Azul Stock Sees 3400% Spike In Retail Chatter After Bankruptcy Filing

Azul SA (AZUL) garnered retail attention on Wednesday after the company filed for Chapter 11 bankruptcy protection in the U.S.

The airline firm stated in a regulatory filing that it has entered into a restructuring agreement with several of its bondholders, aircraft lessor AerCap, and other key stakeholders to raise $1.6 billion in financing.

Azul stated that the agreements would help eliminate over $2 billion in debt and provide up to $950 million in financing upon its emergence from bankruptcy.

Wednesday’s announcement marked the end of the long-drawn-out efforts of one of Brazil’s biggest airlines to boost liquidity amid operational challenges.

In 2024, the company negotiated a deal to reduce $550 million in debt by selling 20% equity to aircraft lessors. It also raised an additional $500 million through an agreement with bondholders.

“These Agreements mark a significant step forward in the transformation of our business, one that enables us to emerge as an industry leader in the main aspects of our business,” said CEO John Rodgerson.

United Airlines and American Airlines have agreed to invest a total of $300 million after the company exits the Chapter 11 proceedings when certain conditions are met, the company said.

“We are confident that Azul’s plan to strengthen its future will be extremely positive for the Brazilian aviation market and travelers to, from, and across Brazil,” Stephen Johnson, American Airlines’ chief strategy officer, said.

Azul has an operating fleet of over 180 aircraft and offers flights to more than 150 destinations.

Raymond James analyst Savanthi Syth said in a note that the filing follows several attempts over the past few years to reduce liabilities accrued due to the COVID-19 pandemic and the devaluation of the Brazilian real.

Retail sentiment on Stocktwits was in the ‘bearish’ (32/100) territory, while retail message volume surged 3,400%.

While most traders were concerned about the future, some remained confident in the stock due to the backing of United and American Airlines.

Azul’s U.S. shares have fallen 70.2% year to date (YTD).

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