Codeshare agreement now under the watchful eye of Cade

Brazil’s antitrust watchdog, Cade, opened a preliminary procedure to investigate the effects of a codeshare agreement between Azul and Gol, two of the country’s largest airlines. The body will analyze whether it should have been notified about the agreement before it took place. If this is the case, Cade could impose a fine ranging from BRL 60,000 to BRL 60 million on those involved. It could also cancel the codeshare agreement. 

The agreement was announced in May and came into effect last Thursday. It allows companies to sell tickets for 40 routes on shared flights — if previously the routes were exclusive to each airline, they can now be purchased through both companies’ websites. The agreement does not apply to overlapping routes.

Among Brazil’s big three airlines, Gol is in the worst shape. The company filed for bankruptcy protection in the U.S. late in January, reporting debts amounting to more than BRL 20.17 billion (USD 3.7 billion). Gol posted a recurring net loss of BRL 130.2 million in Q1 2024. 

Also in the first quarter of this year, Azul, which completed a broader restructuring in 2023, reportedly hired financial advisors to explore a possible takeover of Gol. Analysts recently told The Brazilian Report that the codeshare agreement could be a way of exploring the synergies between both companies’ businesses. 

In June, the Abra Group, the parent company controlling Gol and Avianca, confirmed that it has opened conversations with Azul to “explore” possible business “opportunities.” 

The announcement came after a flurry of reports about Azul potentially taking over Gol — which prompted a query from B3, the company that runs the São Paulo stock exchange. It also came days after the two Brazilian airlines announced the codeshare agreement.

It remains unclear what might result from this “exploration”— an acquisition, a merger, or even a joint venture. Either way, Gol and Azul have a combined 60 percent share of the country’s domestic air travel market, meaning that any merger would undoubtedly attract the attention of antitrust watchdogs.

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