Azul secures R$600 million in additional funds

Azul S.A. (B3:AZUL4, NYSE: AZUL), a prominent airline based in Brazil, has announced on Monday that it has successfully secured approximately R$600 million in additional funding from its existing bondholders. This financial move comes on the heels of a recent debt conversion, where 35% of the company’s notes due in 2029 and 2030 were converted into preferred shares. According to InvestingPro data, the company currently carries total debt of $6.07 billion, with a concerning current ratio of 0.27, indicating potential liquidity challenges. Despite these metrics, InvestingPro analysis suggests the stock is currently trading below its Fair Value.

The additional funding is in the form of BRL Denominated Secured Notes issued by Azul Secured Finance II LLP, with Azul and some of its subsidiaries acting as guarantors. These notes are backed by credit and debit card receivables from Azul’s passenger airline business. The notes have a six-month maturity and include a provision that allows for early repayment if Azul obtains any public-backed financing. The issuance of these notes did not necessitate any amendments or waivers under Azul’s current secured notes and secured convertible debentures. With annual revenue of $3.16 billion, Azul maintains its position as a significant player in the airline industry, though InvestingPro data reveals that short-term obligations currently exceed liquid assets.

Azul has stated its commitment to continuously work with stakeholders to strengthen its financial standing and has promised to keep its shareholders and the market informed of any significant developments.

The airline, which operates over 1,000 daily flights to more than 150 destinations with a fleet of over 180 aircraft, was recognized by Cirium as the most on-time airline in the world in 2022 and was named the best airline in the world by TripAdvisor (NASDAQ:TRIP) in 2020. Azul’s efforts to secure additional funding reflect its proactive approach to maintaining a strong liquidity position and its dedication to operational excellence.

This information is based on a press release statement from Azul S.A. and has been reported in compliance with SEC guidelines.

In other recent news, Azul S.A. has completed a $1.66 billion share offering, a significant capital increase for the Brazilian airline. This offering involved the issuance of 464.1 million new preferred shares, which raised the company’s total capital to R$ 7.13 billion. Additionally, Azul has updated its share structure following several capital-related events, including the issuance of new shares to aircraft lessors, controlling shareholders, and bondholders as part of a debt conversion plan. The company issued 96,009,988 new preferred shares to lessors and a substantial 450,572,669 new preferred shares to bondholders.

Azul has also announced the closing date for its lessors equity issuance, with the transaction set to finalize on April 3, 2025. In connection with these financial maneuvers, Azul is considering a primary public offering of preferred shares aimed at professional investors, though the terms have yet to be approved by the board. The airline has committed to keeping the market informed about the progress of these initiatives. Furthermore, Azul is exploring debt instruments backed by credit and debit card receivables, potentially amounting to R$900 million, to support its working capital. These developments reflect Azul’s ongoing efforts to strengthen its financial position and capital structure.

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