Azul’s Record Revenue Collides With Heavy Losses As Debt Burden Deepens
Azul is proving it can fill planes and grow revenue, even as its balance sheet remains under severe stress.
In the third quarter, the airline reported an adjusted net loss of R$ 1.5 billion ($278 million) and a reported net loss of R$ 644.2 million ($119 million), reversing a net profit of about R$ 1.2 billion ($222 million) in the previous quarter.
At the same time, operating revenue reached a record R$ 5.7 billion ($1.1 billion), up 11.8% from a year earlier on the back of strong demand and expanding ancillary businesses.
The main problem is leverage. Azul’s net debt reached roughly R$ 37.3 billion ($6.9 billion), and the ratio of net debt to EBITDA rose to 5.1 times, from 4.9 times in the second quarter and 4.4 times a year ago.
Management links this to the appreciation of the real against the dollar, which increases the value of dollar-denominated leases and loans in local-currency terms, and to about R$ 6 billion ($1.1 billion) of new debt taken on as part of its Chapter 11 restructuring package.
Operationally, the airline is in better shape than the headline loss suggests. EBITDA came in at about R$ 1.9 billion ($352 million), close to the company’s own plan, while jet-fuel costs fell 8.3% to roughly R$ 1.3 billion ($241 million) thanks to lower prices per liter.
Azul trims routes and raises capital to stabilize finances
Azul continues to adjust its network around more profitable routes and higher-margin business units such as loyalty, cargo and vacation packages.
For Brazil’s growing middle class and for business travelers, this helps preserve connectivity in smaller cities that depend on air links.
The restructuring plan now underway in U.S. courts is designed to cut leverage to around 2.5 times EBITDA by February 2026, when Azul hopes to exit court protection.
A key element is fresh capital from strategic partners: United Airlines has confirmed an equity investment agreement, and Azul’s plan also foresees American Airlines joining as a shareholder.
The flip side is dilution for existing investors, a reminder that markets ultimately punish years of heavy borrowing but still reward firms that move early and decisively to repair their balance sheets.
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