(Adds background on shelved IPO plans, fleet expansion)
By Aluisio Alves
SAO PAULO, March 23 (Reuters) - Brazilian airline Azul is cutting planned flights in April by nearly 10 percent from earlier forecasts, according to a source with knowledge of the decision, as the company feels the impact of the strong dollar.
The source, who spoke on the condition of anonymity, said Azul is also unlikely to add flights to Orlando, Florida, in May, as the airline had suggested earlier this month.
Brazil’s currency has lost about 16 percent against the dollar so far this year, driving up the cost of a trip to Disney World for vacationing Brazilians.
The stronger greenback also increases operating costs for airlines such as Azul that pay fuel and leasing contracts linked to the dollar but receive most revenue in Brazilian reais.
A press officer for Azul, which is controlled by JetBlue Airways Corp founder David Neeleman, declined to comment. The airline earlier this year shelved a planned initial public offering.
The decision to trim flights after years of surging growth shows Azul may be bending to the reality of a slumping Brazilian economy, despite plans for aggressive fleet expansion and a recently launched international service.
In December, Azul ordered 35 Airbus A320neo jets and announced plans to lease another 28 of the narrow-body aircraft. This adds to 11 Airbus wide-body jets that will fly to overseas destinations that Azul started serving this year.
Also in December, Azul had revived plans for an IPO, looking to list shares in Sao Paulo and New York in a debut worth around $1 billion, according to IFR, a Thomson Reuters capital markets publication.
But in January, Azul asked regulators for permission to delay the offering. Brazil’s tumbling currency and growing expectations for the worst recession in a quarter century have battered demand for IPOs in Latin America’s biggest market.
In the nearly seven years since Neeleman launched Azul, his fourth airline venture, it has grown into Brazil’s third-largest carrier, behind Gol Linhas Aereas SA and the Brazilian unit of Chile’s Latam Airlines Group SA.
But Azul’s domestic expansion has slackened, from 35 percent growth in 2014 to just 1 percent expansion of its flight network in January from a year earlier.
The launch of international service in January gave Azul an international network that already rivals Gol, measured in available seat-kilometers, an industry gauge of capacity. (Writing and additional reporting by Brad Haynes; Editing by Leslie Adler)