HNA Group to buy a 23.7% share of Azul for $450 million

Named "Anjo Azul" (Blue Angel)

Azul Brazilian Airlines (Sao Paulo) has issued this statement concerning an investment by the HNA Group:

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Countering the headwinds of the current Brazilian economic crisis, Azul Brazilian Airlines announces today an important milestone that positions it as an even stronger and more competitive airline. The Chinese international conglomerate HNA Group has selected Azul as its primary strategic investment in Latin America.

In one of the largest equity investments in a Brazilian company this year, Azul received a firm commitment from HNA Group, subject to completion of certain conditions precedent, for the investment of $450 million (US) in exchange for an economic stake of 23.7%. As a result, HNA Group will be Azul’s newest shareholder and board member. With this equity raise, Azul will have one of the strongest balance sheets in Latin America.

Over the past 20 years, HNA Group has successfully transformed itself from a traditional aviation company to a global conglomerate spanning the aviation, real estate, finance, tourism, and logistics sectors, with revenues of $21 billion and over 110 thousand employees.

HNA Group has a solid experience with aircraft lessors and has recently invested in Swissport, a renowned global aviation handling company. Within its aviation group, HNA owns 14 airlines with a total fleet of 561 aircraft.

According to David Neeleman, CEO of Azul, the Chinese group saw in Azul a solid investment with high growth potential. “The investment of $450 million investment, considering Brazil’s current macroeconomic situation, demonstrates that we have a winning business model and that the HNA Group, as a large investor, has absolute confidence in Azul’s team. Moreover, this investment makes Azul the airline with the highest valuation in the Brazilian market, at US$ 1.9 billion.”

“HNA Group is committed to expanding in the airline industry through strategic investments in companies with strong market positions and excellent management teams. We are pleased to partner with Azul in order to bring more choice and convenience to our customers traveling to and from Brazil. We eagerly look forward to working with Azul founder David Neeleman and his team for the mutual benefit of both airlines,” said Adam Tan, President of HNA Group.

This investment will bring significant benefits to Azul including a stronger cash position, support for its fleet plan, product and service improvements. Moreover, the partnership between Azul and HNA Group will result in commercial agreements, joint negotiation efforts, and adjustments in aircraft allocation. Finally, it also enables the company’s entry into the Asian market.

Seabury Securities LLC, Seabury Group’s investment banking unit, served as financial advisor to Azul.

Copyright Photo: Rodrigo Cozzato/AirlinersGallery.com. Azul is smiling. Azul Brazilian Airlines (Azul Linhas Aereas Brasileiras) Embraer ERJ 190-200 IGW (ERJ 195) PR-AUB (msn 19000660) arrives at Sao Paulo (Guarulhos).

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