Azul Linhas Aéreas saw its shares on the Sao Paulo and New York stock exchanges fall sharply on Thursday after a Bloomberg report stated that the Brazilian airline is considering filing for Chapter 11 in the US.
The company’s shares opened trading at US$3.64 and reached a low of US$2.65 by the end of the morning, closing at US$2.90, a drop of almost 20%, after Azul’s management denied the report.
According to Bloomberg, Azul considers Chapter 11 as an extreme option, preferring alternatives such as a share offering or raising financing using the company’s cargo division as collateral – Citigroup is reportedly supporting the studies.
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Furthermore, the carrier founded by David Neeleman continues to talk to Abra Group, owner of Avianca and Gol, to seek potential merger or collaboration models between them.
Company denied option for Chapter 11
Azul is currently the third largest airline in Brazil in the domestic market with a 29% share, behind LATAM, the leader with 39%), and Gol, which, despite being under judicial protection in the US, still holds 32%.
Since June, Azul and Gol have maintained a codeshare on domestic flights that are complementary in their air networks.
The airline avoided a financial restructuring during the pandemic by renegotiating debt securities last year, but continues to have aircraft leasing obligations with high interest rates.
The devaluation of the Brazilian currency complicated the situation, which had net losses of R$3.87 billion in the second quarter.
In a statement on Thursday afternoon, Azul denied evaluating a request for judicial restructuring, preferring to seek amicable solutions. The company also said it could raise $800 million through the cargo division.
