Icelandair in Negotiations to Purchase 49% of Azores Airlines

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The Azores islands are steadily becoming one of the most talked about vacation destinations, but its airline, Azores Airlines, continually struggles financially. However, relief may be coming in the form of Icelandair — the carrier today filed a firm Statement of Interest for purchasing a 49% stake in Azores Airlines. In fact, according to parent company SATA, the Icelandic carrier is the only prequalified party to indicate interest in the capital purchase and thus can move to phase 2 of the purchase process.

Azores Airlines has hefty debts of around $250 million, and thus needs to sell a stake of the airline in order to continue its day-to-day operations. It's owned by the SATA group, which actually owns two airlines that serve the islands: Azores Airlines, which flies international routes to and from from the Azores on Airbus aircraft, and SATA Air Açores, which operates inter-island flights on Bombardier aircraft. The latter of these airlines is performing fine, and operates a necessary service for the residents (and visitors) of the islands.

While Icelandair has become a household name to travelers in North America, Azores Airlines remains relatively niche — its only long-haul routes to North America are between Ponta Delgada (PDL) and Toronto (YYZ) and Boston (BOS). It's worth noting, though, that the two carriers have important similarities. Namely, they're both based in locations that lie between North America and Europe, and attempt to take advantage of the flow of transatlantic passengers using stopovers as an incentive to capture passengers.

Despite the financial difficulties, Azores Airlines recently took delivery of two brand-new Airbus A321neo aircraft to supplement its existing fleet of three Airbus A320s, one A330 (which is currently undergoing maintenance in Brazil) and one A310.

At this point, it's unclear what (if anything) would change at Azores if Icelandair is successful at purchasing a minority stake in the carrier. But, it seems that the carrier is one step closer to finding a solution to its perennial financial problems. Hopefully, the airline can get its finances in order so that it can provide more service from North America to its trendy island home base.