Azul Launches $952 Million Equity Raise to Fund Chapter 11 Exit

By Brazil Stock Guide – Azul S.A. (B3: AZUL3) filed for registration of a primary equity offering of up to $952 million, marking a pivotal step in the Brazilian airline’s Chapter 11 restructuring in the United States. The capital increase is designed to fund the court-approved reorganization plan while allowing creditors to convert debt into equity, reshaping the company’s ownership and balance sheet.

The offering will issue up to 3.41 quadrillion common shares before a planned 75-to-1 reverse stock split, with a minimum raise equivalent to about $750 million required for completion. At current estimates, the transaction values Azul’s post-money equity at $1.78 billion, reflecting a 30% discount to the economic value defined under the restructuring plan. Shares are expected to be priced at R$0.000001469 per share, translating into R$190.38 per lot after operational adjustments.

A cornerstone of the transaction is a series of binding investment commitments. United Airlines agreed to invest $100 million, subject to antitrust approval by Brazil’s competition authority, while a group of backstop investors committed up to $750.75 million, with a potential incremental commitment of $101.5 million if demand is insufficient. Holders of first- and second-lien notes, as well as DIP financing instruments, may also subscribe, using either cash or existing credit claims.

The deal follows earlier debt-to-equity exchanges completed in January and forms the financial backbone of Azul’s emergence from Chapter 11. Creditors who became shareholders under prior conversions waived preemptive rights, enabling the allocation rules embedded in the restructuring plan. Trading of the new shares on Brazil’s B3 exchange is scheduled to begin on Feb. 20, following settlement.

For Azul, the transaction marks a shift from liquidity preservation to balance-sheet stabilization, replacing leverage with long-term equity support anchored by strategic and financial investors. For existing shareholders, the scale of issuance — even after the reverse split — highlights the depth of dilution required to keep the airline operating.