Azul S.A.

Houlihan Lokey is pleased to announce the successful emergence of Azul S.A. (Azul) from Chapter 11 bankruptcy protection on February 20, 2026. Houlihan Lokey advised the Official Committee of Unsecured Creditors (UCC) during the pendency of the case.

Azul is a leading low-cost Brazilian airline, offering approximately 800 daily flights to over 135 destinations. With its operating fleet of approximately 175 aircraft and more than 15,000 crew members, Azul operates a network of 250 nonstop routes.

The COVID-19 pandemic created severe disruption across the global aviation industry, leading to a sharp decline in demand as travel restrictions were implemented worldwide. Between 2020 and 2025, Azul raised substantial capital and restructured its outstanding debt and lease obligations to extend its runway and avoid filing for bankruptcy.

Although the capital raises offered temporary relief from broader industry headwinds, the company faced renewed strain in 2024 due to the depreciation of the Brazilian real against the U.S. dollar. The liquidity strain was exacerbated by the flood in Rio Grande do Sul (which represented ~10% of Azul’s revenue), leading to airport closures in the region for more than five months. With ongoing liquidity pressure and an inability to execute additional out-of-court transactions, the company ultimately filed for Chapter 11 bankruptcy protection on May 28, 2025. During the Chapter 11 case, Azul executed a comprehensive balance sheet transformation that included (i) reducing funded debt by more than $1.3 billion, (ii) modifying aircraft lease liabilities, (iii) issuing $1.375 billion 1L exit notes, and (iv) raising up to $950 million via equity commitments from its existing bondholders as well as United Airlines and American Airlines.

Houlihan Lokey was retained by the UCC in June 2025 to serve as its investment banker. Through extensive negotiations, the UCC and its advisors negotiated a global settlement with the company and the ad hoc group of Azul secured creditors, which provided unsecured creditors with, at each creditor’s election, their pro rata share of either (a) up to $20 million in cash or (b) interests in a trust established under the Plan of Reorganization for the benefit of unsecured creditors, to which the company committed to contribute (i) warrants for up to 5.5% of the company’s reorganized equity and (ii) contingent value rights for unsecured creditors to receive three annual payments of up to $6.5 million each, contingent upon the company achieving certain financial milestones post-emergence.

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