Brazil’s Azul reaches agreement with lessors, OEMs

Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos) has reached commercial agreements with select creditors to strengthen its cash generation means and improve its capital structure.

The carrier said in a statement that lessors and OEMs that hold approximately 92% of the airline’s existing equity issuance obligations, have now agreed to eliminate approximately BRL3 billion Brazilian reais (USD545 million) from its current debt balance and, in exchange, receive up to 100 million new preferred shares in Azul in a one-time issuance.

Azul said in a filing to the US Securities and Exchange Commission (SEC) that amendments to certain other obligations also have to be made, such as raising additional financing. Last month, it was reported that the carrier was looking to at a private offering in the first half of 2025.

The Brazilian company started reorganising its business earlier this year, looking to optimise its equity structure and develop a new plan to improve profitability and liquidity in a post-pandemic environment. It rejected using Chapter 11 bankruptcy proceedings in the United States, as protection from creditors was the carrier's least preferred option.

“Negotiations continue with the holders of the remaining 8% of the equity issuance obligations, as well as with other stakeholders,” said the company.

At the end of 2024's second quarter, Azul had an operating fleet of 183 aircraft, of which 163 were under operating leases. The ch-aviation fleets module shows the Brazilian carrier leasing airframes from 20 lessors, the largest one being AerCap with 58 planes. Other lessors include Aircastle, Avenue Capital Group, Avolon, Azorra, subsidiary Azul Finance, BOC Aviation, Carlyle Aviation Partners, Castlelake, CDB Aviation, Chorus Aviation, DAE Capital, Elevate Capital Partners, ICBC Financial Leasing, Jackson Square Aviation, Nordic Aviation Capital, SKY Leasing, SMBC Aviation Capital, TrueNoord, and World Star Aviation.