Azul lands in AA"s backyard, AA lands in Azul's.

[WorldTraveler]

Azul Brazilian airlines landed at FLL today and will depart this evening with its first flight from the US.

AA, in turn, starts new service from MIA to VCP (Campinas), Azul's hub.

http://finance.yahoo.com/news/azul-brazilian-airlines-lands-us-170000185.html

Azul stock is not traded on US stock exchanges but Gol is and Market Realist provides insight into the Latin America market here.

http://marketrealist.com/2014/12/fuel-costs-put-brazilian-airlines-competitive-disadvantage/

sections 2 and 3 provide specific competitive comparisons and show Azul's growth over the past few years as well as the currency devaluations in key Latin America markets - all of which are major markets for AA.

 

[NYer]

And who is the CEO of Azul?
 
The founder and former CEO of JetBlue...David Neeleman.

 

[WorldTraveler]

exactly... he is the son of Mormon missionaries and was born in Brazil so he has dual citizenship.

specific to this topic, Azul and JetBlue haven't revealed how deep their partnership will be but given that Azul's service will be into two of B6's strongest hubs, it is a given they will have a deep partnership.... and it is also possible that B6 will add service of its own to deep. S. America.

 

[MetalMover]

Maybe AA should just throw in the towel now and liquidate!

 

[WorldTraveler]

I dunno know.

maybe they should pull some flights from GRU and go fight Azul... wait, that is what they are doing.

 

[eolesen]

They pulled a flight from GRU other than CLT?

 

[commavia]

Clearly this is an indication of how AA challenging Delta at LAX is going to cost them their dominance in Latin America.  Clear as day, people - let's get with the program. 🙄

 

[MetalMover]

Clearly this is an indication of how AA challenging Delta at LAX is going to cost them their dominance in Latin America.  Clear as day, people - let's get with the program. 🙄

 
This is hogwash too! How dare they?
 
http://blogs.barrons.com/stockstowatchtoday/2014/12/02/falling-oil-no-help-as-delta-air-lines-disappoints/?mod=yahoobarrons&ru=yahoo

 

[WorldTraveler]

They pulled a flight from GRU other than CLT?

yes, GRU-MIA and JFK were reduced to fund VCP-MIA and JFK because the US-Brazil treaty considers VCP part of São Paulo, using the same frequencies as GRU.

Clearly this is an indication of how AA challenging Delta at LAX is going to cost them their dominance in Latin America. Clear as day, people - let's get with the program. 🙄

if you say so.

or maybe it's just that Azul is starting a route that AA chose to match and in so doing pulled down AA's own flights - although upgraded aircraft to 77Ws in some cases.

 

[CMH_GSE]

This is hogwash too! How dare they?
 
http://blogs.barrons.com/stockstowatchtoday/2014/12/02/falling-oil-no-help-as-delta-air-lines-disappoints/?mod=yahoobarrons&ru=yahoo

This from the comments section of the linked story, lol

DECEMBER 2, 2014 7:20 P.M.
dave wrote:
Flew Delta from HNL to SFO in August, old aging 757, most uncomfortable plane ever, First class was a joke, seats didn't work, no personal entertainment, Wont do that again, I will stick with Hawaiian.


DL not winning in HNL

 

[eolesen]

Still a smart move for AA to add VCP regardless of Azul. With TAM now firmly in oneworld, AA really doesn't need to blanket GRU to the extent they did two years ago.

 

[WorldTraveler]

Tam is and likely always will be just a codeshare partner, not a joint venture partner because the combined size of the two is so large. Given that AA already flies to nearly all of the cities in S. America that have any real business sense, the value of JJ to AA is a lot less than you want to believe it is.

The total number of AA seats is not greatly affected because they are using 77Ws which can be rotated thru S. America in the Latin summer and Europe and Asia during the US summer.

the issue for AA with Azul coming to the US is that AA has its first longhaul low fare competition to Brazil (and most of S. America) and Azul has a very well developed hub that provides a valid competitive hub.

and Azul's arrival comes at a time when the Brazilian Real - which has fared better than other currencies in Latin America - is at multi-year lows and will likely sink further as Brazil's economy slows, largely driven by China's slowing economy since China is Brazil's largest trading partner due to China's need for commodities.

AA will be increasingly forced to defend its core Latin network from competitors at the same time that those Latin economies - which provide enormous amounts of tourists to the US - not only slow internally but travel growth slows because of weak currencies.

it is no different from what is happening in Japan except that AA has no currency hedges while DL and UA do for the yen.

 

[jcw]

So let's see - I assume DL should start exiting routes when a new airline starts in one of their markets

Is there any route that DL faces competition or is that impossible to imagine

 

[WorldTraveler]

I never said that AA shouldn't start new routes to protect its markets.

I have noted for quite some time that ncreased competition would be coming to Latin America - and it is now coming in some of AA's top markets.

It also happens to be coming at the same time that those same markets are seeing devalued currencies which makes the job of profitably defending its markets harder for AA.

 

[eolesen]

So, DL's partnership with Gol (now the third largest carrier in Brasil?) is going to reap rewards, but AA's partnership with LATAM (the largest in Brasil & Chile) isn't of any value?

You really do have a warped view of things at times, Skippy.