Brazilian carrier Azul Linhas Aéreas announced on October 7 that it had reached a broad agreement with aircraft manufacturers and lessors that represent 92% of its debt.
According to the airline, US$600 million in debt will be exchanged for 100 million preferred shares to be issued in a single transaction.
As of Monday, Azul’s shares were worth US$3.20 on the New York Stock Exchange, which would represent a total of US$320 million, but the forecast is that they will rise to US$6 with the company’s capitalization plans.
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After the deal was announced, the airline’s shares were worth US$3.76, but ended the day at US$3.40, up 6.3%.
The renegotiation of debts with suppliers of its aircraft makes the possibility of filing for Chapter 11 financial restructuring in the US seem more distant.
Azul said that “negotiations will continue with the holders of the remaining 8% of the equity issuance obligations, as well as with other stakeholders.”
In addition, the company stated that the deal is subject to changes in certain obligations, including additional financing.
Fleet of 180 aircraft
The third largest airline in Brazil, Azul has been impacted by the unfavorable exchange rate and other factors such as the closure of a large airport, which was flooded and where it operated a large number of flights.
In August, the company’s share of domestic air traffic was 29%, behind Gol (31.5%) and LATAM (39%).
Azul currently has a fleet of 180 aircraft, including 12 Airbus A330 widebodies, 57 A320neo family aircraft, 69 E-Jets and 40 ATR 72 turboprops, in addition to two Boeing 737 freighters.
