Azul shares emerge on the positive side of the Ibovespa with an agreement with lessors on the radar (Image: Facebook/Azul Linhas Aéreas Brasileiras)
The actions of the Azul (AZUL4) soar this Thursday (26), with negotiations with aircraft lessors close to being concluded, according to Exam.
In the first hour of trading, the shares entered and left the auction with the maximum permitted fluctuation, jumping as much as 14.51%.
According to the portal, the expectation is that the operation to raise funds will take place by the end of October, while part of the market sees a private offering only taking place between April and May 2025.
According to the publication, the company has reached an agreement with 90% of the lessors and should reach 100% in the next few days. This step is important to unlock the company's private capital increase.
Azul aims to convert approximately US$600 million of debt with lessors into shares, which would hold between 20% and 22% of the company's share capital, for an estimated value of R$30 per share, whereas the current screen price is around R$5.
In the assessment of XP Investmentsif confirmed, the movement is positive for Azul, representing an important source of growth for the shares in the short term.
“Limiting shareholder dilution to 20-22% (implying a share issuance at R$25.25-28.40/share), versus current implied dilution levels of ~58% (at R$5.10/share), leads to a debt cut of ~R$1.8 billion (~95% of current market value)”.
Recap of the latest developments with Azul…
Since the possibility of a request for Chapter 11 (judicial recovery in the United States) appeared on the market, and was tried to be dissipated by the company, Azul's debts and renegotiations are on investors' radar.
A few weeks ago, the company confirmed that it was in negotiations with aircraft lessors to optimize the capital structure agreed in the capital optimization plan signed last year.
Among the terms being discussed is a replacement of the US$580 million debt with equity in the airline.
Analysts of the Bradesco BBI e Agora Investments had already reported the expectation that Azul would reach an agreement with lessors by the end of September, the final deadline to convert the first installment of the leasing liability into equity.
“The agreement with lessors appears to be crucial for Azul to unlock negotiations with bondholders and potentially raise new capital, giving Azul Cargo as collateral.”
The company's shares, which have accumulated losses of 60% this year, have been fluctuating with constant news about the company's financial situation.
Yesterday (25), the shares AZUL4 fell for most of the trading session, after yet another downgrade in risk rating. This time the Fitch cut the rating dos IDRs (Issuer Default Ratings), which refer to long-term default in foreign and local currency, from “B-” to “CCC”. The national long-term rating was changed from “BB(bra)” to “CCC(bra)”.
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Fitch also downgraded Azul Secured Finance LLP's senior secured notes to 'CCC/RR4' from 'B-/RR4' and Azul Investments LLP's unsecured notes to 'CC/RR6' from 'CCC+/RR5'.
According to the agency, the downgrades reflect Azul's high refinancing risk and weaker cash flow profile, impacted by the depreciation of the real against the dollar.
At the beginning of the month, the S&P Global Ratings cut its global issuer credit rating of Azul from B- to CCC+, with a negative outlook.
The change takes into account the airline's weaker-than-expected first-half results, widening the operating free cash flow deficit for the year and weakening liquidity.
The agency highlights that the depreciation of the real and the reduction in capacity and income harmed Azul's second-quarter results.
Last week, Azul had its corporate rating downgraded from Caa1 to Caa2 by Moody’s. The outlook for issuers was also changed from positive to negative.
According to the rating agency, the downgrade reflects the weaker results that the company recorded in 2024 and the cash burn resulting, which increased the liquidity risks.