Azul reaches agreement with aircraft lessors in exchange for 2030 note and shares
Azul Linhas Aéreas announced on Sunday evening (5) that it has entered into commercial agreements with lessors of its aircraft, representing more than 90% of its lease obligations, subject to certain conditions and applicable corporate approvals.
As reported by our Brazilian media partner Aeroin, these agreements represent a significant part of a comprehensive plan to strengthen Azul’s cash generation and improve its capital structure, in addition to delivering 100% of the previously agreed securities to the lessors through a combination of long-term debt and equity quoted on a restructured balance sheet.
Based on these agreements, the lessors will reduce Azul’s lease payments to eliminate Covid-related deferrals, as well as the difference between Azul’s contractual lease rates and current market rates.
In return, the lessors will receive a tradeable note maturing in 2030 and equity priced in a way to reflect Azul’s new cash generation, improved capital structure, and reduced credit risk.
According to Alex Malfitani, CFO of Azul, the lessors represent 80% of the company’s nominal gross debt, so the signing of these agreements demonstrates a hugely successful approach.
«The lessors have recognised that supporting Azul is a smart business decision that maximises their revenues, but we are still honoured and grateful for their valuable support. No aircraft left our fleet during these negotiations and, in fact, our partners have delivered 12 additional new aircraft to us in the last five months. Negotiations continue with lessors and other partners, such as OEMs, and we are very optimistic that we will reach agreements with all of them,» Malfitani concluded.
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