(Adds CEO's quote, details of business plan, share performance)
By Brad Haynes
CAMPINAS, Brazil, April 23 Brazil's
third-biggest airline, Azul Linhas Aereas, unveiled plans on
Wednesday to add 11 wide-body jets from European planemaker
Airbus to start service to the United States.
Azul said it would receive six Airbus A330-200s in early
2015, when the airline will begin flying overseas, and five
Airbus A350-900 jets starting in early 2017.
Together the planes are worth close to $2 billion at list
prices, executives said at a news conference near Azul's hub in
Campinas, outside Sao Paulo. The airline has secured leasing
deals from industry financier ILFC for eight of the planes. It
is still negotiating the lease or purchase of three A330s.
The selection of Airbus planes, first reported on Tuesday by
Reuters, is another blow to U.S. rival Boeing Co in Latin
America's biggest market. Boeing also lost out on a coveted
Brazilian fighter jet contract in December.
The expansion will transform Azul, which is controlled by
JetBlue Airways Corp founder David Neeleman, from a
niche regional carrier into an international player directly
challenging heavyweight Latam Airlines Group SA, which
controls Brazil's No. 1 carrier, TAM Linhas Aereas.
Azul is also making a leap from the 120-seat regional jets
built by Brazil's Embraer SA, which have helped tap
underserved domestic routes, to double-aisle jumbo jets making
10-hour flights. Azul's A330 will seat about 245 passengers, and
the A350 will have more than 320 seats.
The strategy contrasts with Brazil's No.2 airline Gol Linhas
Aereas, which started domestic service with a uniform
fleet of Boeing 737s and now flies those jets to the United
States with a layover to refuel in the Dominican Republic.
"Who says what's an orthodox fleet?" said Neeleman at the
news conference, dismissing any pressing need for traditional
narrow-body jets from Airbus or Boeing.
Dramatic improvements in the fuel efficiency of
next-generation 737s and A320s also make it a "foolish" moment
to buy versions currently on the market, he added.
The structure of the new leasing deals make it unnecessary
for Azul to raise new capital in order to add new aircraft, said
Neeleman, who founded Azul after leaving JetBlue in 2008.
Last year, Azul announced plans for an initial public
offering estimated at up to 1 billion reais ($445 million).
Plans were frozen in August amid turbulent financial markets,
and Neeleman said on Wednesday he sees no urgency for an IPO.
The Azul deal is a double boost for Airbus, which is trying
to maintain demand for its current-generation A330, while
marketing its all-new A350, which enters service this year.
Although the leasing arrangement does not directly generate
a new sale for Airbus, the availability of aircraft looking for
a home on the books of its leasing customers has been blamed for
adding to a sense of oversupply as it tries to keep high
production levels of the jet going beyond 2016.
Airbus shares were down 0.84 percent in Paris on Wednesday,
while Boeing's stock was up 2.1 percent in New York.
Neeleman said Azul is looking to start service to southern
Florida early next year followed by flights to New York,
although the airports involved are still under negotiation.
The choice of airports will be closely watched for signs of
potential alliances with U.S. airlines. Azul has held off
codeshare agreements while Gol tightened its relationship with
Delta Air Lines Inc and TAM recently joined the Oneworld
alliance, including American Airlines Group.
Azul also signed a $400 million service contract with
Britain's Rolls-Royce, which makes the jet engines that
power the Airbus aircraft.
(Additional reporting by Tim Hepher in Paris; Writing by Todd
Benson; Editing by Jan Paschal)