By Brazil Stock Guide – Shares of Azul SA (AZUL4) jumped 63.4% on Monday (Sept. 8) to R$1.88 ($0.33) in São Paulo, as investors scrambled to cover short positions. The buying frenzy made the stock the top gainer on B3, boosting its 30-day rally to more than 200%.
Trading volume hit R$311.1 million ($55 million) by 3 p.m., more than double last Friday’s turnover. Azul is undergoing Chapter 11 bankruptcy proceedings in the US. Despite the recent rally, the stock is still down 46.8% year-to-date, underscoring the airline industry’s volatility.
“The market was caught short and had to buy back shares aggressively,” XP Investimentos said in a note, pointing out that 21.4% of Azul’s stock was sold short as of Sept. 5, up from 19.7% on Aug. 22.
What’s at stake for Azul
The surge highlights the fragility of highly leveraged companies in uncertain markets. Azul’s financial restructuring under Chapter 11 depends on negotiations with creditors and consistent cash flow recovery. Sharp swings in its share price could either complicate or accelerate that process, directly influencing investor confidence, according to Valor.
Spillover effect on rival Gol
The rally also spread to Gol Linhas Aéreas (GOLL4), whose shares jumped 38.6% to R$8.40 ($1.47). Turnover reached R$8.76 million ($1.5 million), more than double Friday’s figure, though still far below Azul’s.