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United and American Airlines to Inject $200 Million into Brazil’s Azul to Support Restructuring Plan

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United Airlines and American Airlines have committed to injecting a total of $200 million into Azul. This operation is designed to support the execution of the Brazilian airline’s restructuring plan and sustain its operations following its exit from the Chapter 11 process.

According to a statement released by the company, each airline will contribute $100 million, albeit through different instruments and subject to specific conditions.

Investment Structure: Direct Equity and Conditioned Warrants

In the case of United Airlines, the $100 million injection will be carried out within the context of Azul’s latest public stock offering. The settlement of this offering is scheduled for February 20, directly linking the investment to the ongoing recapitalization process.

American Airlines, on the other hand, will structure its contribution through the subscription of warrants. The effective and full exercise of these financial instruments will be subject to the fulfillment of certain precedents established in the corresponding Warrant Subscription Agreement.

A key highlight among these conditions is the prior approval by Brazilian competition authorities (CADE), an indispensable requirement for the operation to materialize in its entirety.

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Additional Creditor Investment: Another $100 Million in Play

In addition to the backing from the two U.S. airlines, Azul closed an additional investment agreement with certain existing creditors, which contemplates capital contributions of $100 million. These injections will also be performed under the framework of the public stock offering, reinforcing the company’s capital structure in the final stage of its financial reorganization.

New Warrant Agreements and Potential Investment Increases

In tandem with preparations for its Chapter 11 exit, Azul signed autonomous warrant subscription agreements with both United Airlines and a group of creditors. If exercised, these instruments could increase United Airlines’ investment by up to an additional $15 million and the creditor group’s investment by up to $10 million.

The coordinated participation of United Airlines and American Airlines, together with the additional injection from creditors, solidifies a key capital package for the final phase of the process.

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