Azul Airlines Restructures R$3 Billion Debt With Creditors

(MENAFN- The Rio Times) Azul Airlines, Brazil's leading carrier, has achieved a significant milestone in its financial recovery efforts. The company recently announced agreements with 92% of its aircraft lessors and equipment manufacturers.

These deals cover approximately R$3 billion ($545 million) in obligations, marking a decisive moment for Azul's future. The restructuring plan involves converting a portion of the creditors' claims into preferred shares of Azul.

Up to 100 million new preferred shares will be issued to these creditors. This move aims to improve the airline's cash flow and optimize its capital structure.

Azul expects to reduce its lease payments substantially over the next two years. The company projects a decrease of R$1.3 billion ($236 million) in 2023 and R$1 billion ($182 million) in 2024.



These reductions will provide much-needed financial relief for the airline. Despite facing challenges, Azul remains optimistic about its future performance.

The company forecasts a revenue of R$20 billion ($3.64 billion) for 2024, representing a 7% increase from the previous year. Additionally, Azul maintains its EBITDA projection of over R$6 billion ($1.09 billion) for the same period.

However, the airline's stock has taken a significant hit, dropping 69% this year. This decline reflects investor concerns about Azul's debt and overall financial stability.

The company's leverage ratio is expected to be around 4.2 times by the end of 2024. Azul continues to explore additional funding sources to strengthen its financial position.

One potential avenue involves using Azul Cargo as collateral to secure up to R$4.4 billion ($800 million) in additional funding. The airline also plans to increase its seat capacity by 7% in the coming year.
Azul Airlines Restructures R$3 Billion Debt with Creditors
The Brazilian aviation industry has received some support from the government. The Congress recently approved a bill allowing airlines to secure credit lines backed by the National Civil Aviation Fund.

This measure could provide additional financial assistance to struggling carriers. Azul's restructuring efforts mirror broader trends in the global aviation industry.

Many airlines are grappling with debt accumulated during the pandemic. The success of these agreements will be crucial for Azul's long-term sustainability and growth prospects.

The company remains in negotiations with the holders of the remaining 8% of obligations. Azul emphasizes its commitment to finalizing the necessary documentation to ensure the success of this restructuring plan.

The airline's ability to navigate these financial challenges will likely shape its future in the competitive aviation market.

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