Brazilian airline Azul files for Chapter 11 bankruptcy in US

Azul SA filed for bankruptcy, making it the latest major Brazilian airline to seek protection from creditors after struggling for more than a year with higher expenses and the lingering impact of the pandemic on the aviation sector. The carrier started a voluntary restructuring in the United States under Chapter 11, including about $1.6 billion in financing, Azul said in a filing on Wednesday. The company aims to shed more than $2 billion in debt and receive about $950 million in new capital contributions upon exit, it said. [caption id="attachment_57288103" align="aligncenter" width="1032"] (Courtesy/Azul)[/caption] Once the restructuring process is complete, Azul said it will repay the financing with proceeds from an equity offering of as much as $650 million, backed by “key financial partners.” United Airlines Holdings Inc. and American Airlines Group Inc. plan to invest up to $300 million in equity, subject to certain conditions, according to the filing. “These agreements mark a significant step forward in the transformation of our business — one that enables us to emerge as an industry leader in the main aspects of our business,” Chief Executive Officer John Rodgerson said in the release. Stephen Johnson, American Airlines’ chief strategy officer, said in a statement that the company is confident Azul’s restructuring plan will have a positive impact on Brazil’s aviation market. United declined to comment beyond the Azul release. Azul’s stock slumped as much as 12% on Wednesday before paring losses, and was down less than 1% as of 1:55 p.m. in Sao Paulo. Bonds due in 2028 fell over 12 cents to trade at 20 cents on the dollar, according to Trace pricing. Failed reworks The Chapter 11 filing comes after a drawn-out attempt by Azul to get its ailing finances in shape. In the past year, the carrier cut deals with lessors, exchanged its debt and raised hundreds of millions in fresh cash. It had been working to secure additional funding from bondholders after launching a follow-on share offering aimed at improving its capital structure. Those efforts ultimately failed, as difficult economic conditions in its home market — including interest rates at a two-decade high — and exchange-rate pressures amid heightened volatility in global currency markets impacted Azul’s cash position. “This follows multiple attempts over the past few years to address the weight of liabilities accrued as a result of the COVID pandemic and the devaluation of the Brazilian real,” Savanthi Syth, a Raymond James analyst, wrote in a note to clients. Syth wrote she expects minority shareholders to be “materially diluted” as a result of the process. Azul’s bonds and stock have slumped this year. Shares traded in Sao Paulo and New York are down over 70% in 2025, at a record low. Its dollar bonds due in 2028 have handed investors a 62% loss in the span, the worst performers among emerging-market corporates. [caption id="attachment_57289139" align="aligncenter" width="1200"] (Courtesy/Bloomberg)[/caption] S&P Global Ratings recently downgraded the airline’s credit score to CCC-, with a negative outlook, citing eroding liquidity and a “material cash burn.” “The company faces material cash outflows related to high lease and financial expenses,” analysts led by Amalia Bulacios wrote in a May 20 note. “We think access to additional financing is highly restricted following two debt restructurings in recent years.” With the filing, Azul becomes the last of the three dominant Brazilian carriers to seek protection from creditors. Gol Linhas Aereas Inteligentes SA did so in January 2024, a process it expects to exit in June. Latam Airlines Group SA, along with regional majors Avianca Holdings SA and Grupo Aeromexico SAB, filed for bankruptcy in 2020.

Brazilian airline Azul files for Chapter 11 bankruptcy in US

Shares traded in Sao Paulo, New York down more than 70% in 2025

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