Yahoo Financeยท2025-09-26 01:38Core Viewpoint - Abra Group has terminated merger talks between Gol and Azul, ending the possibility of creating a dominant airline in Brazil that would control approximately 60% of the domestic market [1][2]. Company Developments - Abra Group, which controls Gol and is a major investor in Avianca, initially signed a memorandum of understanding in January to combine Gol and Azul, but discussions stalled due to Azul's Chapter 11 bankruptcy filing in May [2][4]. - Gol emerged from its own bankruptcy proceedings in June, while Azul expects to exit bankruptcy by early 2026 [2][6]. Market Reaction - Following the news of the terminated talks, Azul's shares increased by 18% and Gol's shares rose by 5% in early afternoon trading in Sao Paulo [3]. Industry Context - Both airlines sought bankruptcy protection due to significant debt burdens, a sharp decline in traffic during the COVID-19 pandemic, and delays in aircraft deliveries [4]. - The initial memorandum for the merger was established under different market conditions, and both companies have also ended their 2024 codeshare agreement, which was under scrutiny from antitrust authorities [5]. Future Outlook - Abra Group remains open to future discussions regarding a potential business combination, emphasizing the merits of merging Azul and Gol [6]. - Azul has reaffirmed its commitment to strengthening its capital structure despite the end of merger talks [6]. Competition Concerns - The proposed merger raised competition issues, with LATAM Airlines expressing concerns, although some experts viewed it as a necessary step for a financially viable airline sector in Brazil [7].