MercoPress. South Atlantic News Agency

Brazil: Azul Airlines' stock plummets amid new issuance

Azul is now viewed as a company in “structural transformation,” with a volatile future ahead

Azul Airlines' stock experienced a severe market crash on Friday, with shares plummeting as much as 50% during intraday trading before settling at a 25% loss by mid-afternoon. The sell-off follows the airline's massive issuance of new shares as part of its ongoing US Chapter 11 bankruptcy restructuring.

The market is reacting to the company's aggressive strategy to raise capital and convert debt into equity. Azul issued approximately 1.4 trillion new shares (723.8 billion ordinary and 723.8 billion preferred). The operation seeks to raise R$7.44 billion (around US$1.3 billion) to stabilize the company's finances.

According to finance circle analysts, this “massive dumping” of shares essentially “obliterates” the proportional ownership of current minority shareholders. This significant dilution is the primary driver behind the stock's collapse, it was explained.

The current volatility comes shortly after a US judge approved Azul's debt restructuring plan to eliminate more than US$2 billion in debt, which includes a US$1.6 billion commitment in financing and up to US$950 million in additional equity financing.

Azul has been operating under US bankruptcy protection since May, allowing it to maintain flights while reorganizing its balance sheet.

Beyond the share dilution, investors are concerned about signs of operational scaling back. The carrier recently renegotiated its agreement with Embraer, reducing its orders for new aircraft.

Experts suggest the market is now pricing Azul as a company in “structural transformation,” where future cash flow and final ownership structures remain highly uncertain.

New shares are now trading under tickers AZUL53 and AZUL54. Analysts warned that changes to the “standard lot” size and the sheer volume of new paper created initial confusion and a “technical adjustment” that intensified the downward pressure.