Azul Linhas Aéreas Brasileiras SA is focusing on cutting debt after its recent IPO while rebalancing its fleet to add more capacity to long-haul flights, CE David Neeleman said Monday. Azul, Brazil’s third-largest airline by passengers, was able to swing to a profit of 55.3m reais (US$17.8m) in the first three months of 2017 from a loss of 66.9m reais in Q1 last year. Founded in 2008 by Neeleman—who also founded US discount carrier JetBlue Airways—Azul raised about $644m in its April IPO, with $406m in net proceeds to the airline. The airline has recently paid about 401m reais of working capital debt, which is owed mostly to Brazilian banks, and intends to gradually continue reducing its most expensive borrowing while keeping some cash available, taking advantage of still-high interest rates in Brazil, said Neeleman, who is also Azul’s chairman. At the end of Q1, Azul had total debt equivalent to about 3.7 billion reais, roughly half of it denominated in the Brazilian currency. “Every real of profit we make will be used to pay off debt,” Neeleman said.<br/>
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AirAsia is planning to enter China, one of the last untapped markets for budget airlines, in a joint venture with the government of Henan province and Everbright, the state-owned conglomerate. Tony Fernandes, the co-founder and chief executive of AirAsia, signed a memorandum of understanding with his potential Chinese partners on Sunday. Under the proposal, which is likely to face opposition from China’s three dominant state-owned airlines, AirAsia and its Chinese partners would establish a budget airline, pilot training centre and aircraft maintenance facility in Zhengzhou, the capital of Henan. “Zhengzhou sits at the centre of a vast rail, highway and air transport network that forms the linchpin of China’s development plans for its central and western regions,” said Mr Fernandes, who has been trying to enter the Chinese market for years. China is forecast to overtake the US as the world’s biggest air travel market by 2024 but budget carriers have made little headway so far because of the dominance of the big three state players: Air China, China Eastern Airlines and China Southern Airlines. Low-cost carriers such as AirAsia and China’s Spring Airlines control less than 10% of the Chinese market, compared to 56% in Southeast Asia, 40% in Europe and 32% in the US, according to AirAsia. While China is an enticing prize, analysts warned that it is a risky market for AirAsia, which is already struggling to build new businesses in India, Japan and Vietnam, and faces problems in markets such as Indonesia because of its rapid expansion.<br/>
Jetstar has started charging passengers to travel with babies on their laps during domestic and international flights. Passengers on the budget airline will pay A$30 per one-way journey to carry a child up to two years old on their lap on domestic Australian flights and A$50 on international flights. The charges came into effect on Monday. It was previously free to bring infants on domestic flights and on flights between Australia and New Zealand. Other international flights previously had a $40 fee. A Jetstar spokeswoman said introducing the charges brought Jetstar into line with its low-cost competitor Tigerair. "We know that fees and charges can be unpopular, but giving customers' choice and charging each customer for what they actually need helps us to offer the lowest possible fares, every day," she said. <br/>