Brazil’s Azul airline has launched a $1.3 billion share sale, aiming to settle its debts. This is part of a US Chapter 11 restructuring, which was approved by a US bankruptcy court. It will wipe out over $2 billion in liabilities. The airline is issuing around $724 billion new shares which current shareholders get priority to buy them. Azul’s goal is to stabilize the company’s finances and to exit bankruptcy by early 2026.
Backed by the Court
The restructuring plan received “overwhelming support” from creditors and court approval, allowing Azul to convert a major portion of its debt into equity. The plan includes a $650 million backstop from creditors and up to $300 million in strategic equity investments from American Airlines and United Airlines.
This partnership with major US carriers injects crucial capital and signals strong commercial confidence in Azul’s future. The airline has both renegotiated aircraft leases and scaled back orders with Embraer to align its fleet and costs with a post-restructure reality.
Shares Crash Amidst Uncertainty
The announcement triggered a sharp sell-off in Azul’s stock, with shares plummeting by 25% due to severe dilution from the enormous new share issuance.
CEO John Rodgerson stated:
“We can now execute the plan… This debt comes off my balance sheet and turns into equity, so we end up in a much lighter situation.”
However, analysts note the market now views Azul as a company in “structural transformation,” with future ownership and cash flows remaining highly uncertain.
Despite the market’s mixed reaction, the restructuring slashes Azul’s debt by 60% and cuts annual interest expenses by approximately USD 200 million. The airline aims to emerge as a leaner, more resilient player in Latin America’s competitive aviation market.
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