JetBlue founder to start Brazilian airline

March 27, 2008 10:45:05 AM PDT
The founder of JetBlue Airways announced plans Thursday for a new Brazilian airline that would begin operating next year with three jets and eventually grow to a fleet of 76 planes flying nationwide. JetBlue chairman David Neeleman said the opportunity is clear: Latin America's largest nation has a growing passenger travel market dominated by two airlines that face little domestic competition and charge high prices. "The prices that people pay here in Brazil are 50 percent higher than the prices people pay in the United States." Neeleman said his new venture has no connection to JetBlue Airways Corp., but some former JetBlue executives will join the venture. The new airline doesn't have a name yet, and will use mid-size E-195 jets made by Brazil's Empresa Brasileira de Aeronatica SA. The new airline has placed an order for 36 of the 118-seat planes with Embraer, a purchase Neeleman valued at $1.4 billion. The carrier also has taken options for 40 more planes that would give the overall deal a value of $3 billion.

The entry of the airline will bring the first serious competition in years to Brazil's TAM Linhas Aereas SA and Gol Linhas Aereas Inteligentes SA, two carriers that have dominated air travel in Brazil since the collapse several years ago of Varig, Brazil's former flagship carrier.

"Brazil is a country that needs more competition and a different kind of competition," Neeleman said.

Neeleman also said he is discussing his future as chairman of JetBlue with members of the New York-based carrier's board, and suggested that a decision on his departure from the post could come within several months.

"My attention needs to be here," he said at the Sao Paulo news conference.

"We are not privy to conversations that the board members have," said JetBlue spokesman Bryan Baldwin, who earlier said the company was aware of no plans for a change in Neeleman's role as chairman.

Baldwin declined further comment, and said chief executive Dave Barger was unavailable for comment.

Neeleman said that he has raised $150 million for the venture so far from investors in the United States and Brazil.

The JetBlue founder was born in Brazil and holds Brazilian citizenship in addition to American citizenship. The fact that is he Brazilian allows him to overcome a major hurdle for investors trying to enter Brazil's passenger airline market: A law stating that foreigners can hold no more than 20 percent of Brazilian carriers.


AP Business Writer John Wilen in New York contributed to this story