Azul concludes negotiations worth over US$ 2.4 billion with its bondholders, lessors and OEMs

Rhea-AI Summary

Azul, Brazil's largest airline by destinations and daily flights, has successfully completed negotiations with bondholders, lessors, and OEMs, resulting in the elimination of US$ 2.1 billion in debt and financial obligations. The restructuring process, initiated in 2024, includes converting US$ 557 million of instruments into 94 million preferred AZUL4 shares and converting over US$ 785 million of financial debt maturing in 2029-2030.

The company secured a US$ 525 million capital injection and strengthened its cash flow by more than US$ 300 million through 2027. Despite challenges including Brazilian real devaluation, high fuel costs, and supply chain issues, Azul achieved amicable agreements with all partners. The restructuring will deleverage Azul by approximately 1.4x on a pro-forma basis using 3Q 2024 figures. The company plans to add 15 new Embraer E2s to its fleet throughout the year.

Positive

• Elimination of US$ 2.1 billion in debt and financial obligations
• New capital injection of US$ 525 million
• Cash flow strengthening by US$ 300 million through 2027
• Deleveraging by 1.4x on pro-forma basis
• Fleet expansion with 15 new Embraer E2s

Negative

• Significant shareholder dilution through conversion of US$ 557 million debt into 94 million shares
• Challenging operational environment with high fuel costs
• Currency exposure to Brazilian real devaluation

The Company concluded its restructuring process initiated in 2024 to solidify its financial position, eliminating US$ 2.1 billion in debt and financial obligations and receiving US$ 525 million in new capital.

Faced with a challenging scenario, the company opted for a commercial negotiation with its partners, enabled by its reputation and solid business model.

SÃO PAULO, Jan. 28, 2025 /PRNewswire/ -- Azul, the largest airline in Brazil in terms of destinations served and daily flights, announced this Tuesday the conclusion of the negotiation process with its bondholders, lessors and aircraft manufacturers, resulting in the elimination of over US$ 2.1 billion in debt and financial obligations from the company's balance sheet. This is the result of the exchange of instruments convertible into company stock worth US$ 557 million held by lessors and OEMs for 94 million preferred AZUL4 shares, as well as converting more than US$ 785 million of financial debt maturing in 2029 and 2030, along with other improvements to the company's cash generation.

With over 16 years of operation in Brazil, the company faced last year a challenging external scenario, with the devaluation of the real against the dollar; operational costs highly impacted by the price of aviation fuel, which is one of the most expensive in the world; the high rate of litigation in the sector; the global supply chain crisis; and the floods in the south of Brazil. Even with this scenario, Azul was able to reach amicable agreements with all its investors and commercial and financial partners, enabled by the trust of the overall market.

"This is another very important moment in Azul's history, as we conclude a negotiation process that will solidify our company even further. In addition to the extinction of US$ 2.1 billion in financial obligations, we received today a new capital injection of more than US$ 525 million, which will increase our liquidity and ensure we are stronger than ever," highlights John Rodgerson, CEO of Azul.

The extinction of obligations includes strategic commercial agreements with lessors, manufacturers, and other suppliers, also ensuring a strengthening of the cash flow by more than US$ 300 million until the end of 2027.

In addition to providing an improvement in cash flow over the next three years, the conclusion of the agreements will deleverage Azul by approximately 1.4x on a pro-forma basis using 3Q 2024 figures. 

"We are very optimistic about Azul's future. We will add 15 new Embraer E2s to our fleet throughout this year, which will be extremely valuable to solidify our plan and expand access to air travel across the country. We thank our partners and investors for their trust, which allowed us to successfully conclude this negotiation and who will continue to support us in the constant strengthening of Azul," concludes the executive.

About Azul 
Azul S.A. (B3: AZUL4, NYSE: AZUL) is Brazil's largest airline in number of flights and destinations served, with over 1000 flights per day to more than 160 cities. With an operational fleet of more than 160 aircraft and more than 14,000 crew members, Azul flies more than 300 direct regional, domestic and international routes. In 2022, Azul was named the most on-time airline in the world, according to the OnTime Performance-OTP Review report by Cirium - the world's leading reference for operational data in the aviation industry. In addition, in 2020, Azul was elected the best airline in the world by TripAdvisor Travelers' Choice, being the only Brazilian carrier to be awarded with both prestigious industry recognitions. For more information, visit www.voeazul.com.br/imprensa.

View original content:https://www.prnewswire.com/news-releases/azul-concludes-negotiations-worth-over-us-2-4-billion-with-its-bondholders-lessors-and-oems-302362666.html

SOURCE Azul

FAQ

How much debt did Azul (AZUL) eliminate in its 2024 restructuring?

Azul eliminated US$ 2.1 billion in debt and financial obligations through its restructuring process completed in January 2025.

How many new shares did Azul (AZUL) issue in its 2025 debt restructuring?

Azul issued 94 million preferred AZUL4 shares in exchange for US$ 557 million of convertible instruments held by lessors and OEMs.

What is the expected cash flow improvement for Azul (AZUL) through 2027?

Azul expects to strengthen its cash flow by more than US$ 300 million through the end of 2027.

How many new Embraer E2 aircraft will Azul (AZUL) add in 2025?

Azul plans to add 15 new Embraer E2 aircraft to its fleet throughout 2025.

How much new capital did Azul (AZUL) receive in its 2025 restructuring?

Azul received US$ 525 million in new capital as part of its restructuring process.