United Continental Holdings, Inc .'s UAL wholly owned subsidiary, United Airlines, has increased its stake in the Brazilian carrier, Azul S.A. AZUL . Notably, United Airlines purchased shares of Azul from Hainan Airlines, a China-based carrier, thereby raising its stake to 8% from its previous 3.7% in the carrier. The move found favor with investors as the United Continental stock gained 1.9% on Apr 27 to $67.86.
Through this initiative, the carrier aims to offer its customers with more connectivity options between the United States and Brazil. Moreover, the former is a popular tourist destination for the citizens of the latter. The strategy is indicative of the carrier's initiatives to attract traffic to the location and thus generate revenues.
United Airlines made its first investment in the carrier in 2015. This Chicago-based carrier claims that traffic connecting the two countries has been at its peak ever since.
Under the current code share agreement between the two airlines, passengers of both carriers can connect at Fort Lauderdale, Orlando as well as Sao Paulo Guarulhos airports.
United Continental Holdings, Inc. Price
The US airline industry has long been trying to tap the large Brazilian market. To this end, the Open Skies treaty was signed in 2011 to enhance travel between the two countries. However, there was a stiff opposition from the Brazilian airlines in the past as they feared competition from the US carriers.
Removing all uncertainties, Brazil's senate approved the treaty in March 2018. The agreement will be legalized once the Brazilian President endorses it.
With the approval of the Open Skies treaty, United Airlines and Azul will possibly proceed with their much-awaited joint venture . Also, LATAM Airlines Group S.A. LTM plans to collaborate with American Airlines Group Inc. AAL .
United Continental Holdings carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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