Azul Airlines is on the brink of finalizing negotiations with aircraft lessors, a pivotal move in securing a private capital increase. The company intends to convert around $600 million of debt into equity, providing lessors with a 20-22% stake in Azul’s capital. This agreement is vital for bondholders to approve a new capital injection of up to $400 million.
Market insiders are anticipating the capital increase to take place by the end of October, earlier than expected. By using Azul Cargo, its $800 million-valued logistics arm, as collateral for the new funds, Azul plans to mirror last year’s negotiations involving the Tudo Azul loyalty program.
Azul has already secured agreements with 90% of its lessors and aims to reach 100% soon. The proposed conversion would value Azul’s shares at R$30, significantly higher than the current market price of R$5.10, aiming to avoid excessive shareholder dilution.
Despite facing industry challenges like delayed aircraft deliveries and high fuel costs, Azul’s margins have returned to pre-pandemic levels. In addition, the company is seeking a $180 million loan repayment from TAP amid privatization talks.
