Azul Airlines Files for Chapter 11 Amid $5.56B Debt Crisis
Azul Linhas Aéreas, Brazil’s third-largest airline, filed for Chapter 11 bankruptcy protection in New York on May 28, 2025, after its debt ballooned to $5.56 billion. The move follows similar filings by GOL and LATAM in recent years and aims to facilitate financial restructuring while maintaining operations.
Azul’s financial strain intensified in early 2025, as currency volatility, rising U.S. interest rates, and supply chain delays exacerbated its debt servicing obligations, which reached $1.3 to $1.38 billion annually. The airline’s cash reserves dropped 51% to $118 million, while debt surged over 50% in Q1 compared to the same period in 2024.
The largest unsecured creditors include UMB Bank (USD 354.8 million), Brazil’s air force (USD 189.8 million), and General Electric (USD 141.7 million). Azul’s filing marks the latest in a string of Chapter 11 cases among Brazil’s major carriers, following LATAM and GOL. A planned merger with GOL may now be at risk.
To stabilize its finances, Azul has secured prearranged commitments from United Airlines and American Airlines, each pledging up to $150 million post-restructuring. Creditors have agreed to convert $784.6 million of debt into preferred equity and extend $780 million in maturities to 2029–2030. A $525 million capital injection is also planned, with bondholders and lessors set to gain a 45% stake in the restructured airline.
Azul’s fleet challenges have added pressure, with over 30 aircraft parked due to ongoing Pratt & Whitney engine issues and parts shortages. Azul operates a fleet of 226 aircraft and employs over 16,000 people, serving 137 destinations across Brazil, the U.S., Europe, and South America. According to ch-aviation, the fleet includes 193 leased aircraft such as A320neos, A330s, ATR72s, E195s, and E195-E2s. Subsidiary Azul Conecta flies 24 Grand Caravans.
CEO John Rodgerson emphasized Azul’s continued operations, framing the restructuring as a proactive step toward creating a more resilient airline. Merger discussions with GOL are now paused during the restructuring process.
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