NEW YORK/SÃO PAULO (Reuters) – A United States judge on Friday approved the restructuring of Azul’s debt, allowing the airline to reduce more than US$2 billion in debt and raise funds through a new offering of share subscription and investment rights from American Airlines and United Airlines.
The American judge, Sean Lane, approved Azul’s judicial recovery plan at a hearing in White Plains, New York.
Azul filed for judicial recovery in New York in May. The plan converts a large part of the pre-existing debt into shares and allows the company to raise funds by selling new shares.
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As part of the judicial recovery process, United and American will invest up to US$300 million in Azul shares.
Azul’s executive president, John Rodgerson, stated that the company ‘is in a much lighter situation’ with the approval of the plan by the North American courts.
‘Our idea was for (Azul to exit the process) with three times leverage, but we will exit with 2.5 times leverage’, said the executive in an interview with Reuters.
‘There are two things that are fundamental for us. First, our debt is falling by 60% and our annual interest rates are falling by approximately US$200 million per year. So the debt falls, the interest falls with it. Furthermore, our aircraft rental debt is also falling. And it’s falling 28%.’
‘I’m flying more or less the same fleet…but I’m paying $300 million less a year for it. So that’s the benefit that the Chapter 11 process brings.’
(By Dietrich Knauth and Gabriel Araujo)
