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azul, airlines, renegotiate, debt, deal,

Azul Airlines entered into a new agreement with its aircraft lessors and adjusted a new payment profile that, according to a company statement, results in a savings of working capital of R $ 3.2 billion from the beginning of the crisis to the end 2021. The agreements represent more than 98% of Azul’s lease liabilities, and according to the airline, negotiations with other lessors continue to evolve.

According to these agreements, the payment schedule will be based on an estimate of demand recovery. Conservative estimate, according to Azul. As a result, the company estimates to pay R $ 566 million in aircraft rentals between April and December 2020, a 77% reduction compared to the original contracts. Smaller monthly rentals will be offset by slightly higher amounts from 2023 onwards, or by extending specific contracts to market rates.

“Additionally, as a result of the successful negotiations with our partners, the company’s lease liabilities are expected to decrease R $ 3.4 billion between the end of March and December, totaling R $ 12.5 billion at the end of the year, a reflection of the present value of contracts renegotiated by IFRS 16 “, affirms Azul’s CFO, Alex Malfitani, reinforcing the importance and representativeness of aircraft leasing expenses.

“Aircraft renters represent around 80% of our total debt, and therefore these agreements are an important step in ensuring that we will emerge from this crisis stronger and committed to these long-term partnerships. We are proud of the support we have received from our partners. Which, in addition to renters, also includes our crew, banks, and suppliers”, concluded the financial director.

After the arrival of the coronavirus in the country and with the implementation of restrictive measures, in April, the company lost 90% of traffic concerning the same period in 2019. It operated a network with 70 direct flights per day to 25 cities. After registering a decrease, in May, the demand for flights by the company grew 51.6% concerning April. In June, it increased by 43.6% in May.

To read the entire agreement between Azul Airlines and leaseholders, click on this link.