Azul has reached commercial agreements with lessors to cut payments on more than 90% of its lease obligations.
The Brazilian airline said that the deals "represent a significant part of a comprehensive plan" which is "designed to strengthen [its] cash generation and improve its capital structure, and also deliver to lessors 100% of the prior-committed values through a combination of long-term debt and equity valued at a reset balance sheet".
The lessors are reducing Azul’s lease payments to eliminate Covid-related deferrals as well as the gap between Azul’s contractual lease rates and agreed-upon current market rates, the airline announced, with the lessors in return to receive a tradeable note maturing in 2030 and equity priced in a way to reflect Azul’s new cash generation, improved capital structure, and reduced credit risk.
“The leasing community has recognised that supporting Azul is an intelligent, revenue-maximising business decision, yet we are still honoured and grateful for their valuable support," said Azul's chief finance officer Alex Malfitani.
"No aircraft have left the fleet throughout this negotiation, and in fact our partners have delivered 12 additional new aircraft to us over the past five months. Negotiations continue with lessors and other stakeholders such as OEMs, and we are very optimistic about reaching agreements with all of them,” Malfitani added.