(Bloomberg) -- Brazilian budget carrier Azul SA, now backed by United Airlines Holdings Inc. and American Airlines Group Inc., expects a bankruptcy-triggered reduction of debt and a slew of renegotiated aircraft leases to help it generate a profit the next two years.
The airline will refocus growth plans on the domestic market, though it will increase flights to the US to handle strong demand for World Cup soccer matches next summer, Chief Executive Officer John Rodgerson said in an interview. Azul will still accept deliveries of new aircraft from Airbus SE and Embraer SA.
“The cash flow of the business is significantly improved,” Rodgerson said. “We will generate cash in 2026. We’ll generate cash in 2027. That is the plan.”
Azul won US court permission Friday to exit Chapter 11 bankruptcy with a deal that cuts more than $2.6 billion in debt and aircraft lease obligations. It also raises as much as $950 million in new equity investments, including from United and American.
The reduction in debt will save Azul $200 million a year in interest payments, Rodgerson said.
Founded in 2008 with a handful of Embraer jets, Azul took on piles of debt to add new planes and grow rapidly. After struggling with exchange rate pressures and the lingering effects of the pandemic, Azul followed larger rivals in the region and sought Chapter 11 protection in May.
“This airline is going to be much stronger on the back side,” Rodgerson, 49, said. “It’s a much more moderated growth plan.”
United and American each invested $100 million in Azul, allowing them to separately own 8.5% of Azul’s new equity when it leaves Chapter 11, according to Bloomberg Intelligence. Azul plans to offer code-share flights with the US carriers, giving them access to more than 100 Brazilian destinations, Rodgerson said.
Azul doesn’t expect the recent surge in immigration enforcement actions in the US to dampen demand, with Rodgerson saying Brazilians love traveling to the country.
--With assistance from Rachel Gamarski.
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