Azul Linhas Aéreas, the nation’s largest airline by flight frequency and destinations, has received approval from the U.S. Bankruptcy Court for the Southern District of New York for an agreement with AerCap, its primary aircraft lessor, as part of its ongoing Chapter 11 restructuring.
The court’s decision marks a critical step in Azul’s efforts to stabilise its financial position and ensure long-term sustainability amidst challenging economic conditions.
The agreement with AerCap, the world’s largest aircraft lessor, is projected to deliver savings exceeding $1 billion (£780 million) through revised lease terms, including adjustments to lease durations, rental fees, and maintenance deposits.
AerCap’s chief executive, Aengus Kelly, highlighted the shared commitment to supporting Brazil’s aviation industry, noting that both companies are the largest operators of Embraer E2 aircraft. Despite a reported net loss of BRL 1.057 billion (£150 million) in 2024, Azul remains committed to maintaining its operational integrity, with no disruptions to flights, employee commitments, or customer services.
The court’s approval is seen as a strong signal of Azul’s ability to navigate its financial challenges, particularly in a market affected by currency volatility and post-pandemic debt. The airline’s strategic moves, including fleet optimisation and debt reduction, are expected to halve its debt-to-EBITDA ratio, positioning Azul for a robust recovery.
This deal, described as the result of months of intricate negotiations, allows Azul to optimise its fleet operations while reducing significant financial burdens.
The airline, which operates over 1,000 daily flights to more than 150 destinations, also gained court approval to reject several lease contracts for non-operational aircraft and engines, further streamlining its cost structure without impacting its route network or passenger services.
Azul survival plan
Azul’s chief executive says that the company is on track to exit Chapter 11 by early 2026 as a more competitive and resilient airline.
Azul’s restructuring under Chapter 11, initiated on 28 May 2025, is supported by a $1.6 billion (£1.25 billion) debtor-in-possession (DIP) financing package, with $1.1 billion (£860 million) already released to provide liquidity and settle priority debts. The airline says it has also secured agreements in principle with nearly all its remaining lessors, strengthening its position as it aims to present a comprehensive restructuring plan to creditors by mid-September 2025.
The restructuring process has drawn support from key partners, including United Airlines and American Airlines, which are considering equity investments of up to $300 million (£235 million) to bolster Azul’s financial recovery.
