Azul’s Chapter 11 Plan Approved by US Bankruptcy Court
A United States bankruptcy court has approved the Chapter 11 reorganisation plan of Brazil’s Azul Linhas Aéreas Brasileiras, clearing a major hurdle in the airline’s effort to restructure its balance sheet and return to long-term financial stability. The ruling was issued by the US Bankruptcy Court for the Southern District of New York, following what Azul described as “overwhelming support from all voting creditors.”
In a notice to the market released on Friday, December 12, Azul confirmed that the court’s decision allows the company to move forward with the next phase of its restructuring. The airline initially filed its Chapter 11 plan in September, outlining measures aimed at significantly reducing debt while securing new capital to support future operations.
Under the approved plan, Azul will eliminate more than USD2 billion in debt and raise up to USD950 million in new equity. Of that amount, USD650 million is being underwritten by backstop creditors, while up to USD300 million is expected to come from strategic partners, including United Airlines and American Airlines. The equity infusion is designed to strengthen Azul’s liquidity position and provide flexibility as it adapts to market conditions.
Azul said the court’s approval “reinforces the overall consistency of the proposed restructuring,” adding that it enables the company to proceed with implementation steps required to complete the process. The airline expects to emerge from Chapter 11 bankruptcy protection in the first quarter of 2026.
In parallel with the court proceedings, Azul has taken a number of operational and financial actions to align its business with a lower-cost structure. These include renegotiating terms with creditors and aircraft lessors, rejecting leases for older, less efficient aircraft, and adjusting its fleet strategy. The airline has also slowed upcoming aircraft deliveries and stepped back from potential new aircraft orders to better match capacity with demand.
The restructuring process has not been without controversy. Earlier this year, members of Azul’s senior management came under scrutiny from Brazil’s securities and exchange commission over allegations that the company disclosed overly optimistic financial projections before filing for Chapter 11 protection in 2024. Azul has not publicly commented in detail on the investigation.
Despite these challenges, the court’s approval represents a significant milestone for the airline. Azul remains one of Brazil’s largest carriers, with a broad domestic network and growing international presence. Successfully completing the restructuring would position the airline to compete more effectively in Brazil’s highly competitive aviation market.
As Azul moves toward its targeted 2026 exit from Chapter 11, investors and industry observers will closely watch how the carrier executes its plan, manages fleet renewal, and restores confidence among stakeholders in the post-restructuring phase.
Related News: https://airguide.info/category/air-travel-business/airline-finance/
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com