The deal would create a dominant airline in Brazil, as the combined company would have approximately 60% of the domestic market, surpassing LATAM Airlines' 40% market share.

A proposed merger between Brazilian airlines Gol and Azul would strengthen the sector and prevent either company from going bankrupt, Brazil's ports and airports minister told Reuters , giving the government a key green light to the potential deal.

Azul and Abra, the majority investor in Gol and Colombia's Avianca, announced earlier this month that they had signed a non-binding memorandum of understanding with the intention of combining their businesses in Brazil.

"It is a priority for the government to preserve the aviation sector and, above all, to safeguard jobs and income," Silvio Costa Filho said in an interview. "The possibility of a Gol-Azul merger is positive for strengthening Brazil's aviation industry."

The merger of the two airlines would create a dominant airline in Latin America's largest economy, as the combined company would have approximately 60% of the domestic market, surpassing LATAM Airlines' 40% market share.

This has raised concerns about competition and the cost of airfares. LATAM's head in Brazil, Jerome Cadier, told O Globo that the deal would require "serious mitigation measures" from antitrust regulator CADE.

Its former director, Gesner Oliveira, said the country needed more competition, not less. "If the merger goes ahead, the biggest loser will be the consumer," he told Reuters.

However, Costa Filho argued that a merger would help both companies survive, preserve jobs, allow for lower credit costs and increase connectivity.

Latin American airlines have struggled with high debt since the COVID-19 pandemic, with most forced to restructure and several ending up bankrupt.