INSUBCONTINENT EXCLUSIVE:
Azul Airlines faces a critical moment in its financial restructuring efforts
The Brazilian carrier seeks to raise $300-400 million using its logistics arm, Azul Cargo, as collateral.This move has sparked disagreements
among its international bondholders
The core of the dispute lies in the varying guarantees each creditor group received for their bonds in the past.These differences now
complicate negotiations for new capital infusion
Some creditors argue that negotiations must consider these disparities.Despite reports of a split, the Ad Hoc Group of Azul Noteholders,
(Photo Internet reproduction)They also hold 90% of convertible notes due in 2028
and bondholders to find a solution
primary collateral for raising funds
This approach mirrors a previous move where Azul used its loyalty program as collateral for a loan last year.The airline needs cash inflow
this year to gain financial breathing room
Current creditors are the most likely source of this much-needed capital
However, negotiations with bondholders are intertwined with aircraft lease talks.Bondholders have shown interest in providing more
resources, but this new money cannot be used to pay lessors
Consequently, the lessor debt must be resolved before new funds can be raised.Lessor debts totaled about R$18 billion at the end of the
Current negotiations involve five major lessors holding over 90% of this debt.Azul renegotiated its lessor debt last year, involving the
issuance of $370.5 million in unsecured debt securities
The deal also included an option for lessors to receive $570 million in Azul preferred shares.Due to unfavorable exchange rates and a crisis
This has led to a new round of talks to avoid significant dilution.Current discussions with lessors aim to exchange a fixed portion of the
company for debt-to-equity conversion
Civil Aviation Fund (FNAC) as loan collateral provides additional support
However, airlines will officially access these resources only next year.As Azul navigates these complex financial waters, the outcome of
