Azul Exits Chapter 11, Slashes $3B in Debt with US Carrier Support

Brazilian carrier Azul Linhas Aéreas Brasileiras S.A. has successfully emerged from Chapter 11 of the U.S. Bankruptcy Code, completing a comprehensive financial restructuring in approximately nine months. The airline announced its exit on February 20, 2026, having reduced its total liabilities by approximately $3 billion and secured significant new capital from strategic partners.

The reorganization, conducted under the supervision of the U.S. Bankruptcy Court for the Southern District of New York, positions Azul for greater financial stability in the competitive Latin American aviation market. By addressing its debt obligations and securing fresh investment, the airline has strengthened its balance sheet to better navigate market uncertainties. The successful exit highlights a broader trend of post-pandemic financial recalibration among major Latin American airlines, many of which have utilized the U.S. bankruptcy system to restructure.

Details of the Financial Restructuring

Azul initiated its Chapter 11 proceedings in May 2025 to address a heavy debt load exacerbated by the global pandemic's impact on air travel. According to company statements, the court-approved plan has achieved a material de-leveraging of the company's finances. Key outcomes include a reduction in loan and financing debt by approximately $1.1 billion and a decrease in aircraft lease debt by nearly 40%.

The process was supported by a combination of new capital and agreements with existing creditors. In total, the airline secured a new capital injection expected to exceed $300 million. This includes significant commitments from two major U.S. carriers, American Airlines and United Airlines, each agreeing to invest $100 million.

"In just under nine months, we completed a comprehensive restructuring that has materially strengthened our balance sheet and positioned Azul for long-term stability," said John Rodgerson, CEO of Azul, in a statement. "We know that the company with the lowest leverage will win the race. It's as simple as that. We are in a country with many uncertainties, so what we've done now is shield the company to withstand anything."

The official documentation and court filings for the case were managed by the claims agent Stretto and are publicly available through their case information portal.

Strategic Investments from U.S. Partners

The investments from American and United underscore the strategic importance of the Brazilian market and Azul's network. United Airlines' investment was made through a public equity offering. American Airlines' investment is structured differently, through warrants, and remains subject to approval from Brazil's antitrust regulator, the Conselho Administrativo de Defesa Econômica (CADE).

These equity stakes are indicative of a larger trend where U.S. airlines invest in foreign partners to expand their international reach and secure network connectivity. By holding a financial interest, they can better align schedules, codeshare agreements, and loyalty programs, offering passengers a more seamless travel experience across continents. This strategy allows for network growth without the complexities of direct international expansion.

Following its emergence from bankruptcy protection, Azul's post-emergence share capital is approximately BRL 21.7 billion. The company's shares, which traded over-the-counter (OTC) during the proceedings, have resumed trading on Brazil's Brasil, Bolsa, Balcão (B3) stock exchange.

Industry Context and Comparison

Azul is not the first major Latin American airline to turn to Chapter 11 in the United States. Following the severe downturn caused by the COVID-19 pandemic, competitors including LATAM Airlines and GOL also successfully used the U.S. legal framework to restructure their finances. International airlines often prefer the U.S. system for its debtor-friendly provisions, which facilitate access to debtor-in-possession (DIP) financing and provide a structured environment for negotiating with a diverse group of global creditors and lessors.

The successful reorganization allows Azul to compete more effectively against its rivals, both domestically in Brazil and on international routes. With a cleaner balance sheet, the airline can focus on operational efficiency, network optimization, and fleet modernization. Official announcements regarding the restructuring can be found on the Azul Investor Relations website.

What Comes Next

With the court process complete, Azul's management will focus on executing its long-term business strategy. A key near-term step is securing final regulatory approval from CADE for the investment from American Airlines. The airline's leadership has emphasized its commitment to maintaining a low-leverage financial structure to ensure resilience against future economic shocks. The focus will now shift from legal proceedings to operational performance and capitalizing on the renewed financial foundation.

Why This Matters

Azul's successful emergence from Chapter 11 with a significantly reduced debt load and fresh capital is a crucial development for the South American aviation landscape. It ensures the continued presence of a major competitor in Brazil, benefiting consumers through choice and competitive pricing. For the broader industry, it demonstrates the viability of the U.S. Chapter 11 process for foreign carriers and reinforces the trend of strategic cross-border investments by major U.S. airlines seeking to solidify their global networks. This financial reset positions Azul to better withstand economic volatility and pursue growth opportunities.

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