Brazilian carrier Azul SA and the principal shareholder for rival Gol Linhas Aereas Inteligentes SA reached an agreement to work toward a merger, potentially creating one of the largest airlines in Latin America.

Abra Group (the majority investor of Gol and Avianca) and Azul signed a non-binding Memorandum of Understanding (MoU) today with the intent to explore a combination of their

Abra—which also controls Colombia’s flag carrier Avianca—and Azul concluded the two Brazilian airlines have 90% complimentary and non-overlapping routes. Last year, amid reports that Azul was interested in merging with its rival GOL, the airlines launched a domestic codeshare.

Brazilian carriers Azul and GOL have agreed to enter merger talks in a deal that could create Brazil’s largest airline group.

Abra Group and Brazilian carrier Azul have entered a memorandum of understanding (MoU) to explore a combination that would create Brazil's largest airline via a tie-up with Gol.

Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos) and Abra Group have signed a non-binding Memorandum of Understanding (MoU) “aligning terms and conditions for a potential business combination" between Azul and GOL Linhas Aéreas Inteligentes (G3, São Paulo Congonhas ).

Azul and Gol shares rose sharply on Thursday, following the announcement of a proposed merger between the two Brazilian airlines. Azul’s stock price rose by more than 4%, while Gol’s shares jumped by about 8%.

Azul (NYSE:AZUL) and Abra, the majority investor of Gol and Avianca, signed an agreement to combine their businesses in Brazil. The purpose of the business combination is to promote growth in the Brazilian aviation industry,