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United, American Airlines both back Azul restructuring, eyeing Brazil market

United Airlines and American Airlines are fierce competitors in the U.S., but have decided to support Azul after the Brazilian airline filed for bankruptcy earlier this week.

This move is being made as major U.S. carriers look to improve connections in Latin America’s largest country. American's support of Azul is noteworthy given its own ties with its local competitor Gol, which has just emerged from its own Chapter 11 proceedings.

According to a filing by Azul, U.S. firms are planning to invest up $300 million in a equity offering for Azul to repay its debtor-in possession financing after it emerges from bankruptcy.

John Rodgerson, Azul's Chief executive officer, said that the company believes in its long-term viability and our network strategy. "Brazil will be very important for United and American."

Both airlines will have codeshare agreements and serve on the board of directors for Azul when it emerges out of Chapter 11.

Azul filed for bankruptcy in the United States Wednesday. This followed similar moves made by Gol, and LATAM Airlines, who had spent months trying to restructure debts mainly from pandemic years.

Rodgerson pointed out that, although United and American both have "great franchises" throughout Latin America their routes connect Brazil with different U.S. city.

American Airlines flies to Dallas, Miami, and New York JFK Airport while United flies to Chicago, Houston and Washington.

United is an Azul shareholder. It bought a stake as part of a strategy in 2015 to catch up with U.S. competitors who had a stronger foothold on South America's largest air travel market.

Andrew Nocella said that the new deal was an opportunity for United to expand their business with Azul.

American has been a partner of Brazilian carrier Gol for many years. Gol holds roughly the same market share as Azul in Brazil, at around 30%.

Azul offers a much wider range of destinations than Gol, which focuses on the big cities like Sao Paulo and Rio de Janeiro.

Stephen Johnson, American Airlines' Chief Strategy Officer, said in a press release that Gol was still a major partner and praised Azul for its plans. He called them "extremely beneficial" to the Brazilian aviation industry. Gabriel Araujo, Mexico City. Editing by Aurora Ellis.

(source: Reuters)