Hot on the heels on Abra Group revealing plans to become a publicly traded company on the US stock market, the Latin American airline company has disclosed a major addition to its Airbus aircraft orderbook.
Abra Group said on 16 October it is picking up options for an additional 50 Airbus A320neos, bringing its unfilled order book to 138 of the narrowbody jets.
It also signed a deal with Avolon Aviation to lease up to seven A330neos, complementing last year’s signing of a memorandum of understanding with Airbus to take four A350-900s. Both types of widebodies will give the group’s carriers – Avianca, Gol and Wamos Air – significantly more long-haul operational capability.
Between the two major strategic moves, chief executive Adrian Neuhauser believes Abra Group is further entrenching itself as one of Latin America’s largest airline groups since consolidating in May 2022.
“It cements and continues to execute the plan we originally had,” he tells Airline Business on 16 October. “What we set out to do was consolidate a group that would be able to compete and interconnect and provide service throughout the region.”
Abra Group’s overarching mission got sidetracked by Gol’s Chapter 11 restructuring, a court-supervised process from which it emerged in May. But the Brazilian carrier has since posted strong financial results and appears to be leaving the struggles of 2024 in its contrails.
Gol has emerged ”with a solid business plan, with a solid balance sheet and executing really, really well”, Neuhauser says.
”Avianca is well along on its business plan an is de-leveraging nicely,” he adds. “We’re just sort of moving along and executing, and that requires us to plan for the long-term fleet of this company… and it also requires to plan for the long-term capital structure, hence the IPO discussions.”
Chief financial officer Manuel Irarrazaval says that Abra Group has always intended to launch an initial public offering and gain access to US capital markets.
“Having Gol restructured and now fully integrated into the group, it’s kind of the natural next step in terms of getting all of our regulatory filings internally lined up so we have that option,” he says. “It’s one thing to be prepared and it’s another thing to have a market. Today, there is a market. Hopefully, it’s still there when we’re ready.”
Abra Group is targeting an IPO in 2026 but does not get more specific. Irarrazaval says the company would like it to happen “as soon as possible”.
The parent company become a publicly traded company would not immediately change how Avianca and Gol report quarterly results. Both companies still have separate debt and stakeholders, along with different capital structures, and will continue reporting separately for the time being. However, Abra Group is working to centralise its financial reporting processes.
“We will move toward having consolidated reporting and really point investors to the way we think of the business, which is as a consolidated group,” Neuhauser says.
AZUL COMBINATION ON BACK BURNER
Abra Group plans to remain focused on the IPO plan, and has no intention of revisiting its now-defunct attempt to combine with Brazilian carrier Azul to create the country’s largest carrier. The group recently said that it had ended those talks with Azul, which is currently working through a Chapter 11 bankruptcy process of its own.
Irarrazaval says Abra Group continues to believe that consolidation within the Latin American airline sector is healthy, but it has no immediate plans to re-engage with Azul’s management team regarding a potential combination.
“We had discussions with Azul while we had Gol in Chapter 11; we had some discussions with them while they were filing,” he says. “They’ve concentrated on exiting Chapter 11, which makes sense now. We are concentrated on doing our IPO. Anything that distracts from that is kind of a second priority.”
Based on the current regulatory environment, Abra Group has the impression that securing anti-trust approval from Brazilian authorities would be difficult and time consuming, further dissuading them from any immediate action.
The airline company always intended for Gol to stand on its own legs after emerging with a plan to exit bankruptcy.
“We don’t need a merger to make our Brazil strategy work,” Irarrazaval says.
“Never say never, but not anytime soon,” Neuhauser echoes. “We are believers in the value of consolidation. We think the right answer for the region is to have stable, strong airlines that can invest, that can grow and provide more service.”