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United Airlines and American Airlines will take stakes in Brazil\u2019s Azul after a New York judge backed a restructuring plan that would see the carrier leave Chapter 11 within weeks.<\/p>\n
On Friday, judge Sean Lane of US bankruptcy court in Manhattan approved Azul\u2019s proposal to convert debt to equity and reduce the equity interest of other shareholders as part of a $950mn fundraising that will lower the company\u2019s overall debt burden.<\/p>\n
Its plan to restore its financial health has seen it cut some routes and reduce the number of older aircraft in its fleet to shave leasing costs that had hamstrung it before its bankruptcy.\u00a0<\/p>\n
\u201cI believe that Azul is fixed,\u201d chief executive John Rodgerson told the Financial Times, adding the company would take a \u201cmore conservative\u201d approach to growth targets in the future. <\/p>\n
Azul has shaved some $300mn from its leasing costs, he added.\u00a0<\/p>\n
The Brazilian carrier entered bankruptcy protection in May<\/a>, the last of the country\u2019s major airlines to opt for reorganisation, following rivals Gol and LatAm, the region\u2019s dominant brand.\u00a0After Friday\u2019s ruling Azul expects to formally exit Chapter 11 by the end of January or early February. <\/p>\n When it entered Chapter 11, it had about $6.5bn in total debt and leases, and is expected to emerge with around $3.7bn.<\/p>\n Latin America\u2019s aviation sector is still recovering from the lingering effects of the Covid-19 pandemic, which have been compounded by currency volatility and higher costs.<\/p>\n Unlike peers in the US and many European countries, the region\u2019s airlines did not receive direct state assistance during the pandemic, leading many to enter bankruptcy proceedings. <\/p>\n