Head of Brazil's antitrust regulator tells Gol, Azul to stop public merger talk

By Luciana Magalhaes

BRASILIA, Sept 9 (Reuters) - Brazilian airlines Gol GOLL54.SA and Azul AZUL4.SA should stop making public comments about a potential merger unless they are prepared to formally pursue one, a senior official at Brazilian antitrust regulator CADE told Reuters.

"They should stop talking about a merger if they're not going to actually pursue it or formally notify us of a merger," CADE President Gustavo Augusto said in an interview late on Friday.

CADE last week ordered the companies to formally notify the agency of their May 2024 codeshare agreement for cross-selling tickets and integrating their loyalty programs, and barred them from extending the partnership to additional routes.

That order did not require the two aviation companies to provide information about a potential merger, but Augusto made clear CADE's concern about the market impact of plans announced prematurely and subsequently left unresolved.

"When you're a publicly traded company with a dominant market position, you need to be concerned and cautious with your communications," Augusto said. "You shouldn't announce a merger and acquisition that isn't ready and hasn't been submitted to regulatory authorities."

Earlier this year, Azul and Abra, the majority investor in Gol and Avianca, announced that they had signed a non-binding memorandum of understanding to potentially combine their Brazilian operations.

They said the proposed combination aimed to strengthen operations, with both airlines claiming 90% route complementarity - a situation CADE would need to verify should the deal proceed.

In a written response to Reuters on Monday, Azul said it was going to analyze CADE's decision regarding the codeshare agreement and denied any "gun-jumping" practices, in which firms engage in pre-merger integration without regulatory approval.

Gol said that codesharing is standard practice in the airline industry and added that the company has always respected regulatory decisions.

Both airlines declined to comment on potential merger plans.

Top executives at both companies have indicated in recent months that they were prioritizing their respective restructuring processes before any potential combination. The airlines have not publicly abandoned the possibility of a merger.

Azul filed for Chapter 11 bankruptcy protection in the U.S. in May, just days before Gol exited its own restructuring process.