Brazilian airline Azul has filed for Chapter 11 bankruptcy protection amid financial restructuring plans.
Azul is entering the Chapter 11 bankruptcy process with a structured **restructuring package** which has garnered support from long-standing partner United Airlines as well as new ally American Airlines. The airline has committed to continue its operations throughout this period, reinforcing its business by planning to erase over **$2 billion in debt**.
Despite filing for bankruptcy, Azul will honor all tickets, loyalty points, and agency commissions. Currently, the airline operates around **300 direct routes** using a fleet of 226 aircraft. This month, Azul is actively promoting eight routes to the U.S., focusing on destinations such as Fort Lauderdale and Orlando, while maintaining a codeshare and loyalty partnership with United Airlines.
As part of the prearranged restructuring plan, Azul will secure **$1.6 billion in financing**. This capital will not only help repay part of its existing debt but will also provide the airline with **$670 million in liquidity** during the restructuring phase. Upon exiting Chapter 11, Azul aims to raise **$650 million through discounted share offerings** directed at existing investors. Additionally, American Airlines and United Airlines have pledged a joint equity investment totaling between **$200 million and $300 million**.
Azul’s CEO, John Rodgerson, expressed that the decision to pursue this voluntary financial restructuring is a proactive strategy aimed at optimizing the airline’s capital structure. He emphasized the need to overcome challenges related to the **COVID-19 pandemic**, macroeconomic factors, and issues within the aviation supply chain. “Our strategy goes beyond financial reorganization; it’s about creating a robust, resilient, industry-leading airline,” he stated.
Notably, American Airlines’ involvement in this restructuring is significant, considering its previous lack of partnership with Azul, as it has been an investor in competitor **Gol Airlines**. In January, Azul entered into a non-binding memorandum of understanding with Gol to explore a potential **merger** that would establish the largest airline in Brazil, overshadowing its competitor, **Latam Airlines**. Meanwhile, Gol is currently in the process of emerging from its own Chapter 11 arrangements, having announced plans to exit the bankruptcy process next month following its filing early in 2024.
In a statement, American Airlines reiterated its commitment to Gol while also indicating potential future collaborations with Azul. Chief Strategy Officer Stephen Johnson remarked, “Our services, alongside those of our partners Gol and **JetSmart**, combined with Azul’s extensive network, will offer our customers a unique option for travel across the Americas and enhanced connectivity throughout Brazil and South America.” He voiced excitement about supporting Azul through its restructuring journey.
