DALLAS — The Brazilian government has expressed its support for the potential merger between Brazil’s two low-cost carriers (LCC), GOL Linhas Aéreas Inteligentes (G3) and Azul Linhas Aéreas Brasileiras (AD). 

The government cites the merger's importance in stabilizing the aviation sector and safeguarding employment. Silvio Costa Filho, Brazil's Ports and Airports Minister, highlighted to Reuters the merger’s potential to prevent financial collapse and increase operational efficiency within the industry.

The Brazilian LCCs and Abra Group Limited, G3's primary investor, have signed a non-binding memorandum of understanding to explore merging their operations in Brazil. If approved, the merger would establish a dominant carrier with a 60% share of Brazil's domestic market, surpassing Chile-based LATAM Airlines (LA), which currently holds a 40% share.

Merger Timeline

The merger process, subject to approval by Brazil’s antitrust authority, the Administrative Council for Economic Defense (CADE), is expected to be finalized by early 2026. Regulatory scrutiny will focus on ensuring competitive practices while addressing fears of airfare hikes.

Costa Filho indicated that discussions with the airlines focused on profitability through higher passenger volumes rather than fare hikes. Enhanced management and expanded regional networks may result in lower ticket prices.

This potential merger comes amid financial struggles for Latin American airlines, exacerbated by the COVID-19 pandemic. G3 is under Chapter 11 bankruptcy reorganization in the U.S., while AD has renegotiated its financial obligations with aircraft leasing companies, granting them equity stakes in return.

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