Brazilian carrier Azul has initiated the Chapter 11 process in a US bankruptcy court.
The Sao Paulo-based airline says it will continue operating its flying schedule uninterrupted and paying employees during the financial restructuring process, which will see the company alleviate significant debt related mostly to keeping operations afloat during the Covid-19 pandemic.
The company disclosed on 28 May that it had entered “restructuring support agreements” with stakeholders, including existing bondholders, lessor AerCap and partner carriers American Airlines and United Airlines.
In total, agreements secured by Azul include $1.6 billion in financing to support the restructuring process, the elimination of about $2 billion in debt and further equity financing of up to $950 million upon emergence from bankruptcy.
The exit financing figure includes a total of $300 million of investments from American and United that are “subject to satisfaction of certain conditions”, Azul says.
Azul reported strong results and an upbeat outlook during the seasonally strong first quarter, including a R$783 million ($139 million) first-quarter profit, compared with its R$1.1 billion loss during the same three months of 2024.
But that followed an exceptionally difficult full year of 2024, a period during which Azul lost R$8.3 billion. The carrier says it has struggled with “macroeconomic headwinds and aviation supply chain issues”.
Lack of aircraft and engine availability, operational disruptions from severe weather events and devaluation of the Brazilian real have created further challenges for Azul.
