Azul Airlines Completes Major Restructuring With $2.4 Billion Deal

Brazil's flagship carrier, Azul Airlines, has successfully finished a significant negotiation process involving its bondholders, lessors, and aircraft manufacturers. This deal amounts to more than $2.4 billion and promises to enhance the airline’s financial health considerably. The negotiation is vital as Azul works to solidify its market position in the Brazilian aviation sector.

Overview of the Negotiation Process

The completion of this negotiation comes after a year of rigorous restructuring efforts that began in 2024. During this period, Azul managed to eliminate around $2.1 billion in debt and various financial obligations. This achievement includes the conversion of approximately $557 million in convertible instruments held by lessors and original equipment manufacturers (OEMs) into 94 million preferred shares of AZUL4. Significant portions of the company's existing debt, totalling over $785 million due in 2029 and 2030, have also been converted, enabling further financial improvements.

Azul's successful negotiation demonstrates the company’s resilience in a challenging financial environment influenced by numerous external factors, such as the depreciation of the Brazilian real, escalating aviation fuel prices, extensive litigation within the sector, and disruptions caused by the global supply chain crisis, not to mention the recent floods affecting southern Brazil.

Strategic Significance

John Rodgerson, the CEO of Azul, characterized the conclusion of these negotiations as a crucial milestone in the company’s trajectory. He stated, "This is another very important moment in Azul's history, as we conclude a negotiation process that will solidify our company even further." This restructuring not only lifts a heavy financial burden off Azul’s shoulders but also secures an infusion of new capital exceeding $525 million, bolstering the airline’s liquidity position.

The extinguished obligations include crucial commercial agreements with lessors, manufacturers, and suppliers, leading to an increased cash flow of over $300 million by the end of 2027. Such financial maneuvers are expected to decrease Azul's leverage by approximately 1.4 times based on pro-forma calculations from the third quarter of 2024, indicating significantly improved financial ratios going forward.

Looking Ahead

With optimism for the future, Azul plans to enhance its operational fleet by introducing 15 new Embraer E2 jets throughout the year. This strategic move aims to further cement the airline's market position and expand access to air travel across Brazil. In thanking partners and investors for their continued trust, Rodgerson expresses confidence in Azul’s ongoing growth and stability.

About Azul Airlines

Azul S.A. stands as Brazil's largest airline by the number of flights and served destinations, offering over 1,000 flights daily across more than 160 cities. With a fleet comprising over 160 aircraft and a workforce of more than 14,000 crew members, Azul operates around 300 direct routes, both domestically and internationally. Renowned for its punctuality, Azul was named the world's most on-time airline in 2022 and received the prestigious title of the best airline in the world by TripAdvisor Travelers' Choice in 2020, underscoring its commitment to quality service and operational excellence.

For more detailed information about Azul Airlines and its services, you can visit www.voeazul.com.br/imprensa.