By Brazil Stock Guide – Azul S.A. (AZUL4) filed its Chapter 11 reorganization plan in New York bankruptcy court, featuring a rights offering of up to $950 million and new exit financing facilities. The confirmation hearing is scheduled for December 11, with objections due by December 1. If the timetable holds, Azul could complete the process by year-end, matching management’s original projection.
Of the total, $650 million is backstopped by key creditors. Acting as backstoppers, these investors guarantee to purchase any unsubscribed shares, ensuring full execution of the deal. In return, they receive a 30% discount to Azul’s equity value, exclusive allocation of $50 million in shares, and additional subscription warrants.
Executives close to the process said the restructuring will allow Azul to maintain sufficient liquidity and access to aircraft, while preserving jobs and its domestic network.
Fastest airline restructuring in Brazil
Azul entered Chapter 11 in May. If concluded this year, it would mark the fastest recovery among Brazilian carriers, outpacing lengthier processes by Latam and Gol. Beyond creditors, Azul secured strategic backing from United Airlines and American Airlines, which agreed to support the plan and could inject between $200 million and $300 million to bolster liquidity.
Impact on creditors and shareholders
Under the plan, first-lien creditors will control 97% of the rights offering, while second-lien creditors receive 3%. Current shareholders may participate but face heavy dilution: newly issued shares will account for about 72.3% of the reorganized company. A new board of directors will take over on the plan’s effective date, under revised governance rules.
If confirmed, Azul will emerge with lower leverage, exit financing secured, and new capital from international partners. The company expects the restructuring to restore market confidence, strengthen liquidity, and improve its competitive position in Brazil’s aviation sector.