Azul Linhas Aéreas Brasileiras (AD, Sao Paulo Viracopos) has reached agreements with its lessors on adjusted payment schedules, helping it save around BRL3.2 billion reais (USD591 million) in working capital relief between the start of the crisis and the end of December 2021.

It will follow a new payment schedule “based on a conservative demand recovery scenario”, the company outlined in a statement dated August 11, so that the leases are repaid beginning in 2023.

The agreements were reached with lessors representing more than 98% of the carrier’s leasing liabilities, and negotiations continue with the remaining lessors. The airline said it had managed to reduce its rental costs by 77% between April and December 2020.

Azul will compensate for these discounts by paying “slightly higher rates” starting in 2023 or by the extension of certain lease agreements at market rates, it said.

In addition, the company said that as a result of its negotiations its total lease liability is expected to fall by BRL3.4 billion (USD628 million) from the end of March to December, reaching BRL12.5 billion (USD2.3 billion) by the end of the year.

“Lessors represent 80% of our total debt position, and so reaching an agreement with them is an important step in ensuring we will come out of this crisis stronger and fully committed to this mutually beneficial partnership. We are proud of the support we are receiving from all of our stakeholders, including not only lessors but also crewmembers, banks, and suppliers,” said Alex Malfitani, Azul’s chief financial officer and investor relations officer.

Azul hired a restructuring firm soon after the coronavirus crisis began. It has said that it is renegotiating its debts outside the courts in order to avoid a Chapter 11 bankruptcy filing, according to Reuters.

Azul owns just nine of its fleet of 146 aircraft, according to the ch-aviation fleets advanced module - eight ERJ 190-200ARs and a single ATR42-300. The remainder of the fleet, namely forty-one A320-200neo, two A321-200NX(LR)s, eight A330-200s, two A330-900N, thirty-two ATR72-600s, two B737-400(F)s, six ERJ 190-100ARs, thirty-nine ERJ 190-200ARs, and five ERJ 190-400s, are leased from 24 lessors.

In related news, Azul's shareholders, led by David Neeleman, agreed this week to sell their indirect stake in TAP Air Portugal (TP, Lisbon), including the elimination of rights to convert bonds into shares, netting Neeleman USD44 million and Azul USD10 million.

The move follows the Portuguese government announcing on July 2 that it would buy a 22.5% stake from Neeleman's Atlantic Gateway consortium and take majority ownership of TAP. Neeleman not only departs the TAP shareholder structure; he also leaves Atlantic Gateway, which is now composed only of Humberto Pedrosa, the Lusa News Agency reported.