Azul Linhas Aéreas Brasileiras (AD, São Paulo Viracopos) has completed the restructuring of its obligations to "substantially all" lessors and manufacturers, it has announced. The carrier will settle part of its liabilities through the issuance of new senior unsecured notes and up to USD570 million in new shares.
"Through these agreements, we have significantly improved our capital structure and cash flows by reducing our lease liabilities and payments, while at the same time honouring our commitment to fully compensate our partners. We also have no significant maturities until the end of 2028 and can now rely on a strong balance sheet and liquidity position, consistent with our superior network, product offering, and cost structure," Chief Financial Officer Alex Malfitani said.
The airline said that the agreement permanently eliminates certain lease payments deferred during the pandemic. Azul also reached an agreement to permanently reduce some leases to match current market prices while at the same time deferring other payments. Other conditions, including end-of-lease obligations, were amended too. An unspecified number of leases will be terminated earlier than previously contracted.
As a part of the settlement, the Brazilian airline has already issued USD370 million in senior unsecured notes priced at 7.5% and due in 2030 to certain lessors and manufacturers. It will also issue up to USD570 million in new preferred shares valued at BRL36 reais (USD7.15) per share. The issuance of new shares will be in quarterly instalments starting in the third quarter of 2024 through the fourth quarter of 2027. Should the carrier's stock trade below the set price by that time, Azul can complement the shares with cash payments or issue additional stock. Likewise, if the stock price appreciates to an undisclosed level, it can issue fewer new shares.
The airline estimates that the agreements will decrease its lease payments by BRL1.3 billion (USD258 million) in 2023 and BRL1 billion (USD199 million) in 2024.
The ch-aviation fleets module shows that Azul operates forty-eight A320-200Ns, six A321-200NX(LR)s, four A330-200s, five A330-900s, two A350-900s (due to be retired soon), forty-two ATR72-600s, two B737-400(F)s, forty-seven E195s, and seventeen E195-E2s. The carrier owns four of the ATR72-600s, seven of the E195s, and four of the E195-E2s, and leases the remainder of its fleet.
