HNA To Buy USD$450 Mln Stake In Azul

China's HNA Group has partnered with JetBlue founder David Neeleman to buy a USD$450 million stake in Azul, Brazil's third-largest airline, providing a cash cushion until an IPO happens.

The 23.7 percent stake in Azul will be a first foray into Latin America for HNA, an aviation, tourism and logistics conglomerate that recently acquired air cargo handlers Swissport and Irish aircraft leasing company Avolon.

The capital injection will bolster Azul's cash position in return for preferred stock, without diluting Neeleman's two-thirds of voting shares, Azul's chief executive, Antonoaldo Neves, said.

Azul has repeatedly postponed a planned IPO in New York and Sao Paulo since 2013 because of turbulent financial markets, a weakening Brazilian economy and fierce competition from market leaders Gol and the TAM unit of Latam Airlines Group.

"We didn't have any pressure to do an IPO in the next 12 months... but now we have even more time," said Neves, adding that the deal was driven by the potential for cost savings with HNA on leasing, maintenance, insurance and aircraft orders.

Azul is the biggest Latin American operator of Embraer E-Jets and HNA owns Embraer's biggest client in China.

HNA companies may give Azul more options to sell or lease unused aircraft amid a sharp recession in Brazil, Neves said, adding that he planned to dispose of 10 or 15 planes as the airline trims capacity by up to 4 percent next year.

Neves said there were no plans to alter Azul's international service, which started recently with flights to Florida.

HNA will name a member to Azul's board of directors and negotiate code-share agreements with subsidiaries.

In June, United Airlines reached a similar but smaller deal with Azul, paying USD$100 million for a 5 percent stake and the right to name a board member.

Neeleman, who left JetBlue Airways in 2008 and launched Azul shortly after, is also leading a consortium of investors that agreed this month to take control of Portuguese airline TAP.