Azul S.A.

Industry Headwinds Necessitate Operational Overhaul

Azul S.A., one of Brazil’s largest airlines, is known for serving more cities and nonstop domestic routes than any other Brazilian carrier. Like much of the global airline industry, Azul faced challenges related to lingering financial pressure of pandemic-era debt, aircraft-lease obligations, and rising operational costs. By early 2025, the company determined that a comprehensive financial restructuring was the clearest path toward long-term stability.

On May 28, 2025, Azul initiated Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of New York. The case was complex from the outset: a Brazilian public company restructuring under U.S. law, with multiple series of publicly traded debt held across international markets, a $1.6 billion debtor-in-possession financing facility, and a plan that called for equitizing existing debt while raising substantial new-money debt and equity. Coordinating a transaction of this scope meant reconciling requirements across U.S. and Brazilian regulatory frameworks, multiple creditor constituencies, and a dense network of banks, brokers, custodians, and trustees holding Azul’s securities worldwide.

Azul assembled an experienced restructuring team, including Davis Polk & Wardwell LLP as U.S. restructuring counsel, White & Case LLP as international counsel, Pinheiro Neto Advogados as Brazilian counsel, FTI Consulting as financial advisor, and Guggenheim Securities, LLC as investment banker. Davis Polk & Wardwell engaged Stretto to support the public securities components of the restructuring.

Clear Skies Ahead After Successful Restructuring

Leveraging decades of public securities expertise, Stretto identified holders across Azul’s multiple series of publicly traded debt and managed solicitation and tabulation of votes for the Plan of Reorganization. The team coordinated securities cancellations, issuances, and distributions through DTC, custodians, trustees, and other market participants. Stretto delivered backstop allocation support, while tracking and allocating commitments accurately.

Adhering to a compressed timeline, and across cross-border markets, Stretto executed each of these workstreams in parallel with precision and constant coordination with Azul’s advisors and the broader securities-holding ecosystem. Stretto’s role enabled Azul’s legal and financial teams to stay focused on the broader restructuring.

Azul emerged from Chapter 11 on February 20, 2026, less than nine months after filing, a notably fast timeline for a restructuring of this size and complexity. The company reduced its debt and lease obligations by approximately $2.5 billion, meaningfully strengthening its balance sheet while continuing to operate roughly 800 flights per day without disruption throughout the case.

By successfully executing the public securities components of the restructuring, Stretto helped ensure that Azul’s equitization, tender, and distribution processes closed cleanly, giving the company a solid operational and financial foundation for its next chapter.