Azul (AZUL) and Abra, the majority investor of Gol and Avianca airlines, said late Wednesday they have signed a non-binding memorandum of understanding to combine their businesses in Brazil.

Under the potential deal, the companies expect to keep their separate operating certificates and brands. The MoU paves the way for negotiations on the "unification of strategy" and launches the process for regulatory approvals, the companies said.

The purpose of the merger is to increase the Brazilian aviation sector's strength and promote growth "through more destinations, routes, connectivity and services to consumers."

The two firms said they have mostly complementary and non-overlapping routes.