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Azul Linhas Aéreas has formalized its entry into a capital restructuring process under Chapter 11 of the U.S. Bankruptcy Code. The decision aims to optimize its financial structure and strengthen its position as a key player in the competitive Latin American air market. The Brazilian airline thus joins other companies in the region such as Aeroméxico, LATAM, and Avianca, which utilized this mechanism to navigate turbulent periods and emerge stronger; GOL Linhas Aéreas, the latest to file and mentioned several times as a potential partner of Azul, currently undergoes its own reorganization.
The company, which serves 160 destinations and transported 30 million passengers in 2024, enters this process with pre-arranged agreements established with key creditors, including AerCap, its main aircraft lessor, and strategic partners such as United Airlines, which already holds a 2.02% stake in its capital, and American Airlines.
The restructuring operation relies on a robust debtor-in-possession (DIP) financing package totaling $1.6 billion. These funds will allow Azul to cover a portion of its existing debt and add approximately $670 million in additional liquidity. Additionally, a rights offering for up to $650 million is contemplated. A potential additional capital injection of up to $300 million from United Airlines and American Airlines will bolster Azul’s financial position upon completion of the process.
Azul CEO John Rodgerson confirmed in an interview with Folha de S. Paulo that, once the judicial procedure concludes, United and American Airlines could each invest between $100 million and $150 million. This investment would grant them a relevant equity stake and seats on the board of directors, subject to the final approval of the restructuring plan.
Rodgerson emphasized that this stage represents a temporary pause in discussions with Abra Group, the conglomerate controlling GOL Linhas Aéreas, which also undergoes a restructuring process. “By deleveraging, Azul will fly higher. We are entering the process already with an exit in mind,” the executive stated. The primary objective, he indicated, is to halve the total debt and reduce the debt-to-EBITDA ratio from four to two times. Thanks to pre-negotiated agreements for both entry and exit from Chapter 11, the expectation is to complete the restructuring within a timeframe ranging from six months to one year.
During 2024, Azul reported an adjusted net loss of BRL 1.057 billion (approximately $187 million), although it recorded a positive operating result of BRL 3.507 billion (about $621 million).
Regarding the continuity of its services, Azul assured that all its scheduled flights, customer benefits, and commercial operations will continue without alterations. The airline also stressed that commitments to employees, suppliers, and passengers remain in effect. “Azul continues flying – today, tomorrow, and in the future,” Rodgerson affirmed.
From AerCap, CEO Aengus Kelly expressed his confidence that Azul will emerge “stronger than ever.” Kelly also highlighted that both companies are the largest operators of Embraer E2 aircraft, underscoring support for Brazil’s aerospace industry.
Andrew Nocella, Executive Vice President and Chief Commercial Officer of United Airlines, commented that “United is proud to have begun collaborating with Azul in 2014 and investing in the company in 2015. Since then, we have connected hundreds of thousands of passengers and are excited about the opportunity to continue growing this business.” He continued, stating that “Azul is more than a commercial partner for United: its customer-centric approach and unique route network, connecting large and small communities, have enhanced the passenger experience in Brazil. That is why we support Azul’s restructuring process and have signed an agreement to build an even stronger relationship in the future.”
Stephen Johnson, Vice President and Chief Strategy Officer of American Airlines, added that “we are confident that Azul’s plan to strengthen its future will be extremely positive for the Brazilian aviation market and for travelers to, from, and within Brazil.” He concluded by noting that “American has been flying to Latin America since 1942 and is proud to operate in 14 destinations in South America. Our service, alongside that of our partners GOL and JetSMART, combined with the strength and breadth of Azul’s network, will offer our customers a unique option for travel between the Americas and greater connectivity within Brazil and throughout South America. We are excited to support this process and to be part of Azul’s future.”
As part of this transformation, Azul’s board of directors approved the creation of an Independent Special Committee. This committee, composed of independent directors Renata Faber Rocha Ribeiro, Jonathan Seth Zinman, and James Jason Grant, will function as an advisory body to the board, with the authority to evaluate, plan, and oversee negotiations inherent to the Chapter 11 restructuring process.
Consistent with this new scenario, Azul announced the suspension of its financial projections for 2025, which had been previously disclosed. The company will reassess its financial outlook as the reorganization process progresses.
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