Azul rushes to raise cash to seal aircraft lessor deal and slash debt

Azul SA is rushing to raise cash as part of a deal it reached last week with its aircraft lessors, a key step in the Brazilian carrier’s attempt to again rework its debt. The company was able to strike an agreement with lessors and parts suppliers that reduces its debt by 3b reais ($540m) in exchange for 100m new preferred shares. The announcement sent shares rallying as much as 22%. But the boost proved short-lived. The stock eked out gains of less than 1% for the week, and remains down more than 60% this year, the worst performance on Brazil’s benchmark Ibovespa index. While welcome by investors, the deal doesn’t provide any of the fresh capital Azul needs to bolster liquidity. And the agreement itself is contingent on the company obtaining new financing, said Carolina Chimenti, an analyst at Moody’s Ratings. “Getting new money remains crucial,” she said. The renegotiation “was the first step toward avoiding a Chapter 11 filing and the company is still at work.” The situation underscores Azul’s delicate financial position. It’s the only carrier of the three that dominate Latin America’s largest air travel market to have avoided filing for bankruptcy protection. But it has struggled to shore up its balance sheet and deal with the impact of a weak Brazilian real, despite having renegotiated with lessors and carrying out a debt swap that pushed back maturities. About $68m comes due in bond payments this month, according to Moody’s, and analysts have said the company can manage those. As of June 30, Azul had 1.5b reais ($268m) of debt maturing in the short term and around 1.4b reais readily available cash, according to Fitch Ratings.<br/>