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AZUL
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Azul transforms for the future as Company reaches agreements on financial reorganization with key stakeholders, including its lenders, largest lessor, and strategic partners United Airlines and American Airlines

1. Azul initiates restructuring process with $1.6 billion financing support. 2. Plans to eliminate over $2 billion in debt during Chapter 11. 3. Operational activities continue unimpeded, honoring customer commitments. 4. Major partners United and American Airlines back Azul's restructuring efforts. 5. Azul aims for long-term industry leadership post-restructuring.

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Why Bullish?

The restructuring, supported by key stakeholders, enhances AZUL's financial health and prospects. Companies that successfully navigate Chapter 11 frequently see a post-emergence price increase, as evidenced by past airlines like Delta and American Airlines.

How important is it?

A successful restructuring process is crucial for AZUL’s stability, significantly influencing investor sentiment and stock performance in the long run.

Why Long Term?

The positive implications of the restructuring and strengthened partnerships suggest long-term benefits, akin to Delta's transformation following its own restructuring back in 2005.

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Company initiates pre-arranged restructuring process in the United States to effectuate agreements including approximately US$1.6 billion in debtor-in-possession financing. Agreements to secure exit financing structure, including up to US$950 million in equity investments, enabling an accelerated path to emergence, a significant step in positioning Azul as a long-term industry leader in the region. Operations and sales continue as usual, honoring all tickets, loyalty points, and Customer benefits, safely connecting Brazil with Azul's industry-leading Customer service. , /PRNewswire/ -- AZUL S.A. (B3: AZUL4; NYSE: AZUL) ("Azul" or "Company"), the largest airline in Brazil by number of flight departures and destinations, today announced it has entered into Restructuring Support Agreements (the "Agreements") with its key financial stakeholders, including its existing bondholders; largest lessor, AerCap, representing the majority of the Company's aircraft lease liability; and strategic partners, United Airlines and American Airlines, to effectuate a proactive reorganization process. The Agreements are designed to transform the Company's financial future and position the business for the long term with significant deleveraging and positive cash flow generation. To implement the Agreements, which include a commitment of approximately US$1.6 billion in financing throughout the process, elimination of over US$2.0 billion of debt and contemplate further equity financing of up to US$950 million upon emergence, Azul is using the Chapter 11 process in the United States. Customers, Crewmembers, and partners remain Azul's priority. Azul will continue flying and operating as normal while maintaining its commitments throughout this process. "Azul continues to fly – today, tomorrow, and into the future. These Agreements mark a significant step forward in the transformation of our business – one that enables us to emerge as an industry leader in the main aspects of our business," said John Rodgerson, Chief Executive Officer of Azul. "With a collaborative approach and the support of our stakeholders, we have made a strategic decision to pursue a voluntary financial restructuring as a proactive move to optimize our capital structure – which was burdened by the COVID-19 pandemic, macroeconomic headwinds, and aviation supply chain issues. Our strategy is not just about financial reorganization. By using this process, we believe that we are creating a robust, resilient, industry-leading airline – one that Customers will continue to love flying, at which Crewmembers will continue to love working, and that will create value for our stakeholders." Chapter 11 is a Court-supervised financial reorganization process in the United States through which companies can restructure their balance sheet while continuing operations in the ordinary course of business. Azul intends to use this proven, well-known legal framework to eliminate over US$2.0 billion in total funded debt, reduce lease obligations, and optimize its fleet, allowing the Company to emerge with greater flexibility and a more sustainable business and capital structure. "AerCap has signed a support agreement with its longstanding partner Azul. As the airline moves through its restructuring process, we are very confident Azul will emerge stronger than ever," said Aengus Kelly, Chief Executive Officer of AerCap. "Together with Azul, we are the largest owners of Embraer E2 commercial aircraft, supporting the Brazilian aviation industry like no other." Azul's process is unlike any other airline restructuring case in the region, given the fact that it enters the process with agreements with many of its main stakeholders already in place. Azul has secured a commitment for debtor-in-possession ("DIP") financing of approximately US$1.6 billion from certain key financial partners, which will repay part of the Company's existing debt and provide the Company with approximately US$670 million of new capital to bolster liquidity during the restructuring process. Upon emergence, the Agreements provide for the DIP financing to be repaid with the proceeds of an Equity Rights Offering of up to US$650 million, backstopped by some of these financial partners and further supported by a contemplated additional equity investment of up to US$300 million from United Airlines and American Airlines, subject to the satisfaction of certain conditions. This comprehensive financing package means that Azul's path to emergence is clear, which streamlines the process and accelerates the timeline. "United was proud to begin cooperating with Azul in 2014 and to invest in Azul in 2015. Since that time, we have connected hundreds of thousands of passengers and are excited about the opportunity to grow this business even more. Azul is more than just a commercial partner for United – their customer-first approach and unique route network connecting small and large communities have improved the passenger experience in Brazil. That's why we support Azul's restructuring process and have entered into an agreement to build an even stronger relationship in the future," said Andrew Nocella, Executive Vice President and Chief Commercial Officer of United Airlines. Stephen Johnson, Vice Chair and Chief Strategy Officer for American Airlines added, "We are confident that Azul's plan to strengthen its future will be extremely positive for the Brazilian aviation market and travelers to, from and across Brazil. American has served Latin America since 1942 and is proud to fly to 14 destinations in South America. Our service, including that of our partners GOL and JetSMART, combined with the strength and breadth of Azul's network, will provide our customers another unique option for traveling between the Americas and even more connectivity in Brazil and throughout South America. We are excited to support this process and to be part of Azul's future." Azul has filed customary motions with the Court to support ordinary-course operations including, but not limited to, continuing Crewmember compensation and benefits programs, honoring all Customer commitments including tickets for future travel and benefits under the Azul Fidelidade loyalty program, and fulfilling go-forward obligations to select vendors who are truly critical to the Company. These motions are typical in the Chapter 11 process. John Rodgerson concluded, "We are grateful for the support of our bondholders, particularly those who are providing Azul with new capital, and our key strategic partners, American Airlines, United Airlines, and AerCap. Their support will allow us to optimize our fleet, reinforce our financial position, and operate more efficiently. We are confident that we will emerge even stronger and better positioned to continue connecting Brazil like no other, while offering the best service and value to our Customers." Additional Information Stakeholders seeking specific information about Azul's Chapter 11 case can visit its dedicated website at www.azulmaisforte.com.br. For case and claims information, please visit https://cases.stretto.com/Azul or call (833) 888-8055 (toll-free) or (949) 556-3896 (international). The Company is supported by Davis Polk & Wardwell LLP, White & Case LLP, and Pinheiro Neto Advogados as legal counsel; FTI Consulting as financial advisor; Guggenheim Securities, LLC as investment banker; SkyWorks Capital LLC as fleet advisor; and FTI Consulting, C Street Advisory Group, and MassMedia as strategic communications advisors. The Participating Lenders are supported by Cleary Gottlieb Steen & Hamilton LLP and Mattos Filho as legal counsel and PJT Partners as investment banker. United Airlines is supported by Hughes Hubbard & Reed LLP and Sidley Austin LLP as legal counsel and Barclays Investment Bank as investment banker. American Airlines is supported by Latham & Watkins LLP as legal counsel. AerCap is supported by Pillsbury Winthrop Shaw Pittman LLP as legal counsel. About Azul Azul S.A. (B3: AZUL4, NYSE: AZUL), the largest airline in Brazil by number of flight departures and cities served, offers 900 daily flights to over 150 destinations. With an operating fleet of over 200 aircrafts and more than 15,000 Crewmembers, the Company has a network of 300 non-stop routes. Azul was named by Cirium (leading aviation data analysis company) as the most on-time airline in the world in 2023. In 2020 Azul was awarded best airline in the world by TripAdvisor, the first time a Brazilian flag carrier earned the number one ranking in the Traveler's Choice Awards. For more information, access www.voeazul.com.br/imprensa. SOURCE Azul S.A. WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM? 440k+ Newsrooms & Influencers 9k+ Digital Media Outlets 270k+ Journalists Opted In

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