Last week, the agency had already relegated the airline (Image: Disclosure/ Blue)
THE S&P downgraded the rating of Blue (Blue4) From CCC to D, the lowest and which, in practice, means default, shows document sent to the market this Thursday (28).
Earlier, the company filed a judicial recovery in the United States With debts of R $ 31 billion in the first quarter of 2025 (1T25), up 50.3% over the same period of the previous year.
According to the risk rating agency, the announcement was made after Azul registered a considerable cash burning during the first quarter of 2025.
“Despite the solid operational performance, the company still faces heavy indebtedness, while very high lease payments, financial expenses, investments.”
Last week, the agency had already relegated the airline to CCC.
Blue’s Judicial Recovery
Judicial recovery has been speculated since last week. The mechanisms was also used by other companies, such as Goal and Latam. According to the company, however, its case is “different from any other airline restructuring in the region”, ie from Latin America.
The reason, according to Azul, is the entry into the process with the agreements already signed with several of its partners. According to the statement released to the market on Wednesday (28), the airline started a pre-coorded restructuring process to enable agreements involving approximately US $ 1.6 billion in DIP financing (DIP financing (DEBOR-IN-POSSESSION).
DIP is a specific credit modality for companies in judicial recovery, which aims to provide the necessary financial resources for the company to operate and achieve its purpose. In the case of Azul, the search is to reduce debt and improve the financial structure.
Agreements include a commitment of approximately $ 1.6 billion in financing throughout the process and the elimination of US $ 2 billion debt, in addition to up to $ 950 million in additional financing guaranteed in equity in the conclusion of the process.
Azul points out that this financing commitment will pay part of the existing debt and will provide approximately $ 670 million new capital to reinforce liquidity during and after the process.
In the evaluation of Ricardo França, from Agora Investmentsthe measure can solve blue liquidity problems, but the elimination of $ 2 billion in debt will probably result in greater Heritage Dilution liquid, which tends to keep the actions pressured and highlighted between the names of positions sold.
The action closed down 3.74%, to R $ 1.03.
Source: Moneytimes
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