Major airline risks Chapter 11 bankruptcy, no canceled flights

The airline eliminated $1.6 billion in debt in a restructuring earlier this year.

May 16, 2025 - 20:30

Major airline risks Chapter 11 bankruptcy, no canceled flights

While the last months of 2024 saw two high-profile airline bankruptcies with Spirit (SAVE) and later Silver Airways, the new year brought with it a number of others from small carriers in different parts of the world.

After losing its license to fly and failing to satisfy regulators about its ability to regain it, Brazilian budget airline Voepass filed for bankruptcy protection in April 2025.

Over in Montenegro, former flagship carrier Montenegro Airlines has just been ordered to liquidate any parts of its Fokker and Embraer (ERJ) planes that can be sold. Earlier this year, a businessman bought its last full aircraft, a Fokker 100, with the goal of turning it into a restaurant.

Amid the sanctions that were placed after its government invaded Ukraine, Russia now has at least 30 regional airlines on the verge of bankruptcy in 2025.

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After months of rumors, Azul to formally consider Chapter 11

The third-largest airline in Brazil after LATAM (LTM) and fellow budget carrier GOL (GOL) , Azul Linhas Aereas (AZUL) has struggled to bring in profit amid market competition and the high cost of fuel needed to run flights in the territorially large country.

Since the start of the Covid pandemic, the airline accumulated debts of over BRL 30.5 billion (approximately $5.35 billion USD). CEO John Rodgerson had at one point claimed the "Costo Brasil" (the country is spelled with an 's' in Portuguese) to justify the high cost of operating in the country.

With bankruptcy rumors swirling since the start of the year, sources with knowledge of the matter are now saying that Chapter 11 protection is one of the options formally being explored by Azul. Other options floated by the sources could include a merger with GOL, which has faced its own string of liquidity problems, or another larger airline.

After the news of the bankruptcy talks was reported by local airlines, Azul stock sank by more than 9% to $0.56 in a single day. While Rodgerson called any speculation about bankruptcy "unsubstantiated" in 2024, the airline has yet to release a statement on the fresh report.

Azul is one of the largest low-cost airlines in Brazil.
Image source: Shutterstock

Is Azul canceling flights? Here is what you need to know

Analyst averages currently have Azul at the "Hold" rating with a 2.9 score. In February 2025, the airline reported record revenue of BRL 5.5 billion reais (approximately $1 billion USD), while a fuller picture of the airline's financial state will be available when second-quarter earnings are released this May.

In January 2025, the airline announced the end of a restructuring process that eliminated $1.6 billion in debt and raised $525 million from fresh investors. While the rebalancing bought Azul time to continue operations, the looming debt continues to pose problems for future plans.

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On its website, Azul states that it runs 1,000 flights a day to over 160 domestic and international destinations.

The sources who commented on the potential bankruptcy said that the airline's main goal in seeking Chapter 11 protection was to continue day-to-day operations — as the second-largest budget airline in the country, it is the primary way for many Brazilians to get to both smaller regional cities and nearby foreign destinations.