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SkyWest will sell Brazilian airline shares.

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mtsupilot376

happy to be alive
Joined
Mar 12, 2008
Posts
156
Delta Connection carrier SkyWest Airlines announced plans to sell its 26% interest in the Brazilian airline Trip Linhas Aereas, according to The Salt Lake Tribune.

Utah-based SkyWest, Inc. will transfer ownership of its stake in the company to Trip Investimentos Ltda., a limited liability company affiliated with the Brazilian airline, for $42 million, to be paid in three installments over a two-year period.

Also included in the deal was an option for SkyWest to acquire a 15.38% interest in Trip Investimentos Ltda. within six years from the date it receives payment.

SkyWest initially invested $30 million in Trip Linhas Aereas in August 2008 and has said it anticipates recording a gain on the investment.

On Monday, Azul, the upstart Brazilian low-cost carrier that began operations in 2008, announced a merger with Trip, according to Dow Jones Newswires. Azul is headed by JetBlue Airways founder and former CEO David Neeleman.


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I am here: http://tapatalk.com/map.php?nj2odm
 
They are probably hoping to spark a bump in the share price of SKYW, which is sitting at $7. More cash, less risk, not a bad move and it can finance EFBs... Not likely though.
 
I think the honeymoon period for their accepting losses on their foreign investments has expired and they are looking to get out quick.

It may also have something to do with the recent acquisition of Trip by Azul.

Azul, Trip To Merge As Rival Brazil Airlines Consolidate

SAO PAULO – David Neeleman, founder of JetBlue Airways Corp. (JBLU), is expanding in Brazil, with the first major deal by his local start-up venture Azul Linhas Aereas, as he seeks a larger share of the world's fourth-largest aviation market.
Azul, Brazil's third-largest airline in the domestic market, unveiled plans Monday to merge with Trip Linhas Aereas SA, the fifth-largest airline, creating a company with nearly 15% market share and estimated revenues this year of 4.2 billion Brazilian reais ($2.1 billion). That puts it in a better position to go up against the industry's two dominant players, TAM SA (TAM, TAMM4.BR) and GOL Linhas Aereas Inteligentes SA (GOLL4.BR, GOL).
"There are some things we couldn't do without this association," Neeleman said, pointing to the extensive reach of Trip's routes. "It's better for Brazil than having two separate companies."
It is the latest merger in the Brazilian market, which has been through a number of evolutions since the collapse of the Brazilian flagship airline, Varig, some seven years ago. GOL, which took over the Varig operations in 2007, recently purchased a smaller rival, Webjet Linhas Aereas Economicas, putting it on a par in the domestic market with TAM. Both airlines have around 40% market share.
TAM, meanwhile, is in the final stages of merging with Chile's LAN SA (LFL, LAN.SN), which will create Latin America's largest airline.
Yet while its two biggest rivals have seen profitability decline, prompting cuts in service, Azul Trip executives see no reason to stop growing. According to civil-aviation agency Anac, while TAM flew 6% less in April than the year-earlier month, and Gol grew just 1%, Azul expanded operations by 41% and Trip flew 69% more passengers.
That is partly because both Azul and Trip focus on regional flights, using a fleet that is mostly made up of aircraft with fewer than 90 seats produced by Brazil's Embraer SA (ERJ, EMBR4.BR) and France's ATR. Smaller planes can land at airports the larger aircraft operated by TAM and GOL can't serve, and the new company is planning to keep adding to the fleet.
"We have more planes arriving in 2013, 2014 and 2015," said Neeleman, who, having been born in Brazil, got around restrictions on foreign ownership of Brazilian airlines. "We think there will be lots of passengers to put on those planes."
For analysts, the merger could help rein in the overeager expansion of routes in Brazil. In the midst of competition between carriers, supply expanded too quickly last year, leaving many seats empty and pulling down returns.
"The consolidation process can bring more discipline," UBS analyst Victor Mizusaki wrote in a note. Azul may also be able to help Trip, which saw profitability decline over the past year, he said.
Azul's shareholders will own two-thirds of the new company, while Trip's owners will own the other one-third. The airlines plan to merge operations once they secure regulatory approvals, but are still studying whether to extinguish one of the brands.
Neeleman also discarded the possibility of an initial public offering in the near term. Though the eventual goal is to list the airline's shares, current investors are "patient" and "have deep pockets," so there is no urgent need for cash, Neeleman said.
The deal with Azul also ends Trip's talks with other potential partners. TAM had agreed last year to buy a 31% stake in Trip, but that agreement expired in January; Trip also recently bought back a 26% stake it had sold to SkyWest Inc. (SKYW), Caprioli said.

Read more: http://www.foxbusiness.com/news/201...al-brazil-airlines-consolidate/#ixzz1wThVjcXt


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I am here: http://tapatalk.com/map.php?elnrzt
 
It has everything to do with the merger, that's why they have been offered 15% of the new company. I wonder if they will take the offer?
 

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