Brazilian airline Azul aims to exit Chapter 11 in early 2026

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SAO PAULO (Reuters) -Brazilian airline Azul aims to exit Chapter 11 proceedings early next year, Fabio Campos, institutional and corporate vice-president, told reporters in a press conference on Friday.

Asked about plans to combine operations with local airline Gol, Campos said Azul will now focus primarily on its financial restructuring process. Azul filed for Chapter 11 protection in the United States earlier this week.

Abra, the majority investor in Gol and Colombia’s Avianca, announced in January with Azul that they had signed a non-binding memorandum of understanding with the intent of combining their businesses in Brazil.

Campos also noted that the MoU with Gol, although not Azul’s current priority, remains valid.

Azul completed this week its initial Chapter 11 hearing, with the court granting approval for the carrier to immediately access $250 million of its $1.6 billion debtor-in-possession financing, he added.

The amount, combined with other judicial approvals and revenue generated from ongoing operations, will provide enough liquidity to support uninterrupted operations, the company said.

According to Campos, Azul is not planning massive layoffs in the face of its financial restructuring, with sales and operations unaffected by the proceedings.

Prior to filing for Chapter 11 protection, Azul had entered into agreements with key financial stakeholders, including existing bondholders, aircraft lessor AerCap, and partners United Airlines and American Airlines. Additionally, the executive noted on Friday that talks with other lessors, beyond AerCap, are ongoing.

Azul was the latest Latin American carrier to file for bankruptcy, joining a list of airlines in the region that have been severely impacted by the COVID-19 pandemic.

(Reporting by Luciana Magalhaes in Sao PauloEditing by Matthew Lewis)