Azul has received B- rating with a stable outlook from S&P Global Ratings following the airline's emergence from Chapter 11 bankruptcy.
The ratings agency noted the company's reduction of financial debt by around $1.1bn and lease obligations by around $1bn — a roughly 40% gross debt reduction — as a key item in its rating rationale.
S&P said it expects a debt to EBITDA leverage of 3.0x to 3.5x in 2026, improving from over 6.0x over the previous two years.
“We expect the company's optimized fleet and improved capital structure to allow for gradual margin improvements and stronger cash generation in the coming years,” said S&P.
The ratings agency added that it expects Azul's cash flow to increase from its stronger margins and lower interest payments. However, free operating cash flow is expected to remain negative after lease payments.
Additionally, the airline remains “highly sensitive” to currency and fuel price volatility.
“Azul has carved out a differentiated competitive position but faces ongoing market challenges,” said S&P.
Azul focuses on underserved regional markets and avoiding direct competition in primary hubs, but its market share still faces competition with LATAM Airlines and Gol Linhas Aereas Inteligentes.