Brazilian airline Azul is weighing options from an equity offering to a Chapter 11 filing to address approaching debt obligations, according to people familiar with the matter. The troubled carrier is also actively working get the merger over the line with Gol Linhas Aereas Inteligentes SA to convince creditors that a new combined entity would have lower debt levels and better growth prospects, one of the people said, asking not to be named because the information is private. But that approach is seen as less attractive given Azul’s imminent cash needs and weak financial results. While filing for bankruptcy protection is on the table, Azul is keen to avoid it and is working with Citigroup Inc. for a potential follow-on offering, according to one of the people. The company has also tapped Citi as an adviser on the potential merger agreement with Gol, and is pursuing that potential deal as a strategic option separate from the current debt crunch. Another potential option under consideration is to issue debt through Azul’s cargo unit. Representatives for Azul and the US bank declined to comment for this story. Gol filed for Chapter 11 bankruptcy in January after grappling with $2.7b in near-term liabilities and carrying out a dozen debt exchanges. Three other of the region’s largest airlines — Avianca Holdings, Latam Airlines Group and Grupo Aeromexico — filed for bankruptcy in 2020, with their respective processes dragging on for years. Since then, smaller carriers like Interjet in Mexico and Colombia’s Viva Air have also shuttered operations. Azul was the only one among Brazil’s trio of dominant airlines that didn’t file for bankruptcy protection after the Covid-19 pandemic ravaged the travel industry. Instead, the company was able to push out maturities through a bond swap in June 2023. But its still grappling with lease obligations and high interest payments on its debt load. <br/>
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Flair Airlines is looking for partners to inject fresh capital into the discount carrier in order to "restructure" its finances and build out its fleet. Eric Tanner, vice-president of revenue management and network planning, said the company is hoping for partners to buy into the business as a way to deal with pandemic-era debt and allow the company to acquire jets beyond the 20 planes it now flies. "What we're really looking at is restarting our growth ambitions and finding strategic equity partners who are going to help us get onto that level," Tanner said in an interview. "There’s work underway, amongst investors, to restructure the balance sheet." He was quick to add that the investor hunt is not a "pressing need" and the business itself is not undergoing restructuring, having turned a profit in July and August. "The business is in frankly the best shape that it's been in, from a performance perspective," he said. Tanner attributed the boost in part to a thinning out of competition over the past year. Budget carrier Lynx Air collapsed in February and filed for creditor protection, while WestJet's ultra-low-cost subsidiary Swoop shut down in October last year.<br/>
Norse is expecting to deploy at least half its aircraft capacity on wet-lease and charter services over the winter season, and signals that it is looking to de-risk its operation by entering longer-term external capacity agreements. The airline has been revising its business plan, to strengthen its financial footing, following the collapse of talks with a potential strategic partner earlier this year. Although it will deploy much of its capacity on its own network for the third quarter, it will concentrate on third-party opportunities during the weaker fourth. “Through the winter season we are planning to fly at least half of our operated capacity on [wet-lease] and charter contracts,” it states. Norse is scaling down its fleet to 12 Boeing 787-9s, after opting to return its three sub-leased 787-8s to their lessor, and it is re-assessing its business plan based on the smaller operation. It says the strategic changes to its business model could involve more of its capacity being “locked into longer-term contracts” which will mean the airline carries “lower market risk”. It says it is negotiating with “several” airlines over “multi-year contracts” to which it would allocate capacity – potentially from the end of this year – and replace part of its variable income with fixed revenues.<br/>