Azul has completed the restructuring of its obligations with nearly all bondholders, lessors, and OEMs, the Brazilian airline said on January 29, 2025. In addition, the company closed its previously announced offering of $525 million of floating rate superpriority notes due 2030 issued by Azul Secured Finance, along with its previous exchange offers.
The restructuring and recapitalisation included a structured financing plan, focussed on improving liquidity and cash generation, and reducing leverage, with almost $1.6bn of its debt being extinguished from the balance sheet.
The elimination of equity issuance obligations owed to lessors and OEMs totalled around $557 million, in exchange for 94 million new Azul preferred shares in a one-time issuance to be completed in the first quarter of this year.
In addition, around $243.6 million of its existing notes held by certain lessors and OEMs were extinguished in exchange for “other commercial considerations”. The company also signed definitive agreements with lessors, OEMS, and other suppliers, which the company said will enhance additional cash flow improvements by over $300 million from 2025 through 2027.
“By achieving these results, Azul was able to access the full gross proceeds of the superpriority notes, including the additional $100 million that been reserved upon satisfaction of certain conditions,” Azul said in a statement.
Furthermore, the $150 million funded in October 2024, which was fully repaid on January 28, 2025. Azul's $784.6 million of new exchanged 2029 and 2030 notes will be equitized into preferred shares, with 35% converted by April 30, 2025, and 12.5% upon a $200 million equity offering. The remaining 52.5% will be exchanged into new notes by April 30, 2025, carrying 4% cash interest plus 6% payment-in-kind (PIK) interest.
The company's total debt including lessor equity and OEM notes was reduced from R$30.7bn ($5.2bn) to R$25.4bn ($4.3bn). With the debt reduction, Azul's leverage dropped from 4.8x down to 3.4x.