A plan to merge two of Brazil's top airlines to create a dominant carrier will likely win regulatory approval as a government push for a financially healthy sector outweighs concern about restricted competition, experts and lawyers told Reuters. A floated combination of Gol and Azul, formalized with a memorandum of understanding last week, would give the new firm overwhelming control over the country's domestic market. But both have faced financial turbulence since the pandemic, along with Brazil's current No. 1 carrier, LATAM Airlines' local unit. Costs remain high and air travel remains restricted in Latin America's largest nation and top economy. The cocktail of factors - and support from the administration of President Luis Inacio Lula da Silva - means that the merger process, while likely to face some pushback, is likely to proceed. "The impact (of the merger) needs to be thought about in the context of what the alternative is," said Andre Castellini, a senior partner at Bain & Company. "It's a necessary evil." Airlines in Brazil are hit by high taxes, strict consumer protections and face headwinds with the recent weakening of the Brazilian real against the U.S. dollar - used for expenses such as jet fuel and aircraft leasing contracts - said Nicole Villa, a lawyer specialized in aviation law.<br/>
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UK-based low-cost carrier EasyJet cut its headline loss before tax by 52% during its fiscal first quarter, as it looks ahead to a 2025 peak season that should keep it on track for its medium-term full-year profit target of GBP1b ($1.2b). Outlining its October-December performance on 22 January, EasyJet cited demand at its primary airports and for its package holiday offerings, alongside cost control and favourable fuel prices, as it achieved a loss before tax of GBP61m during what is traditionally a weaker quarter for the business. EasyJet’s overall revenue was up 13% at GBP2b. “EasyJet performed well in the quarter, reducing Q1 losses by 52% year on year while flying 7% more customers to an even greater choice of destinations across the network,” says CE Kenton Jarvis, who took over from Johan Lundgren on 1 January. “EasyJet holidays continued its growth, achieving around a 40% increase in profits during the period.” The carrier is seeing some unit revenue softness in its fiscal second quarter, but says that is to be expected amid capacity growth of around 14%. “Route maturity” benefits from that expansion are expected next winter and beyond, the airline states. For the key second half of the airline’s fiscal year, when EasyJet would traditionally make its money, demand and bookings are ahead year on year and are supporting the consensus of a full-year profit before tax of just over GBP700m, the airline says. EasyJet is guiding for capacity growth of around 8% for its full fiscal year.<br/>
The Australian government has become the principal secured creditor of embattled operator Regional Express (Rex), after acquiring the carrier’s debt. Transport minister Catherine King says her government has acquired A$50m ($31.4m) of debt from Rex’s largest creditor, PAGAC Regulus Holdings, a move she calls an “important step to prevent an adverse outcome for regional communities”. King on 23 January adds that assuming Rex’s debt “makes clear” Canberra’s “ongoing commitment” to maintaining regional aviation access in the country. Rex entered administration at the end of July as its financial challenges mounted after an expansion into jet operations.While its Boeing 737 flights were immediately grounded, the airline has continued its Saab 340 regional flights after the government agreed to guarantee these services. Canberra has also provided a commercial loan of up to A$80m to keep Rex’s operations going, and extended its flight-booking guarantee to enable to Rex to continue flying during an lengthened administration process. A suitable buyer for Rex’s regional operations has yet to emerge.<br/>