A US court has approved a Chapter 11 reorganisation plan and a $650 million backstop commitment agreement that are designed to recapitalise Azul, the bankrupt low-cost carrier.
On Tuesday (November 4), the US Bankruptcy Court for the Southern District of New York approved both proposals, clearing the reorganisation plan for a vote.
The plan requires approval from impaired classes of claims, with votes due by December 2, 2025. A subsequent confirmation hearing has been scheduled for December 11, 2025.
Azul’s Chapter 11 reorganisation plan was originally filed on May 28, 2025, as covered by Airline Economics.
Key aspects of the proposed restructuring include an equity rights offering to raise up to $950 million in new equity interests.
Some $650 million of the offering will be backstopped by the company’s commitment parties, and strategic investors will participate up to $300 million.
First-lien (1L) claims and second-lien (2L) notes may be exchanged for new equity interests.
The plan has the support of key stakeholders including the secured ad hoc group, debtor-in-possession (DIP) debtholders, and consenting shareholders.
It also has the support of AerCap, United Airlines, and American Airlines, all of whom are major holders of Azul bonds.
In July, as covered by Airline Economics, Azul received court approval for $1.6bn in DIP financing.
The key aims of the restructuring plan are to reduce debt by over $2bn, improve cash flow and preserve over 15,000 jobs globally.
The plan also aims to maintain Azul's position as Brazil's largest airline by departures and cities served.
In September, Azul received court approval to restructure its aircraft and engine leases.
The airline assumed leases for one A320neo and four A330-900s, while returning two A330-900s, one A330-200, and one E190-200. It also committed to returning two E190-200s to ICBC Leasing.
One month later, Azul received court approval to enter new aircraft lease agreements.
Specifically, the court approved letters of intent for the lease of two A330-200 aircraft from GPFC Ireland, and one A330-200 and one CF6-80E1A4/B engine from First Star Speir Aviation.