Brazilian carrier Azul has concluded its restructuring by agreeing with bondholders, lessors and aircraft manufacturers to eliminate R$12.3 billion ($2.1 billion) in debt.
“Faced with a challenging scenario, the company opted for a commercial negotiation with its partners, enabled by its reputation and solid business model,” Azul said on 29 January.
Azul’s debt reduction “is the result of the exchange of instruments convertible into company stock worth $557 million held by lessors and OEMs for 94 million” Azul shares, in addition to the conversion of about $785 million of debt maturing in 2029 and 2030.
Sao Paulo-based Azul entered a financial restructuring process last year, citing the devaluation of Brazil’s currency against the US dollar, rising fuel prices, snags in the global supply chain, floods in Brazil and “the high rate of litigation in the sector”.
”This is another very important moment in Azul’s history, as we conclude a negotiation process that will solidify our company even further,” says John Rodgerson, Azul’s chief executive.
“In addition to the extinction of $2.1 billion in financial obligations, we received today a new capital injection of more than $525 million, which will increase our liquidity and ensure we are stronger than ever.”
Azul also says it has strengthened its cash flow by more than $300 million for the next three years via “strategic commercial agreements” with aircraft lessors and aircraft manufacturers.
Looking ahead, Azul plans to add 15 new Embraer 195-E2 jets to its fleet in 2025, “which will be extremely valuable to solidify our plan and expand access to air travel across the country”, Rodgerson says.
Fleets data from aviation analytics company Cirium show that Azul has about 25 E195-E2s in service, and that it holds 49 unfilled orders for the type.
Earlier this month, Abra Group – which owns Brazil’s Gol and Colombia’s Avianca – entered a memorandum of understanding (MoU) with Azul to explore a combination that would create Brazil’s largest airline.
Abra informed shareholders on 15 January of its “intent to explore a combination of business in Brazil” with Azul. The MoU represents “an initial stage of a negotiation process between Abra and Azul to explore the feasibility of a potential transaction”, according to Gol.
