The Azul Paradox: Reporting Million-Dollar Profits While Under Bankruptcy Protection
Financial mirage or true strength? Azul declares a BRL 1.4 billion profit, but the figures hide the complex reality of its restructuring.
/https://aviacionlinecdn.eleco.com.ar/media/2022/04/A330-900-Azul-MSN1876-Taxiing-2-scaled-e1668601560608.jpg)
Azul S.A. has released its financial results for the second quarter of 2025, presenting a picture of contrasts that reflects the complexity of its current situation. The Brazilian airline achieved record operating revenues for the period, totaling BRL 4.9 billion, an 18.4% increase compared to the same quarter last year. Simultaneously, it reported a net income of BRL 1.468 billion.
These numbers are presented as the airline navigates a voluntary reorganization process under Chapter 11 of the U.S. Bankruptcy Code, which it filed for on May 28, 2025, in the Southern District of New York. This legal mechanism allows Azul to restructure its liabilities while maintaining full operations, a path also taken by its competitor GOL and other airlines in the region in recent years.
The decision to seek this protection was based on an unsustainable capital structure. As of June 30, 2025, Azul's balance sheet showed that its current liabilities exceeded current assets by BRL 14.183 billion, and it carried a negative equity of BRL 26.040 billion.
Operational Engine Drives Revenue
The strong revenue growth is supported by a calculated capacity expansion. Overall Available Seat Kilometers (ASKs) grew by 17.5% year-over-year. This increase reveals a clear strategic focus: while capacity in the domestic market grew by 12.9%, international capacity saw an expansion of 36.8%, as detailed in the investor report.
Despite this considerable increase in supply, Revenue per ASK (RASK), a key efficiency indicator, remained stable with a slight increase of 0.8%, standing at BRL 38.53. This suggests disciplined pricing management and robust demand capable of absorbing the new seats without eroding unit revenue.
Azul's Q2 2025 Key Highlights
Operating Revenue: BRL 4.9 billion (+18.4% vs Q2 2024).
Net Income: BRL 1.468 billion.
Operating Income: BRL 380 million (-13.9% vs Q2 2024).
Capacity Expansion (ASK): +17.5% (+36.8% in international).
Chapter 11 Process: Expected to conclude between December 2025 and February 2026.
The company's ancillary business units were a fundamental pillar of these results. Azul Fidelidade (loyalty), Azul Viagens (tourism), and Azul Cargo (logistics) accounted for 23% of the total RASK and a strong 37.5% of the quarter's EBITDA. Notably, Azul Viagens saw a greater than 45% increase in gross bookings, and Azul Cargo's revenue grew by over 14%, driven by a 50% rise in its international business.
Costs, Efficiency, and the Reality of the Profit
On the cost side, Cost per ASK (CASK) increased by 4.1% to BRL 35.57. The company attributed this rise to the 8.7% depreciation of the Brazilian Real, local inflation of 5.4%, and an increase in legal claims.
To counteract these pressures, Azul implemented efficiency improvements. Productivity, measured in ASKs per employee, increased by 20.5%, and fuel consumption per ASK decreased by 3.0%, thanks to the continued modernization of its fleet with new-generation aircraft. Additionally, the fuel price paid was 11.3% lower than in Q2 2024.
However, the headline-grabbing net income of BRL 1.468 billion requires closer examination. The result is heavily impacted by non-operational events linked to the restructuring. The income statement shows a net foreign exchange gain of BRL 1.793 billion and an income of BRL 734.4 million from the conversion of debt into equity.
Excluding these extraordinary items, the operating income, which reflects the core business performance, was BRL 380 million, representing a 13.9% decrease compared to the same period in 2024. This shows that the reported profit is more a product of the financial engineering of the restructuring than of pure operational profitability.
The Path to Exit
Azul's reorganization plan is progressing steadily. The company has already secured approval for a "Debtor-in-Possession" (DIP) financing of USD 1.6 billion, which ensures liquidity to operate. Furthermore, it signed a key agreement with AerCap, its largest lessor, which is expected to generate savings of over USD 1 billion.
With a backstop agreement for up to USD 650 million in new capital upon emerging from the process, Azul is using its strong operational performance as its main argument before the court and creditors. The quarter's results demonstrate that, beyond its fragile balance sheet, the business model is resilient and capable of generating record revenues. The ultimate goal is to emerge from Chapter 11, projected for between December 2025 and February 2026, with a capital structure that allows its healthy operation to reach a sustainable cruising altitude.
Para comentar, debés estar registradoPor favor, iniciá sesión