If You Invested in Azul S.A. (AZUL)

Azul S.A. (traded on B3 as AZUL4 and on the New York Stock Exchange as AZUL) is a Brazilian airline in the scheduled passenger air transportation industry within the broader transportation and warehousing sector. According to the company, it is the largest airline in Brazil by number of flight departures and cities served. Azul operates a network that includes regional, domestic and international routes, connecting a wide range of Brazilian destinations and select international markets.

The company describes an extensive flight network with around 1,000 daily flights to more than 150–160 destinations and over 300 non-stop routes, supported by an operating fleet that has been reported at more than 160–200 aircraft and a workforce of over 14,000–15,000 Crewmembers. Azul emphasizes its role in connecting communities across Brazil, including smaller and larger cities, and highlights that it flies more than 300 direct regional, domestic and international routes. These characteristics position Azul as a major participant in Brazilian commercial aviation by scale of departures and breadth of network.

Azul’s business is centered on transporting passengers and related air travel services. Public company materials reference a loyalty program, Azul Fidelidade, and mention that the company honors loyalty points, tickets, travel packages and Customer benefits as part of its ongoing operations. Azul has also highlighted aspects of its customer service, referring to Customer service of excellence and a focus on connectivity and value for travelers within Brazil and to international destinations served by the company.

In addition to its core passenger transportation activities, Azul has engaged in financial and capital structure initiatives. Company announcements describe negotiations and agreements with bondholders, lessors, aircraft manufacturers and other financial stakeholders, including exchange offers for various series of senior secured notes and convertible instruments, as well as debtor-in-possession financing commitments. These actions are aimed at reorganizing and deleveraging the company’s balance sheet, with references to the elimination of significant amounts of debt and financial obligations and the receipt of new capital.

Azul has been recognized in the aviation industry for operational performance and customer experience. The company reports that Cirium, a leading aviation data analysis company, named Azul the most on-time airline in the world in 2022, and that Azul was also recognized as the most on-time airline in the world in 2023 in another company release. Additionally, Azul states that TripAdvisor’s Travelers’ Choice Awards named it the best airline in the world in 2020, and that it was the first Brazilian flag carrier to receive that top ranking in those awards.

From a corporate and regulatory perspective, Azul files reports with the U.S. Securities and Exchange Commission as a foreign private issuer, including annual reports on Form 20-F and current reports on Form 6-K. The company’s interim condensed individual and consolidated financial statements are prepared under Brazilian and international interim financial reporting standards and are subject to review by independent auditors. A statutory audit committee issues opinions on these financial statements, and the board of directors provides declarations regarding its review and approval of the financial information.

Azul is headquartered in the municipality of Barueri, in the state of São Paulo, Brazil. Its principal executive offices are located in Barueri, and the company’s corporate structure includes various subsidiaries and financing entities, some of which are incorporated outside Brazil. The airline’s shares and related securities are listed in Brazil and in the United States, and certain debt instruments have been issued through financing subsidiaries.

The company has been undergoing a court-supervised financial reorganization process under Chapter 11 of the United States Bankruptcy Code. Azul voluntarily filed Chapter 11 petitions with the United States Bankruptcy Court for the Southern District of New York on May 28, 2025. Company communications and auditor reports note that this process is intended to restructure the company’s balance sheet, reduce leverage, adjust lease obligations and optimize its fleet, while Azul continues to operate flights and conduct sales in the ordinary course of business. The company has also disclosed a backstop commitment agreement to support an equity capital raise, subject to court approval.

Azul has entered into restructuring support agreements with key financial stakeholders, including existing bondholders, its largest lessor and strategic airline partners. It has also announced a non-binding memorandum of understanding with Abra, the majority investor in Gol and Avianca, expressing the intent to combine their businesses in Brazil, with the expectation that operating certificates and brands would remain separate if such a combination is completed. This memorandum is subject to due diligence, definitive agreements, regulatory approvals and other customary closing conditions.

Auditor reports included in Azul’s interim financial filings draw attention to material uncertainty related to the company’s ability to continue as a going concern, citing factors such as current liabilities exceeding current assets, negative shareholders’ equity and cash flows applied to operating activities, alongside the Chapter 11 filing. Management’s plans and actions to address these conditions are described in the notes to the financial statements, and the financial information has been prepared under the going concern assumption without adjustments that might result from the outcome of the restructuring.

Business model and operations

Azul’s business model is based on scheduled passenger air transportation. The company’s public disclosures emphasize its scale in terms of daily flights, number of destinations and non-stop routes, as well as the size of its operating fleet and Crewmember base. Azul highlights that it connects more than 150–160 cities and operates a network of around 300 non-stop routes, with over 1,000 flights per day in some disclosures. These characteristics indicate a hub-and-spoke and point-to-point network structure that spans regional, domestic and international markets, although specific hub airports are not detailed in the provided materials.

The company also references a loyalty program and air traffic liabilities associated with tickets and loyalty points, which appear as significant items in its financial statements. Airport taxes and fees, leases, loans and financing, convertible debt instruments and provisions are key components of its liabilities, reflecting the capital-intensive nature of airline operations and the importance of aircraft leases and financing arrangements.

Financial restructuring and capital structure

Azul has undertaken a series of financial restructuring steps. Company announcements describe negotiations worth over US$2.4 billion with bondholders, lessors and aircraft manufacturers, resulting in the elimination of more than US$2.1 billion in debt and financial obligations and the receipt of new capital. These negotiations included exchanges of instruments convertible into company stock for preferred AZUL4 shares and conversions of financial debt maturing in later years, along with other measures intended to improve cash generation and deleverage the company.

In addition, Azul has launched exchange offers for different series of senior secured notes, including First Out Notes due 2028 and Second Out Notes due 2029 and 2030, along with related consent solicitations to amend existing indentures. Company disclosures provide details on participation levels in these exchange offers, minimum exchange conditions, issuance of superpriority notes and other conditions tied to a broader transaction support agreement. The company has also reported on the extension of exchange offer deadlines and early participation results.

Following the Chapter 11 filing, Azul secured commitments for debtor-in-possession financing and has indicated that this financing, together with ongoing operations and other court approvals, is intended to provide liquidity during the restructuring process. The company has also disclosed a backstop commitment agreement for an equity rights offering of up to US$650 million, with additional contemplated equity investments from strategic partners, subject to conditions and court approval.

Recognition and market positioning

Azul’s public communications emphasize recognition by third parties for punctuality and service quality. The company notes that Cirium named Azul the most on-time airline in the world in 2022 and, in another release, in 2023. It also highlights that TripAdvisor’s Travelers’ Choice Awards named Azul the best airline in the world in 2020, and that it was the first Brazilian flag carrier to receive that top ranking. These recognitions are used by the company to support its positioning in terms of operational performance and customer experience.

Regulatory reporting and governance

As a foreign private issuer with securities listed in the United States, Azul files annual reports on Form 20-F and current reports on Form 6-K with the U.S. Securities and Exchange Commission. The company’s interim financial information is prepared under Brazilian and international accounting standards for interim reporting and is reviewed by independent auditors. A statutory audit committee issues summary reports and opinions on the financial statements, and the board of directors provides declarations that it has reviewed, discussed and agreed with the interim condensed individual and consolidated financial statements and with the independent auditor’s report.