports the airline's exit from Chapter 11.
