Azul Linhas Aéreas Brasileiras Successfully Exits Chapter 11 Bankruptcy

Azul Completes Financial Restructuring

Azul Linhas Aéreas Brasileiras, a major Brazilian airline, officially announced the successful conclusion of its voluntary financial restructuring process under Chapter 11 of the United States Bankruptcy Code. The airline emerged from bankruptcy on February 20, 2026, following a comprehensive nine-month reorganization effort.

The restructuring, administered by the U.S. Bankruptcy Court for the Southern District of New York, has significantly strengthened Azul's financial position. According to CEO John Rodgerson, 'This is a defining milestone for Azul... In just under nine months, we completed a comprehensive restructuring that has materially strengthened our balance sheet and positioned Azul for long-term stability.' He further highlighted the speed of the process, calling it 'record' time.

Key Outcomes of the Restructuring

The financial overhaul resulted in substantial debt reduction and capital injection for the airline:

• Debt Reduction: Azul reduced its loan and financing debt by approximately $1.1 billion and its total debt by about $2.5 billion. Aircraft lease debt was also cut by nearly 40%.
• Interest Savings: The annual interest paid on loans and financing has been reduced by more than 50%.
• New Capital: The airline raised $850 million in new equity, including $100 million from United Airlines and a further $100 million from American Airlines, pending regulatory approval. Overall, approximately $1.375 billion was raised through senior notes and $950 million in equity commitments.
• Balance Sheet Strengthening: Azul repaid its debtor-in-possession (DIP) financing and settled a public offering of shares. The company's new share capital now stands at BRL 21.76 billion (approximately USD 4.2 billion), divided into 54.73 trillion registered common shares.

Context and Operational Continuity

Azul's decision to file for Chapter 11 in May 2025 was attributed to a combination of factors, including the lingering effects of the Covid-19 pandemic, local currency devaluation, engine-related aircraft groundings, and operational disruptions caused by widespread flooding in southern Brazil. Despite the restructuring, the airline maintained its operations throughout the process.

Azul was the last of Brazil's three major carriers, following LATAM Airlines Brasil and Gol Linhas Aéreas Inteligentes, to complete a Chapter 11 restructuring in the current decade. The airline continues to serve over 130 destinations across 250 routes.