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Investing.com -- Brazil-based airline Azul S.A. has filed for voluntary bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. On May 28, 2025, S&P Global Ratings downgraded its global and national scale issuer credit ratings on the company to ’D’ from ’CCC-’ and ’brCCC-’, respectively. The ratings on the company’s 2026 senior unsecured notes were also lowered to ’D’ from ’CC’ and the ’6’ recovery rating was withdrawn.
This downgrade came after Azul announced its Chapter 11 filing on the same day. The decision was made following a significant cash burn reported by the company during the first quarter of 2025. Despite a strong operational performance, Azul continues to grapple with a heavy debt load and high ongoing expenses, such as lease payments, financial charges, capital expenditures, and working capital outflows.
In conjunction with the bankruptcy filing, Azul announced that it had already secured financial backing from key stakeholders, including bondholders, its largest lessor AerCap, and American Airlines (NASDAQ:AAL) and United Airlines. The company has secured debtor-in-possession (DIP) financing of nearly $1.6 billion to pay off some debt and improve liquidity by approximately $670 million.
Azul’s bankruptcy proceedings, supported by its creditors, could potentially lead to further equity investment from American Airlines and United Airlines. The company anticipates reducing its debt by over $2.0 billion during the bankruptcy process.
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