Azul Airlines Reportedly Preparing for Chapter 11 Bankruptcy Filing in U.S.

Brazilian carrier Azul Airlines is reportedly preparing to file for Chapter 11 bankruptcy protection in the United States as early as Tuesday, according to Valor Economico. The filing would place Azul among several major Latin American airlines that have sought bankruptcy protection since the COVID-19 pandemic devastated the global aviation sector.

Azul would join the ranks of Aeromexico, Avianca, Gol, and LATAM Airlines (NYSE:LTM), all of which previously filed for Chapter 11 amid financial turmoil triggered by pandemic-related travel restrictions and a steep decline in passenger demand.

Despite efforts to stabilize its finances, Azul has remained under intense financial strain. Last year, the airline reached an agreement with aircraft lessors to eliminate $550 million in debt in return for a 20% equity stake. It also secured additional funding from bondholders. However, these moves failed to significantly ease the pressure on its balance sheet.

As of the end of the first quarter, Azul’s net debt had surged by 50% year-over-year to 31.35 billion reais ($5.56 billion). The company’s leverage ratio also climbed sharply to 5.2 from 3.7 a year earlier, highlighting its worsening financial health.

A potential Chapter 11 filing would allow Azul to restructure its debt while continuing operations. The move reflects broader challenges in Latin America’s airline industry, where carriers continue to grapple with high costs, currency volatility, and slow post-pandemic recovery.

The airline, known for its domestic network and regional jet fleet, has not yet issued an official statement on the bankruptcy report. If confirmed, the filing could have significant implications for creditors, investors, and the future of Brazil’s aviation market.