Hainan Airlines Co. Ltd., a subsidiary of Chinese global conglomerate HNA Group, said it has completed the acquisition of a 23.7% stake in Brazil’s third largest airline Azul SA for $450 million, becoming its largest single shareholder. HNA will appoint three new members to Azul’s board of directors.

The deal closing came just in time before the opening ceremony of the 2016 Olympic Games in Rio de Janeiro which is set to take place this evening at the famed Maracana Stadium.

The acquisition, which was announced in November, paves the way for the two airlines to cooperate through network synergies, code sharing, development of new routes, frequent flyer programs, and cargo, as well as other strategic initiatives in the region.

Azul Brazilian Airlines is the largest airline in Brazil by number of cities served, offering more than 800 daily flights to over 100 destinations. With a fleet of 136 aircraft, low-cost carrier Azul operates approximately one third of the daily departures of the Brazilian aviation market. Azul was founded in 2008 by Brazilian-born David Neeleman, founder of American low cost airlines JetBlue, Morris Air and WestJet, and co-owner of TAP Portugal.

According to the Brazilian Civil Aviation Authority (ANAC), between January and December 2015 Azul had 17.0% of the domestic and 7.8% of the international market shares in terms of passengers per kilometer flown, making it the third largest airline in Brazil, after LATAM and GOL.

Hainan Airlines is the largest privately-owned air transport company and the fourth-largest airline in terms of fleet size in China. Hainan Airlines is one of eight airlines, all based in Asia, rated as five-star by Skytrax, along with All Nippon Airways, Asiana Airlines, Cathay Pacific, EVA Air, Garuda Indonesia, Qatar Airways, and Singapore Airlines.

“In addition to bringing more choice and convenience to Hainan Airlines’ customers traveling to and from Brazil, we view Azul as a strong and lasting partner for HNA to explore further expansion and capital investment in Latin America,’ said HNA Group vice chairman and CEO Adam Tan.

“This US$450 million investment, demonstrates that we have a winning business model and that Hainan Airlines, as a large investor, has absolute confidence in Azul’s team. We are pleased to have Hainan as a partner as we strive to expand our award winning services throughout the region,” said Azul founder and CEO David Neeleman.

UBS and Bravia Capital Partners acted as financial advisors to Hainan Airlines. Seabury Securities LLC served as financial advisor to Azul.

Prior to the sale to HNA, Azul had cancelled plans for an IPO in the US repeatedly in 2013 and 2014, until the final IPO registration was withdrawn in August 2015, due to adverse market conditions. As of December 1, 2014, the date of its last IPO prospectus, Neeleman was the company’s largest shareholder with a 56.62 percent stake, followed by the Chieppe and Caprioli families who had sold Trip Participacoes SA to Azul in 2012, and together owned a 32.18 percent stake.

HNA, a leader in aviation and tourism, was founded in 1993. Over the past two decades, it has grown from a local aviation transportation operator into a multinational conglomerate encompassing aviation, holding, tourism, capital, logistics and EcoTech.

In 2015, HNA had revenues of nearly RMB190 billion ($28.6 billion), total assets of over RMB 600 billion ($90 billion) and employed nearly 180,000 employees worldwide. As of December 2015, HNA has a fleet of nearly 1,150 aircrafts, serves nearly 700 domestic and international routes, flies to over 200 cities, and has served 77.4 million passengers annually. HNA is headquartered in Haikou, Hainan, China.

HNA Group aspires to become one of the top 50 companies in the world by 2030.

In February 2016, HNA agreed to acquire Ingram Micro Inc. (NYSE:IM) for $6 billion, the largest Chinese takeover of a US information technology company.

This week, HNA Group agreed to invest $336 million in San Francisco-based RocketSpace, a leading technology accelerator campus and co-working space for high-growth startup, in a strategic joint venture deal to fuel RocketSpace’s global expansion, including China.

Photo: David Neeleman, Founder & CEO of Azul Brazilian Airlines.



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