Azul initiated Chapter 11 proceedings in New York in May 2025 to address its debt load and enhance operational stability amid varying fuel costs and currency values.
The restructuring arrangement transforms a significant portion of existing debt into equity while facilitating capital infusion through the issuance of new shares. United Airlines and American Airlines committed to provide up to $300 million in equity support.
Judge Sean Lane endorsed the plan during a session in White Plains, New York.
Azul CEO John Rodgerson informed Reuters that the airline anticipates completing the bankruptcy process in February 2026.
"We can now execute the plan, which is to convert all that debt, that burden," he said in an interview. "This debt comes off my balance sheet and turns into equity, so we end up in a much lighter situation."
Azul holds a prominent position in Brazil's aviation sector alongside Gol and LATAM. The carrier faced accumulated debt from the COVID-19 period, compounded by elevated operational expenses, currency depreciation in Brazil, and disruptions in aircraft supply chains affecting delivery and servicing schedules.
This Chapter 11 filing aligns with actions taken by other regional airlines, including Aeromexico, Avianca, Gol, and LATAM, which pursued similar restructurings following the pandemic's effects on travel.
Rodgerson noted that the company projects a post-restructuring leverage ratio of 2.5 times, improved from the earlier estimate of 3.0 times. Overall debt levels are expected to decrease by 60%, resulting in annual interest savings of approximately $200 million.
Additionally, aircraft leasing commitments will decline by 28%, supported by negotiations with lessor AerCap.
Earlier in 2025, Azul engaged in discussions with Abra Group regarding a possible combination with Gol, under Abra's management, but those talks concluded in September as priority shifted to the restructuring efforts.
"I'm super focused on our stand-alone plan," Rodgerson said when asked about the current market scenario in Brazil. "Everyone has their own plan, and I have to focus a lot on my clients."
