Azul S.A. heads into the Friday, December 26, 2025 session with its equity story dominated by restructuring mechanics, not day-to-day flight demand. In the past two weeks, the Brazilian airline’s Chapter 11 plan received U.S. court approval, and Azul moved to launch a large primary share offering in Brazil that is explicitly tied to converting debt into equity and raising fresh capital. [1]
For U.S.-based traders, the setup is even more complex because Azul’s U.S. listing changed in 2025: the company’s NYSE-traded ADSs were suspended and delisting proceedings began after the Chapter 11 filing, pushing the stock into an environment where liquidity, spreads, and volatility can be extreme. [2]
Below is what matters most before the market opens on Dec. 26—the developments moving the stock, the practical implications for shareholders (especially ADR/ADS holders), and the key dates likely to drive the next headlines.
1) Where Azul Stock Trades Now: AZULQ vs. the Old NYSE “AZUL”
If you remember Azul as NYSE: AZUL, that is no longer the right reference point.
- On May 29, 2025, the NYSE said it would commence delisting proceedings and suspended trading in Azul’s American depositary shares, citing uncertainty about the impact of the Chapter 11 process on ADS value. The NYSE also noted each ADS represented three preferred shares. [3]
- Azul’s own disclosure around the same time said the NYSE had notified it of the decision to suspend trading and seek delisting following the Chapter 11 filing (May 28, 2025), while emphasizing that this did not affect trading of its shares in Brazil. [4]
- By December 2025 filings, Azul references its U.S. trading venue as OTC: AZULQ, alongside B3: AZUL4 in Brazil. [5]
Why this matters before the open: OTC-traded restructuring equities can gap sharply on modest headline flow. Even small updates on offering terms, creditor conversions, or regulatory approvals can move prices disproportionately.
2) The Immediate Market Context: Recent Price Action Signals High Event Risk
Ahead of Dec. 26, investors are reacting to a rapid repricing in late December.
- Azul’s AZULQ showed dramatic moves in the most recent sessions available, including a close around $0.15 on Dec. 24, after a steep decline the prior day (Dec. 23) and high volatility in the days leading up to Christmas. [6]
How to interpret this: In restructuring situations, the equity often trades as a “residual claim” on what remains after debt conversions and new equity issuance. The market can reprice quickly as dilution math becomes clearer.
3) The Biggest Catalyst: Court-Approved Restructuring Plan + Capital Raise Path
Court approval and strategic investor support
On December 12, 2025, Reuters reported that a U.S. bankruptcy judge approved Azul’s restructuring plan. Reuters also reported that American Airlines and United Airlines agreed to invest up to $300 million in Azul’s equity, and that Azul expects to exit bankruptcy in February. [7]
Reuters further reported management expectations that, upon exit, Azul would have:
- a leverage ratio around 2.5x,
- annual interest expense reduced by about $200 million, and
- aircraft lease obligations lowered by 28% (with an AerCap-related agreement mentioned). [8]
Azul’s own filings: the blueprint for dilution and new capital
Azul’s December 2025 SEC filings describe the restructuring goals and the mechanisms to get there:
- Azul described Chapter 11 goals including eliminating more than $2.0 billion in financial debt, renegotiating leases, and optimizing the fleet. [9]
- The company also summarized a path involving $1.6 billion in DIP financing, a $650 million backstop commitment for a future equity offering, and up to $950 million in new capital contributions upon emergence. [10]
- Separately, the company disclosed equity investment agreements approved by the court in which the two strategic investors each committed $100 million (total $200 million) subject to conditions and regulatory approvals. [11]
Before the Dec. 26 open, the core takeaway is this: the market is not guessing whether Azul will issue equity—it is watching how much, to whom, at what implied valuation, and how existing holders are treated during the conversion and new-money phases.
4) The Brazil Share Offering (R$7.44 Billion): What Was Announced and Why It Matters
On December 23, 2025, Reuters reported Azul launched a primary share offering to raise about 7.44 billion reais (roughly $1.33 billion) to help settle financial debts. [12]
Key details Reuters highlighted include:
- the offering includes massive issuance quantities (Reuters described roughly 724 billion preferred shares and the same number of ordinary shares),
- pricing formats: preferred shares sold in 10,000-share allotments priced at 101.45 reais per allotment, and ordinary shares in 1,000,000-share groups priced at 135.27 reais per group,
- UBS BB as bookrunner, and
- board ratification scheduled for January 6. [13]
Reuters also noted subscription bonuses convertible into new shares. [14]
Investor translation: While the share counts look enormous, what matters is that Azul is using a Brazil-based equity issuance process to implement debt equitization and raise capital—an approach that typically implies heavy dilution and a reshaped shareholder base.
5) Critical Detail for U.S. Holders: ADR/ADS Owners May Not Have the Same Rights
One of the most market-moving disclosures for U.S. investors is that the offering is not being made to holders of Azul’s ADRs.
In a December 22, 2025 SEC filing, Azul stated:
- the offering consists exclusively of newly issued shares in Brazil and is an integral part of the Chapter 11 plan, intended to implement mandatory capitalization of certain indebtedness, including equitization of senior secured notes; [15]
- existing shareholders in Brazil will receive priority rights to subscribe on a pro rata basis (the “Priority Offering”); [16]
- ADR holders are not entitled to participate in the Priority Offering, and can only participate if they qualify as professional investors under Brazilian rules and invest directly in Brazil shares (not through ADRs). [17]
Why this matters before the Dec. 26 open: if your market is the U.S. OTC line (AZULQ), this difference in participation rights can materially affect how investors model dilution and expected value.
6) Dilution Math: What the Plan Says About Post-Restructuring Ownership
The December 11, 2025 SEC filing is unusually explicit about how the capital structure could look after debt-to-equity conversion:
- Azul said the equitization of first-lien and second-lien notes is expected to result in 97% of share capital held by first-lien noteholders and 3% by second-lien noteholders (before considering shareholder participation through preemptive rights). [18]
- The filing warns that current shareholders who do not exercise preemptive rights will face significant dilution, and also notes a management incentive program that may represent up to 7% of fully diluted equity post-emergence. [19]
- Azul also described a “Public Offering – New Capital” to raise up to $950 million, with issuance expected at a 30% discount to the plan’s equity value, and said this could imply over 80% dilution to the then-existing shareholder base if preemptive rights are not exercised. [20]
Bottom line: Azul is not just “restructuring debt.” The filings describe a transformation in which creditors become the dominant equity owners, while new capital raises and incentive equity expand the fully diluted share count further.
7) Operational Performance Still Matters: Azul Posted Record 3Q25 EBITDA (But Restructuring Drove Big Non-Recurring Items)
One reason Azul’s restructuring is being closely watched is that the airline’s operating metrics—at least as of 3Q25—showed strength alongside balance sheet stress.
In Azul’s 3Q25 results filing, the company reported:
- total operating revenue of R$5.737 billion in 3Q25 (up 11.8% year-over-year), and
- EBITDA of R$1.9878 billion with a 34.6% margin. [21]
The same filing highlighted demand and network metrics including:
- capacity growth of 7.1% year-over-year, and
- a record load factor of 84.6%. [22]
Liquidity and financing disclosures in that 3Q25 filing included:
- total liquidity of R$8.8 billion, with immediate liquidity of R$3.4 billion as of Sept. 30, 2025, and
- that Azul accessed $1.1 billion of its $1.6 billion DIP financing in July. [23]
Why this matters now: Stronger operations can support the post-emergence thesis—but the equity’s value still depends on the final capital structure, dilution, and the ability to sustain performance after the restructuring.
8) Forecasts and Outlook: What’s Being Projected for 2026 and Beyond
Forward-looking expectations in the most recent reporting emphasize a “lighter” post-bankruptcy company—but with execution risk.
- Reuters reported Azul expects to exit Chapter 11 with meaningfully reduced debt, lower lease obligations, and lower interest expense, with management targeting leverage around 2.5x at emergence. [24]
- Bloomberg reported (Dec. 16, 2025) that Azul expects the bankruptcy-driven debt reduction and renegotiated aircraft leases to help it generate a profit over the next two years. [25]
- The Financial Times reported that the plan converts debt into equity and significantly dilutes existing shareholders, and also noted Azul’s longer-run leverage ambitions and intention to eventually relist in the U.S. [26]
A practical reality for investors: traditional Wall Street-style price targets and consensus EPS forecasts may be limited or less meaningful during (and immediately after) restructuring, because the equity base and ownership distribution are still in flux.
9) Key Dates and Catalysts to Watch After the Dec. 26 Open
If you are tracking Azul stock going into Friday’s open, these are the calendar items most likely to drive incremental headlines:
- Brazil share offering process updates
Look for filings that clarify subscription demand, final allocations, and how subscription bonuses/warrants convert into shares. (This is where dilution becomes “real,” not theoretical.) [27] - January 6 board ratification (per Reuters)
Reuters reported the offering’s conclusion is set to be ratified by Azul’s board on January 6—a near-term date that could create another volatility window. [28] - Chapter 11 emergence timing (management expectation: February)
Reuters reported Azul expects to formally exit bankruptcy proceedings in February. [29] - Regulatory approvals and strategic investor funding conditions
Azul’s filing describes the strategic investors’ equity investments as subject to conditions and regulatory approvals. [30]
10) Risks to Keep Front-and-Center (Especially for AZULQ Traders)
Even after major court milestones, Azul’s equity remains a high-risk, event-driven trade. The most important risks flagged by filings and coverage include:
- Extreme dilution risk if preemptive rights are not exercised, and further dilution from new capital raises, warrants, and incentive equity. [31]
- Different treatment between local shareholders and ADR holders, including limited participation rights for ADR holders in the priority offering process. [32]
- OTC liquidity and execution risk, which can amplify price swings. (This is a market-structure reality rather than a company-specific claim, but it’s particularly relevant given Azul’s trading venue shift after suspension/delisting actions.) [33]
- Macro sensitivity (fuel and FX), which Reuters has repeatedly cited as a challenge Azul has been trying to “de-risk” via restructuring. [34]
The Setup Into Dec. 26: What to Know in One Sentence
Going into the Dec. 26, 2025 market open, Azul S.A. stock (AZULQ) is being priced less like a normal airline equity and more like a restructuring security—highly sensitive to offering mechanics, creditor-to-equity conversions, and dilution outcomes, with operational performance serving as a secondary (but still important) support factor. [35]
Note: This article is informational and not investment advice. For restructuring situations, consider reading the company’s latest SEC filings and restructuring disclosures directly, because small changes in capitalization terms can have outsized impacts on equity value.
References
1. www.reuters.com, 2. ir.theice.com, 3. ir.theice.com, 4. api.mziq.com, 5. www.sec.gov, 6. stockanalysis.com, 7. www.reuters.com, 8. www.reuters.com, 9. www.sec.gov, 10. www.sec.gov, 11. www.sec.gov, 12. www.reuters.com, 13. www.reuters.com, 14. www.reuters.com, 15. www.sec.gov, 16. www.sec.gov, 17. www.sec.gov, 18. www.sec.gov, 19. www.sec.gov, 20. www.sec.gov, 21. www.sec.gov, 22. www.sec.gov, 23. www.sec.gov, 24. www.reuters.com, 25. www.bloomberg.com, 26. www.ft.com, 27. www.reuters.com, 28. www.reuters.com, 29. www.reuters.com, 30. www.sec.gov, 31. www.sec.gov, 32. www.sec.gov, 33. ir.theice.com, 34. www.reuters.com, 35. www.sec.gov
