Aviation
Commercial /
Brazil
expansion never hurts
Azul advances in the cargo market; company continues targeting rival Latam
Man working on a cargo plane from Azul Cargo
Image: Azul Cargo
Rafael Ramos
8/23/2021
Azul Linhas Aéreas released its results for the second quarter, showing that the company's positive point was the cargo market, which continues to grow at an accelerated pace. In 2019, Azul Cargo had revenues of 500 million reais, and this year the value should reach 1 billion reais.
“This area helped Azul not to go broke,” says John Rodgerson, CEO of Azul Linhas Aéreas
For comparison purposes, before the pandemic, the cargo area's revenue was 5% of the company's total. At a certain point in the pandemic, this figure came to represent 45% of the total, and now that travel is picking up, the figure should stabilize at around 10% of the total.
With the low demand for passenger travel, the company adopted solutions such as using idle planes to fly only with cargo, as it is doing with the Embraer E190. In addition, new customers in the industry started to arrive. “New marketplaces, e-commerces, consumer goods companies, automakers. And we are keeping an eye on small businesses.” says Izabel Reis, director of Azul Cargo.
The company had only two freighters in its fleet, the 737-400 model. However, the number does not stop growing, and today there are another six of the company's aircraft operating only in the cargo market.
Magazine Luiza, Via, Mercado Livre are some of the big names the company works with, Shopee, Arezzo, Evino, Wine and soon with Amazon and Riachuelo as well. However, as e-commerce continues to grow, small manufacturers are also starting to look for the company's cargo services, as well as small cheese manufacturers in Serra da Canastra.
The company's growth in the cargo market is also due to the investment the company has made over time. “Over the past three years, we've invested more than R$100 million in systems and infrastructure. When this e-commerce boom came, we were prepared”, says Azul's CEO.
In addition to serving 95% of the Brazilian population, the company has a complete logistics solution, offering door-to-door services, from cargo terminal to cargo terminal, collection at the customer's house and even leaving it at the terminal. cargo, in addition to supplying stores and shopping. It is worth remembering that before Azul only took cargo from Manaus to Campinas and Recife, where the company's largest distributions are located.
And the expansion doesn't stop. Azul Cargo operates flights in 130 cities, with 300 cargo division franchises throughout Brazil. Soon there will be about 30 more stores inaugurated.
Azul, according to data released by Anac, has 35% of market share, followed by Latam, with 25%, Sideral, with 14.7%, Gol, with 9.7% and other smaller ones.
The domestic flight market is recovering from the fall that was covid. “In July and August, we are flying the same number of seats as we were in 2019. The domestic market is strong. The leisure market has come back strong and I'm optimistic because the big corporate has not come back yet. If Covid-19 didn't break us, it's hard for us to break. We went through the biggest test that an airline could pass”, says the CEO of Azul.
Azul is now aiming to acquire its rival Latam. However, the interest is not reciprocated. “They are not interested in selling and we are interested in buying. Therefore, the game is more with the creditors”.
With a debt of 10.9 billion dollars, in the process of judicial recovery and with Charpter 11 activated, Latam is trying to create a plan and negotiate with its creditors.
“Charpter 11 protects the company from creditors for a period. And, during this period, the company has the option of creating a plan. But creditors have to approve the plan. They will say: 'you owe me 100, how much are you going to pay me?' If Chileans say they are going to pay 100, there is no conversation. But if they say they're going to pay 20 and I pay 50, it's better for the creditors and they're the ones in charge of the business”, said the CEO.
Latam has until September 15 to deliver this plan. Azul says it is waiting for that day. What will be the next chapter of this supposed purchase that has been going on for some time?
Boeing 737-400f from Azul Cargo
Image: Azul Cargo
Airbus A350
Latam Brasil
Adam Moreira, CC BY-SA 4.0, via Wikimedia Commons
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Rafael Ramos
Aviation enthusiast from an early age, he had his first contacts with the area developing that good old habit of spending dozens of hours in front of the screens of Micrsoft Flight Simulator and other simulators. With a solid background in various technological areas, including engineering and chemistry, Rafael has rejoined aviation as editor and author of articles and materials on our portal, providing invaluable help to the dynamics and expansion of the website and the aeronautical community, bringing us the news and updates so indispensable for us to remain current in our area of operation.
   
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