The Brazilian airline Azul SA is working with Citigroup Inc. and Guggenheim Partners as it explores a potential offer for its troubled competitor Gol Linhas Aereas Inteligentes SA, Bloomberg News reported. Shares in both companies rallied. The companies are advising Azul as it weighs several options, including an outright acquisition of its rival. Azul still could decide to shelve the idea. Any offer would need approval from the country’s regulator — known as Cade. A tie-up between Azul and Gol would help them cut costs and boost revenue, helping support share prices, Bradesco BBI analyst led by Victor Mizusaki wrote in a note. Sao Paulo-based Gol filed for chapter 11 after grappling with $2.7 billion in near-term liabilities and carrying out a dozen debt exchanges. Under the process, it has managed to increase its debtor-in-possession financing to $1 billion from $950 million. Moody’s Investors Service on Tuesday upgraded Gol parent Abra Group’s credit rating to Caa1 from Caa3 and lifted the outlook to stable from negative. The upgrade hinged on Gol securing the $1 billion DIP financing, the ratings company said.
