09/10/2024 – 20:05
Azul’s agreement with creditors to swap debt for equity is positive news for Embraer, analysts said, as it eases concerns related to a key customer’s debt burden.
Azul had 21 state-of-the-art E2 jets in its fleet at the end of the first half of the year and is awaiting the delivery of more jets this year.
“A stronger Azul is a stronger Embraer,” Azul chief executive John Rodgerson told Reuters on Tuesday, the day after the deal was announced.
Azul reached an agreement with aircraft lessors and equipment manufacturers that involves the exchange of around 3 billion reais in debt obligations for the issuance of up to 100 million new preferred shares in the company.
The airline, which competes in the Brazilian aviation market with Latam and Gol, has focused its fleet growth plans on Embraer jets. In August, the company said it expects to receive 15 to 18 new aircraft by the end of 2025.
Azul has firm orders for 51 E195-E2 jets, according to aircraft manufacturer Embraer.
Azul’s orders represented 13% of Embraer’s commercial aircraft backlog in June and 28% of E195-E2 orders, JPMorgan analyst Marcelo Motta said.
“Embraer would have to provision pre-delivery payments for Azul’s order if the airline filed for judicial recovery, which would likely generate an impact of 20 to 30 million dollars on the P&L (profits and losses),” he said .
Azul and Embraer shares were among the few positive weights of the Ibovespa this Wednesday, which fell more than 1%.
Rodgerson said Azul expects eight more jet deliveries this year, but has seen delays as manufacturers face supply chain issues.
“We should receive eight more, but they are late. I want it before Christmas and they are delivering it after Christmas,” Rodgerson said.
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