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United Airlines to pay $100 million for 5% stake in Azul

Staff writer |
United Airlines agreed to pay $100 million for a 5 percent stake in Azul SA, Brazil's third-biggest airline, to get a bigger share in South America's biggest air travel market.

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Azul's founder and chief executive officer, David Neeleman, who also founded JetBlue Airways, announced the deal in Sao Paulo. United Continental Holdings will name a representative to Azul's board, and the two airlines have struck a codesharing agreement subject to government approval. Neeleman, who also acquired a 61 percent stake in Portuguese carrier TAP this month, said Azul still planned to list shares "when the outlook improves."

For United the deal opens more Brazilian cities to its customers, and for Azul the deal should ease the urgency of an initial public offering.

The United investment will be made in the form of a capital injection, slightly diluting the stakes of existing shareholders.

United views the tie-up as the start of a "long-term" relationship that could be strengthened further as opportunities arise, the airline's chief revenue officer Jim Compton said in an interview.

United Airlines would be excited if Azul joins its global airline partnership, the Star Alliance, but the decision is up to Azul and Star's other carriers, Mr. Compton said.

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